MultiChoice Group Ltd, Pay-TV company, has signed deals with Netflix Inc and Amazon.com Inc to offer their streaming services through its new decoder.
The deal has been touted as a move by MultiChoice to retain subscribers. The platform has been battling greater competition from its US rivals after cheaper and faster internet speeds enabled them to grab a foothold on the continent.
With the partnership, Netflix and Amazon Prime Video will in some way be accessible through the next Explora decoder model from the company.
The Johannesburg-based company introduced its own streaming product called Showmax in 2015 and has offered cheaper deals on premium packages to shore up its customer base, but it has not been able to keep up with other foreign services.
According to reports, details on how the move could affect MultiChoice’s monthly fee will be announced in the coming weeks, a spokesman said on Wednesday.
Speaking on this, Mr Tim Jacobs, MultiChoice chief financial officer, said, “What would typically happen is we would get commission on whatever revenue gets generated by customers coming from our platform,” without being specific about Netflix and Amazon.
The deals were, however, included in MultiChoice’s results presentation, published on its website, under the heading – ‘Improve Retention’.
This led the company’s shares to jump on the news, gaining 8.5 percent to 102.62 rand at the close in Johannesburg, the highest in almost four months.
MultiChoice subscriber numbers rose by 5 percent in the year through March to 19.5 million households, with demand picking up at the end of that period as South Africa, its biggest market, entered a coronavirus lockdown.
The company offers a wide variety of international sport to its highest paying viewers, but has also been focusing more on local content and with Netflix also making an effort to produce more African content, the company considers it complementary.
“There is little overlap between content on Showmax, that is now 50 percent local, and a service like Netflix at the moment, hence, we find deals with other video-on-demand services complementary,” said Mr Jacobs.
Deals between pay-TV providers and streaming services have been struck elsewhere. Sky UK and France’s Canal+ both have agreements with Netflix.
MultiChoice reported full-year earnings per share of 1.17 rand, compared with a loss the previous year. The company announced a maiden final dividend of R5.65 pershare.
MultiChoice said the full impact of the COVID-19 pandemic on the business is as yet unknown, but said that it expects weaker economic growth and higher unemployment in many of its markets.
The TV service provider plans to continue local film productions, taking specific precautions such as splitting production teams, Mr Jacobs added.