Multichoice Africa’s CEO Eben Greyling looks to 20-30% growth over “the next couple of years”

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As the long-time player in the African market, Multichoice is the largest Pay TV operator in all Anglophone markets. Last year a range of new competitors entered the market and before long there will be new competitors in South Africa. Russell Southwood spoke to Eben Greyling, CEO – Sub-Saharan Africa Pay TV, Multichoice Africa about how the new competition has affected them and what they’re planning in the coming year.

Q: What do you think the impact of competition has been on the market?

If you look at it from various angles, the increase in competition in the market increased awareness of Pay TV. So it was positive in terms of subscriber growth and we had a good year.

The area where it was negative was in terms of the cost of doing business. You see the cost of sports rights going to unsustainable levels in terms of doing business.

Q: How many players can survive in Sub-Saharan Africa?

It’s a difficult question to answer. You can look at Pay TV examples in more developed countries and there are very few where there is more than one player doing more than just surviving. Probably therefore there will be one, two or three players, depending on the strategies of the different companies. It’s not like the cellphone business.

Q: What are your bigger markets in Sub-Saharan Africa?

Nigeria and Angola are the only two above 100,000 and these are followed by Zambia, Kenya and Namibia which are in the 30-40,000 range. All the others are smaller.

Q: What’s the rate of growth?

In the current year, we have been looking at between 20-30% growth. We think we can maintain levels of 20% a year for the next couple of years.

Q: How does that growth break down between the cheaper and the premium bouquets?

When you talk about price, you have to look at content as well. If you look at our premium offering versus our competitors, their prices may be cheaper but the content is not comparable. We have a greater level of channels in depth. Our competitors are focusing on football. But we’ve got much wider coverage of sport and the latest movies. We cover all the genres and have a wider choice. They’re just competing on lower price packages.

These lower price packages have opened up the market. In the last year, our lower price bouquets have been growing at a much higher rate off of a lower base. The premium bouquet subscribers are growing at a slightly lower rate.

Q: Why didn’t you buy the Premiership rights for Nigeria and Sub-Saharan Africa?

You know the way the bidding process works. You go into the tender process and you’ve no idea what the others are putting on the table. We went in with a reasonable price, an increase of 400% on the last time. Unfortunately our bid was not high enough and you can’t go back and negotiate. We have an idea of what price was paid and if it was offered to us at that price, we would have paid it. It’s rather like playing roulette, you hope that your number comes up.

Q: What level of advertising are you generating as a percentage of total turnover?

It’s very small and the revenue goes to MNet and Supersport. It’s a couple of million Rand, around 1-2% of total revenues.

Q: How much African content have you commissioned and are you planning to increase your level of commissions?

We’ve done quite a lot over the last two years. Our flagship is the Africa Magic Channel. This is 70% Nigerian movies and the balance is movies from the rest of the continent. We’re looking to extend that with a lot more movies from the rest of the continent.

What we’ve commissioned, we’ve done through MNET and they’ve done a lot of local shows like Big Brother Africa and Idols. Some of these are produced in Nigeria.

From the sports perspective, we’re investing in local football leagues. We’re into our second season of doing this through Supersport and we’re adding Kenya and Zambia. We’re also looking at one or two other countries. The cost of producing these games on television is high against local subscriber growth so we’re going to be going into countries with a critical mass of subscribers – existing and potential.

Q: What about new bought-in programming?

We’ve quite a few in the pipeline, some aimed at our Portuguese-speaking subscriber base. There will be 3-4 additional channels to promote this offering. The development of the English-speaking channels is focused on local productions. There’s a couple of areas where we can bring in more relevant content, both commissioned and bought-in, to create another 4-5 new channels.

We’re launching a new bouquet called Easyview which will have roughly eight channels plus the local Free-To-Air channels, giving a total of 10 channels for effectively US$2.50 a month. As it’s a small sum, this will be paid annually in advance. The aim is to make Pay-TV affordable at an entry level. It’s our contribution in terms of digital migration. We want to move people on to digital, making that transition easier for African Governments. We’re 100% digital already.

Q: How fast do you think the digital transition will happen in Sub-Saharan Africa?

It’s going to be a challenge, especially for terrestrial transmission. The biggest issue is cost. There’s the cost of the roll-out of the transmission networks and the cost of receivers for the consumer. Will Government subsidise the cost of receivers. It’s a hard challenge to get Governments to do that with all the competing financial demands. There’s going to be opposing forces.

Q: When will you launch High Definition (HD) programming in Sub-Saharan Africa?

We’re looking at introducing an HD decoder. We’ve not yet got the satellite capacity available but we’ll definitely introduce it next year when we go on to W7. It’s a question of timing.

Q: How many HD-enabled televisions do you think are out there in Sub-Saharan Africa?

It’s a very low percentage of the population. You see them for sale in all of the electrical shops and retail outlets. But it must be below 5% of the population. However, take-up will be driven by the introduction of HD/Blu-ray DVD formats. It’s big enough to start the launch of a service.

Q: How do you see the new entrants who are doing IP-TV and triple play?

We’ve seen people talk about IP-TV but not many have launched and where it has been launched it’s very small. Their biggest challenge is the cabling in terms of reaching homes. If you have a big population like in Dakar, it’s possible to provide coverage. It’s a case of cost vs return. It will come to Africa but the roll-out will be slower than elsewhere. We’re keeping a close eye on it and looking at partnerships. We want to be in the space.

We’re working with (our sister company) MWeb to offer triple play services in Africa. It’s early days as the pricing of broadband is still too expensive but we’ve got it in our strategic plans.

Q: How do view the mobile operators getting involved in content?

It depends what they’re looking at. The jury’s still out on 3G as a broadcast technology. It’s good in terms of data but it’s difficult to offer proper broadcasting on 3G.

Q: What are you doing yourselves with mobile TV?

We’re rolling out in several countries and we see it as complementary to what the mobile players are doing with 3G. We have a number of good mobile partners in Africa for our DVB-H offering.

We’ve got less of an issue in terms of spectrum than there is in Europe but there is the challenge of handset prices. We’re working to get these down over the next 2-3 years. To be a mass market, the handset has to be below US$100. Currently they average US$400 but this year we’ll get that down to US$200. Price all depends on the functionality. If it’s a simple phone that can do voice, data and DVB-H then the price can come down to the levels we need.

Q: What’s the relationship between the Internet and your broadcast offerings?

The first question is what is going to be the predominant broadband platform: adsl, Wi-MAX or cable/fibre? It will probably be a wireless service. The two (Internet and broadcast) will move closer together, especially on broadband Video-On-Demand (VOD) and catch-up TV and these will enhance the offering to the consumer.

We were amazed by the number of people who accessed clips from Big Brother Africa on the Internet. There’s huge opportunities in that segment. Obviously we have Internet companies as part of the (Naspers) Group so we will be part of it. But where we don’t have companies we’ll make partnerships. Everyone can’t own everything these days.