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As competition for subscribers heats up, international streaming platforms are scaling back on SA

May 31, 2024
in Technology
As competition for subscribers heats up, international streaming platforms are scaling back on SA
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Last week, the UK video streaming service Britbox announced that it would shut down in South Africa after three years. The streaming platform joins a host of other international streaming platforms including Acorn TV, Paramount+, Amazon Prime and Disney+ which have either exited, frozen or cut down their investments in the country.

When announcing its exit, Britbox said it was looking to focus on “more established markets and the areas of the business that will have the highest opportunities for growth”. 

Although South Africa is Africa’s most mature streaming market, increasing competition for subscribers has driven up customer acquisition costs for streaming providers. Combining this with the already high capital expenditure of streaming driven by content acquisition costs, platforms like Britbox are choosing to cut their losses and exit the market.

“Content costs a lot and streamers don’t make as much money per subscriber as traditional pay-TV providers like DStv,” said Thinus Ferreira, a streaming analyst. For example, Netflix’s Premium subscription costs R200 ($11) in South Africa, where the service has 1.2 million subscribers. Meanwhile, DStv’s Premium subscription brings in R929 ($50) per user for the company which has over 8 million subscribers.

To justify further investment in the South African market, they would have to acquire subscribers until they reach a critical mass; they can then charge more money or sell other products like ads to those subscribers without fear of a mass subscriber exodus. South Africa’s growing streaming market presents this opportunity to acquire subscribers, but it’s a double-edged sword. A growing market also means the entry of more competitors, and with streaming platforms cutting budgets globally, investing in a highly competitive market does not make sense for the platforms’ bottom line.

An example of a competitor is MultiChoice-owned Showmax which recently relaunched its streaming platform in partnership with Sky and NBCUniversal and has amassed a significant share of the market. Besides Netflix which had first mover advantage in the South African market, platforms like Britbox, although it claimed to have “thousands of subscribers”, cannot wage a justifiable subscribers war against the likes of Showmax for several reasons.

Firstly, Showmax simply better understands the South African market’s content consumption habits. Secondly, regarding local content that has become popular with the South African streaming audience over the last few years, Showmax has a unique advantage. The platform can simply repurpose content made for MultiChoice’s DStv channels into streaming content, which saves the platform a significant amount of money and is an advantage the likes of Britbox don’t have. For example, Shaka Ilembe, one of South Africa’s most-watched shows, was originally made for DStv’s M-Net channel and is also available on Showmax.

Currently, South Africa has more than half a dozen streaming platforms all vying for subscribers. In the US, to hedge against this increasing competition, streaming platforms have started to offer subscribers “bundled” packages to keep them within the streaming pipeline. For example, Netflix, Peacock and Apple TV Plus this week launched a bundle where subscribers can access all three platforms for $15 a month.  The South African market has not reached that level of maturity so streamers have to engage in a very expensive dogfight to attract and keep subscribers, a fight the likes of Britbox want no part of.

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