Amazon Coming To South Africa Is Bad News for MultiChoice
Amazon Coming to South Africa is Good News for Takealot but Bad News for MultiChoice, DStv's owners
Recently, I wrote about why Amazon's Online Store could be good news for Takealot.
However, there is one business that should be concerned — DStv.
Here's why.
🧵THREAD🧵
DStv, which is owned by MultiChoice Group (MCG), needs no introduction.
Launched in 1995, it's the biggest TV service in Africa by some distance.
To simplify things, I will use the MultiChoice Group and DStv interchangeably as more people are familiar with the name DStv.
DStv has remained largely unchallenged because TV is a very expensive game to play especially when it comes to buying sports rights.
No wonder every company or service that has challenged DStv has gone broke or closed down.
But now Amazon has entered the group chat.
Amazon is launching its online store in South Africa next year but what separates Amazon apart is not just the online store but Amazon Prime.
Amazon Prime is the online store subscription service which offers special discounts and free fast shipping & returns.
Amazon Prime is ridiculously popular.
In the US more people have Amazon Prime than voted in the last election or decorate a Christmas tree🤯.
For people in the US it seems like when you move into a house, you make sure you have electricity, water, internet and Amazon Prime.
I wouldn't be surprised if Prime also become popular in SA.
But what does Amazon Prime's fast shipping and discounts have to do with DStv?
Well in addition to all the shopping benefits (which are already amazing), Amazon Prime also comes with Prime Video which is essentially like Netflix.
Prime Video is already available in SA and has taken some market share but hasn't yet troubled DStv as much as Netflix.
Prime Video could make one move that Netflix won't that could change the game completely.
Sports broadcasting.
Netflix hasn't been a risk because they have already indicated they are not too keen on going into live sports.
Amazon, however, has already started broadcasting sports. In the US it even streams some English Premier League games.
DStv's biggest advantage has been its sports offering which is really good even by global standards.
Let's take the English Premier League (EPL) for example.
The only place to watch all the EPL games is DStv because bidding for rights is extremely expensive.
Back in 2016, MultiChoice had to pay £300 million (R7 billion today) for the EPL rights for three seasons.
They are so expensive that the one-time DStv lost the EPL rights, the company which had won them, GTV, ended up broke.
Now what happens if Prime Video in SA adds sports to its portfolio?
Unlike DStv's previous competition, Amazon has loads more 💰 and won't go broke.
By Market Cap, Amazon is over 500 times bigger than MultiChoice Group (DStv's owners).
Prime Video spent $16.6 billion on content in 2022 whereas Multichoice spent about $1.2 billion 14 times less. Amazon could outbid DSTv on any day of the week if they want to.
Tangent — South Africa could be an interesting market for Prime Video.
Amazon could buy/fund content produced in SA which is a lower-cost country and push that content to the US.
This "Hollywood Arbitrage" is becoming more popular of late (see 👇🏾)
https://twitter.com/tmukogo/status/1718692503258312875?t=ZGAo1hXxlfikUDFstKuZ7w&s=19
Back to sports. What happens if sports DStv sports broadcasts are now also available on Prime Video?
Or worse, if Amazon outbids DStv and certain games become exclusive to Prime Video 😟 , which is bundled with amazing online shopping benefits.
DStv has already been struggling to keep subscribers, particularly in South Africa.
If Prime Video adds sports at a competitive price point can DStv hold on to subscribers?
DStv does still have a few tools to fight with. The biggest one is local content.
DStv has done very well on this. 👏
Case in point is the series Shaka Iembe which was a big-budget production that was better than almost all of the shows coming out of the US this year.
I hope Prime Video makes a strong push in SA mainly because it will mean more money for local content.
I also hope MultiChoice can navigate any potential challenges but that the pressure will force them to have a more compelling offering.
Let's see what happens.
I am basing all this on publically available information so I could be missing something in my analysis.
What do you think?
Opposing views are welcome!
If you found this interesting you should check out Part 1 on Amazon and Takealot below!
Also, check out the highlights section of my profile for similar threads.
Thanks!