DStv has been struggling to keep its Premium subscribers in recent years due, in part, to the rise of Netflix in South Africa.
Netflix has performed well internationally thanks to its low price when compared to traditional pay-TV services like DStv Premium.
The rise of Netflix has also coincided with the growth of high-speed Internet access across South Africa.
The competition from the likes of Netflix has therefore raised questions about the future of DStv.
To see what this future may hold, MyBroadband asked South Africa’s tech experts whether they believe Netflix will overtake DStv in terms of market share.
The Internet barrier
Managing director of World Wide Worx Arthur Goldstuck believes that Netflix will struggle to reach DStv’s 5-million subscriber mark.
“Netflix is growing its customers in SA via the broadband user base of ADSL and fibre users,” said Goldstuck.
“That will take many years to reach the 5-million mark, and all the while DStv will continue penetration of low-end markets and areas with limited broadband.”
However, Goldstuck believes that Netflix poses a serious threat to DStv’s Premium package.
“Netflix is eating rapidly into the DStv Premium subscriber base, as that is also the typical broadband user,” said Goldstuck.
“So, while it won’t overtake DStv any time soon, it is taking away its most profitable subscribers.”
“Once DStv loses rights to the English Premier League and local rugby, it’s game over for the premium bouquet,” he added.
Director of the South African National Editors’ Forum (Sanef) Kate Skinner agrees that sport is one of DStv’s biggest draw cards.
“If DStv continues to provide excellent sport coverage and Netflix can’t then that will slow the speed of people switching to Netflix,” said Skinner.
Skinner added that the ability of Netflix to surpass DStv is also dependent on the rollout of fast Internet connections.
The problem of pricing
William Bird, director at Media Monitoring Africa, believes that if things are left as they are, Netflix will “just about decimate” DStv over time due to the difference in pricing.
However, Bird added, DStv is likely to fight back aggressively to ensure that this doesn’t happen.
“DStv are not wilting wall flowers,” he told MyBroadband.
“They have been prepared in the past to do almost whatever it takes to get a deal or squash an opponent.”
“They will almost certainly have to look at offering pay-per-view of some kind rather than the limiting bouquet available currently,” said Bird.
He also speculated that in the long term, MultiChoice may seek to work with Netflix rather than compete against it.
According to Bird, DStv’s continued support of local content makes them a crucial cog in the local film industry – particularly given the SABC’s financial issues.
“Across the world, regulators are looking to protect their own content and markets, and with DStv’s weight, we shouldn’t be surprised if our own regulator starts to look at ways of taxing entities like Netflix,” said Bird.
“Tempting as it may be to wish the downfall of a DStv behemoth, we have to ask: at what real cost?” asked Bird – adding that switching out DStv for an international company like Netflix will likely leave us in a worse position overall.
Skinner agrees that DStv is a crucial part of local content creation, adding that this gives them an advantage over Netflix.
“If DStv continues to produce quality local content, then that will be a competitive edge for DStv,” she said.
Netflix’s international challenges
Bird also highlighted that Netflix has challenges of its own globally, which may reduce the power that it holds over local companies.
The likes of Amazon and Disney are running their own content streaming services, and these massive organisations could make it difficult for Netflix to remain head-and-shoulders above the competition.
While Netflix is gaining steam locally and abroad, it is too early to see who will reign supreme in the coming years.