Pay-TV provider MultiChoice says the uptake of its decoder with streaming service applications is helping it retain customers, but has repeated its call for the regulation of the sector to create a level playing field.
Greater internet access and lower data prices in SA has led to a flood of companies that use the internet to provide services, including video streaming. Known as over the top (OTT) platforms, they include international firms such as Netflix, Amazon Prime Video, Disney+, and BritBox. Local providers include Vodacom’s Video Play, eMedia’s eVOD and Telkom One.
“There has to be regulatory parity in the market. It doesn’t help to continue to subject traditional players to more regulations and the OTT players have a free reign. That creates an imbalance,” CEO Calvo Mawela said in an interview after the company's full-year results presentation on Thursday.
“They have to comply with laws like any company operating in SA. If they are making money in SA they have to comply with the laws. They have to comply with BEE, employment requirements, pay tax and contribute to local content. That will be the starting point,” Mawela added.
MultiChoice offers an aggregation of Netflix, Amazon Prime Video, and Showmax apps on its decoder to give customers access to a variety of content in one place, which as helped subscribers on its DStv platform even if they downgrade to a cheaper offering.
It brings in additional revenue as these streaming services pay a fee for distribution and subscription collection. MultiChoice also provides internet packages to clients as well as a video streaming-only box for subscribers that do not want the satellite service.
The company has 9-million clients in SA, and estimates there are 2-million video streaming clients in the country.
Video streaming companies should be subjected to regulations like any company operating in SA. They have to comply with BEE, employment requirements, pay tax and contribute to local content.
— MultiChoice CEO Calvo Mawela
Last month, the Independent Communications Authority of SA (Icasa) said it would extend its inquiry into subscription broadcasting due to the growing availability of streaming services, which could lead to new regulations for the industry that is still dominated by MultiChoice.
Icasa said on Friday that it expects to finalise the inquiry at the end of March next year, but added it was “unable to pre-empt whether there will be regulations; that is dependent on the outcome of the findings”.
Mohammed Shaikh, partner in assurance services and media sector leader at Deloitte Africa, said the regulation of OTT providers “could see them bound to investing in developing local content, employment and contributing to the fiscus through a digital services tax, for example”.
Shaikh said many European countries have implemented a content levy for OTT providers to ensure investment in local content production. In France, they will have to invest 20%-25% of their revenue derived in France in local content.
Netflix has it will spend $63m (R980m) on local content this year, while eMedia will spend R100m on its eVOD streaming platform thanks to a sharp increase in subscribers. MultiChoice’s content costs were R19.5bn in the year to March, up from R18bn in the previous year.
Nitesh Singh, MD for communications, media and technology at Accenture in Africa, said there should be some form of regulatory body to govern the content that is produced.
“The regulation, however, shouldn’t be too harsh to rule out any forms of content — we do want an open society after all. But one should watch for fake news and misinformation — that’s where the regulatory bodies need to pay close attention,” he said.
Icasa’s inquiry, which started in 2016 aims to open competition in the traditional pay TV market dominated by MultiChoice. In its draft findings published in 2019, Icasa found that the impact of OTTs was still muted, given relatively limited internet access at the time, the high cost of data and low average internet speeds. The lack of access to local content and sport content also limits the rapid growth of OTTs in SA.
William Bird, director at Media Monitoring Africa, which acts as a watchdog for the media industry, said since Icasa’s inquiry into subscription TV started there had been a surge in MultiChoice competitors — not only in the traditional satellite pay TV market, but also via the internet.
“Urgent policy intervention is needed to ensure there is a fair competition in the pay-TV industry. The more pay-TV channels there are, the more opportunities spring up for independent producers,” Bird said.
“Regulating OTT services, especially international ones that operate in the country, will give local producers an opportunity to showcase their work internationally. Regulations in terms of languages will ensure that even local streaming services have a broad inclusion of all local languages” and, where appropriate, adhere to BEE requirements, he added.
