DSTV – Monopoly no more UCT GSB CONSULTING

COMPANY CHOICE DSTV - MULTICHOICE WHAT HOW Movies Local content Sports Kids New & Life stile Documentaries The ONLY South African Pay TV operator with operations in Africa Over 25 Years Also Own MWEB – Local ISP – Broadband Provider Deliver video content over satellite – Push Content They decide WHAT They decide WHEN

DSTV’s BUSINESS MODEL Subscription based Setup installation After 25 years ~5 million subscriber based Pay to access bouquet of channels 3 payment options Base Package Sport Package Premium Package Price per year $300 $480 $840 Channels 30 Only sport 500 $10 000 Average Salary of working Class in SA

Situation analysis SA Monopoly Pay TV Operator Over 25 years Owning Sporting Rights Strong focus on Hollywood and Local Content ~5 Million Subscribers ARPU ~$780 Pay TV Landscape disrupted by Online Declining subscriber base moving to online

Timeline of events 2013 - 2014 2013 - 2014 2013 - 2016 Now Broadband penetration & speed picks up Users start accessing video content online illegally DSTV respond with PVR & Box Office Subscriber base starts to decline DSTV Launch their Netflix Alternative SHOWMAX 2016 Netflix Arrives in SA Subscriber base continues to decline 2013 - 2014 2013 - 2014 2013 - 2016 Now

ANALYSIS NICCOLO

Changing Trends What are the South African Pay TV Customer Needs? DSTV- Multichoice Access to variety Whatever, whenever Affordable Flexible pricing Latest Content Local Content Sporting SA low-middle income  cash strapped working class DSTV had a monopoly in the market and customers had no choice DSTV did not adapt to changing customer trends

DSTV did not change pricing or enable their content online Factors of disruption 2014 Effects DSTV RESPONSE Internet penetration increase to 52% Broadband speed increased to 8bits/s  speed enabled video streaming Customers demand flexibility & on demand DTSV start losing customers 2014 2016 – DSTV first ever staff restructure churn starting to hurt Launched Box Office pay for latest movie $2.5 One day only Launched PVR Record Shows Watch anytime Launch Showmax Replica of Netflix Subscription based model  $10 On demand DSTV did not change pricing or enable their content online

The disruptor Enters Netflix entered in 2016 DSTV- Multichoice Needs Netflix Access to variety Whatever, whenever Affordable Flexible pricing Latest Content Local Content Sporting Netflix provided service that met SA customer needs DSTV did not take threat seriously and did not adapt

DSTV’s only competitive advantage is local and sporting NETFLIX vs DSTV NETFLIX DSTV SA Consumer Annual cost of $120 No Setup Fees Flexible Viewing Excludes Broadband - $250 per Year Affordable Annual cost of $840 $300 Setup Fees Annual escalation Semi- Flexible Viewing Sports & Local Content Price sensitive Low Disposable income Netflix is seen as viable replacement DSTV’s only competitive advantage is local and sporting

Response, critique & Recommendations joel

Response & Critique of DSTV Period DSTV Response DSTV Rational Critique 2013 Launch Box Office To give access to longtail content on a flexible basis Maximum of 6 movies which were out dated. Affordability 2014 Launch PVR (Personalized video recording) Allowed flexibility through recording shows Affordability Limited to disc space Limited to specific TV channels 2015 Launch Showmax Replica of Netflix with Local content @R99 / month Poor user experience Platform compatibility Quality of viewing poor Poor content Needs not met and poor adoption 2017 Showmax become free for premium subscribers Stop attrition of subscribers Too late (1 year after Netflix) Value not as good as Netflix (content) Brought local content to it

Response & Critique of DSTV Period DSTV Response DSTV Rational Critique 2013 Launch Box Office To give access to longtail content on a flexible basis Maximum of 6 movies which were out dated. Affordability 2014 Launch PVR (Personalized video recording) Allowed flexibility through recording shows Affordability Limited to disc space Limited to specific TV channels 2015 Launch Showmax Replica of Netflix with Local content @R99 / month Poor user experience Platform compatibility Quality of viewing poor Poor content Needs not met and poor adoption 2017 Showmax become free for premium subscribers Stop attrition of subscribers Too late (1 year after Netflix) Value not as good as Netflix (content) Brought local content to it Ignored customer needs and failed to adapt from a complacent perch of sport

What dstv should have done differently Recommendation What Why Embraced technology early DSTV + Broadband bundle (m-web part of DSTV) Add value to premium – Entrench & Retain customers Immediately creates channel to deliver wider selection of content Review the pricing Risk of losing non sport watchers Allow flexible packages, meeting needs & costs Compromise or be Cannibalized Take all content online (2014 / 2015) – access to internet Launched PVR box online DSTV for local content Showmax for international Bring Netflix (& other) onto PVR for revenue share Not as a competitor but rather as complimentary – Sky & BBC in UK – retained and grown

summary

Summary of Outcomes Recommendation Outcome Embraced technology early DSTV monopoly Advances in technology & global trends Changing customer needs Failed to capture opportunity Netflix Disruption Our Recommendations Recommendation Outcome Embraced technology early Retain customers Competitive pricing Fragmented but future proof clients Take all content online (2014 / 2015) – access to internet Access & flexibility internally when needed