Picture: for illustration purposes
In a major setback for MultiChoice, the owner of DStv, the company's share price hit an all-time low last week, closing at R70.81. This represents a significant 41% decrease since the start of this year. The substantial slide started in March following a surge to over R144.00 per share. However, poor revenue reports and an uncertain financial landscape have significantly affected the broadcaster's share prices.
One of the notable challenges faced by MultiChoice includes a large investment in their streaming platform, Showmax. According to MultiChoice CFO, Tim Jacobs, the investment in Showmax is expected to peak in the 2024 financial year, between R3 billion and R4 billion. However, the heavy investment in an uncertain terrain like Showmax has investors worried.
This uncertainty isn't the only bad news for the company. MultiChoice also purchased a significant stake in sports betting service KingMakers, formerly known as BetKing. The investment, which amounted to nearly R6 billion, has yet to yield expected returns, with KingMakers suffering considerable losses and exiting operations in some markets such as Kenya and Ethiopia.
Despite these challenges, MultiChoice is placing high hopes on the success of Showmax, as it eyes the platform as the final frontier for their subscription video-on-demand (SVOD) growth. The company is also planning to increase local content production tenfold over the next decade.
Nevertheless, the path to profitability for online streaming platforms is a herculean task, with some like CNN+ shuttering just a month after launch due to poor performance. Even giants like Disney+ and HBO Max are not immune from challenges. Showmax's considerable losses of R1.2 billion in the last fiscal year testify to the struggles of monetizing online streaming.
In light of these issues, MultiChoice's struggle to sustain growth with its share prices remaining around the R70 mark is anything but surprising.