DStv’s big Netflix deal is great news for South Africans
MultiChoice’s deals with Netflix and Amazon Prime Video could benefit South Africans and may bolster competition in the entertainment industry.
The company announced back in June that it secured agreements with the streaming heavyweights to integrate their services on its new Explora decoder.
MultiChoice CFO Tim Jacobs said this formed part of a new streaming platform that would include content from international players.
However, this deal is currently in limbo, as it is now under investigation by the Competition Commission.
While it has not shared specific details around why it is investigating the deal, the Commission’s mandate suggests that it may be concerned over potential implications for competition in the broadcasting entertainment industry in South Africa.
According to television broadcasting analyst and journalist Thinus Ferreira of TV with Thinus, the Commission is merely taking a precautionary stance since it has not dealt with a matter of this nature before.
Ferreira explained the agreement was likely very similar to existing arrangements DStv had with content providers, and would therefore not be considered illegitimate.
“In the same way that DStv has a BBC channel, Discovery, or an ESPN channel with a separate channel carriage agreement for each for a specific time period that gets renewed or renegotiated, MultiChoice wants to add streaming services,” Ferreira explained.
He noted similar deals have been made between streaming services and pay-TV provides in the US, UK, and Europe.
“None of it has broken any anti-competitive or antitrust regulations in any of those countries,” Ferreira stated.
In a certain sense, it actually serves to increase competition, he said.
“MultiChoice puts some of its competitors in front of its own subscribers, allowing the subscriber to use that as well if they choose to.”
Ferreira said that consumers could benefit financially, as it was “highly conceivable” that MultiChoice and the streaming companies negotiated for a discount on the services when accessed through the DStv platform.
“With these line items appearing on a bill and where it will definitely be in local currency, it will be at a slightly cheaper price than getting it separately,” Ferreira said.
This price would be balanced as to still make enough money for all parties involved, but will also have to be able to lure the customer.
“MultiChoice will get a pre-determined discount for signing up someone as a new customer, similar to when an insurance broker gets a commission from signing a policy and a new client irrespective from which insurance company it is,” Ferreira said.
Ferreira explained how the agreement between MultiChoice and the streaming companies would typically benefit both parties.
“MultiChoice keeps its DStv subscriber inside its ‘mall’, meaning it retains you as a customer, and can say they offer access to this third-party content too,” he said.
“The video streaming service – like Netflix, Amazon Prime Video, Disney+, or HBO Max – and others are ‘big’ globally, but are made up of little chunks of subscribers in separate countries,” he said.
Because MultiChoice is a big legacy media company, it enjoys a significant amount of brand trust in South Africa, which can be leveraged by the streaming companies to gain more customers.
“A potential South African customer might never on their own sign up to Netflix,” Ferreira explained.
“But because the Netflix tile now shows on MultiChoice’s streaming carousel interface, that DStv subscriber, from a consumer psychology perspective, might say: ‘I feel it’s a safe enough environment. I will try this’.”
The battle for your data
One major bargaining chip in these types of deals would be the customer data and insights parties stand to gain to further grow their platforms.
“It is extremely conceivable that a part of the intricate contract negotiations will be around who gets access to what consumer data,” Ferreira said.
This would in certain instances be a more important deciding factor in whether an agreement can be reached and maintained.
Ferreira explained that Netflix could for example demand the data which shows how a DStv subscriber scrolls through and behaves on the DStv interface and the Netflix app on the decoder in particular.
“How much subscriber data does MultiChoice give to a third-party streamer and what? How much customer information is a third-party streaming service entitled to if channelled through a MultiChoice? These are more the make-or-break questions the operator and streamer have to work out behind-the-scenes,” he added.
He went on to elaborate on how Amazon grew because of how it used its partnerships with retail stores to resell their products while collecting rich customer behaviour data.
“Amazon kept it all. Amazon started to learn. Amazon could see exactly what potential consumers click on, what they watch, how long they look and browse, what leads to sales and how and what products consumers compare,” Ferreira said.
No exclusivity involved
Protea Capital Management founder and CEO Jean Pierre Verster previously said that DStv could become a streaming gatekeeper in South Africa.
In an interview with Business Day TV, Verster implied that by bundling streaming services with DStv, users would be forced to continue to pay their DStv subscription to keep their Netflix service.
However, Ferreira said there are no reasons to believe this is the nature of the agreement, nor would any exclusivity be involved.
“In a very few cases internationally, a streamer launched in an exclusive partnership with a pay-TV operator in some countries, but as a start-up beginning.”
This exclusivity arrangement would eventually expire once the streaming service had gained a foothold in the region.
“Netflix and Amazon Prime Video are already in South Africa, so the genie is out of the bottle,” he noted.
“If you already have a Netflix account, you get to use that and access that through DStv – absolutely nothing changes for you,” Ferreira added.