MultiChoice under pressure
Pay-TV operator MultiChoice is feeling the pressure from local and international over-the-top (OTT) players. On top of that, the company believes the regulatory framework in SA is not protecting traditional broadcasters against the onslaught of big foreign media companies.
This was revealed yesterday by the company's senior executives at the MultiChoice offices in Randburg. The execs were in unison in expressing their fears that online video content is growing in SA and will eventually eclipse traditional TV.
Describing the rapid changes the broadcasting sector has faced over the years, Nolo Letele, executive chairman at MultiChoice, said in the past video content was only distributed by a few broadcasters but today they are countless.
Imtiaz Patel, group CEO of MultiChoice, added that in 2005, there was only SABC, eTV and MultiChoice, but now consumers have video content access from international brands such as YouTube, Netflix, VIDI and HBO, among others.
ONTAPtv became the newest player to launch into the South African video-on-demand (VOD) market this month, only a month after Naspers-backed ShowMax was introduced to South African consumers. Both newcomers will have to compete with other VOD services, such as MTN FrontRow and Vidi, as well as contend with the imminent arrival of Netflix in 2016.
"There is a plethora of players now in the industry, which shows the changing nature of technology as well as consumer behaviour," said Patel.
In SA, MultiChoice has introduced Internet services that include a mobile app and a VOD-like product that allows subscribers to download movie content from an online catalogue.
The only other pay-TV provider in SA, StarSat, has so far failed to gain traction, leaving MultiChoice with 95% of the market. MultiChoice has monopolised pay-TV since it launched DStv in 1995 – a move that was instigated nine years prior with the introduction of SA's first subscription TV station, M-Net.
"Global international giants like Google, Netflix, Amazon, and Facebook are the real threat," Patel noted. "These international players are not here to respect national boundaries."
He revealed that according to MultiChoice's internal intelligence, Facebook and Google are raking in R3.2 billion annually from online advertising from SA.
Although the international OTT players offer the same content as local broadcasters, they are not regulated in the same way, Patel said.
Karen Willenberg, director of regulatory and legal affairs at M-Net, said the international OTT players simply provide their content via the Internet without any regulations, licences, or contributing to local content.
"South African companies are at a huge disadvantage unless policy and legislation ensures ‘like for like' treatment," said Willenberg. "These companies are already taking significant advertising revenue out of SA without being taxed."
Willenberg also pointed out that due to increasing cases of alcohol abuse in SA, the Department of Health is looking to ban alcohol advertising, something which will negatively impact advertising revenues of the local broadcasters only.
She also noted there was a tendency by the South African authorities to over-regulate the traditional broadcasters, giving the international players an unfair advantage.
"If similar content is already available on other platforms, why over-regulate others? For example, we cannot show ‘Game of Thrones' during the day although we know there are lots of viewers who would want to watch it during the day. Besides, they can still watch it online during the day if they so wish."
Faced with this mounting pressure, MultiChoice will lobby, together with other local broadcasters, for the relaxing of the local regulations. "Some developed markets have already reduced regulation. The government must just regulate only that which requires regulation."
The other challenges the pay-TV operator is facing relate to currency fluctuations, which Patel said have an adverse impact on content and satellite costs.
Tebogo Sibidla, a director at Werksmans Attorneys, says SA's broadcasting laws need to be adjusted to accommodate online video content as well.
"The problem with our regulations is that they don't have any impact on anyone who is operating outside our jurisdiction. If the regulations are adjusted at least there will be some accountability from the international players," she said.
Arthur Goldstuck, MD of World Wide Worx, stresses it's not possible to regulate online content delivered to international Web sites, but it is likely there will be attempts to regulate content made available by South African-based businesses.
This will apply to all the newly-launched VOD services, as well as Netflix, should it choose to launch an SA-specific service, he notes.
"In fact, all of this content is already regulated in terms of the Film and Publications Board age ratings. However, it is unlikely they will introduce time restrictions, as none of these are the equivalent of free-to-air services, or at least their adult content would not be free-to-air," says Goldstuck.
He points out that content available online in other countries cannot be regulated in any way, unless local service providers are ordered to block specific sites. "That hasn't happened with pornography, so it's unlikely to happen with general video content."
Goldstuck urges both the regulator and broadcasters to start off by understanding the economic, technical and social dynamics of the new world of content into which we are moving, and that may take many more years.
Source: ITWeb 23 September 2015