The Independent Communications Authority of South Africa (Icasa) is concerned that pay-TV group Multichoice may use its dominant position in South Africa to limit competition in the streaming market.
The concerns were raised in the authority’s draft findings on the “Inquiry into Subscription Broadcasting Services” published on Friday (12 April), where it noted that Multichoice is increasing its presence in the video-on-demand market in South Africa.
This was specifically worrying when looking at Multichoice’s streaming services (DStv Now and Showmax) compared to competitors like Netflix.
“Multichoice states that Netflix subscribers are only two-thirds of its Showmax subscribers, indicating that Multichoice is currently leading in terms of subscriber numbers in this market,” Icasa said.
“There are concerns that Multichoice may use its dominant market position in subscription television services to limit competition in the video-on-demand market.”
According to Icasa, Multichoice submitted that the entry of over-the-top players, particularly Netflix, posed a significant competitive threat to its operations in South Africa. However, the authority said that the group’s business plans – heavily redacted in the report – contradicted this.
“Taken overall, Multichoice appears to engage in what could be considered a ‘threat inflation’ tactic that is not underpinned by any hard evidence in the South African market, beyond anecdote. It cites data from other countries and transposes the market dynamics to the South African context.
“In the authority’s view, data shows that Multichoice is firmly in control of the market and will continue to do so for in the foreseeable future, despite the entry of OTTs in South Africa.
“Multichoice pre-empted the impact of OTT entry by adopting new business strategies, [Redacted] and has launched new services to compete directly with OTT services.”
Icasa said that it will monitor developments in this market and will intervene when required.
Netflix subscriber numbers
Netflix is notoriously secretive about its subscriber counts with the company only ever stating that they are ‘happy’ with the amount of South Africans who have signed up for the service.
The only real indicator for the service’s subscribers numbers in South Africa have come from Multichoice itself.
Estimates from Multichoice put Netflix’s subscriber base in region of 300,000 to 400,000 people.
Because Netflix allows for multiple users to use one account, the exact figure is difficult to pin down, even as a range.
Icasa pointed to a submission by Multichoice in May 2018 in which it estimated that Netflix had over 400,000 subscribers.
Multichoice streaming numbers
In a pre-listing presentation published in February 2019, Multichoice for the first time gave indicated how large its Showmax and Dstv Now user base is.
According to Multichoice, around 9% of its user base in South Africa is streaming content through Showmax and DStv Now. This includes both hybrid and streaming-only audiences.
With the group reporting 6.6 million South African subscribers at FY 2018, this would place its streaming-only audience at around 595,000 people.
This is significant, as it would put DStv Now and Showmax subscribers above Multichoice’s estimates of Netflix’s user base in the country.
In a comparison between competitors in the market, however, Multichoice said that its total subscriber base (13.9 million) is four times bigger than all its competitors in the comparable market.