MultiChoice Sets Sights on 50 Million Subscribers, Showmax Central to Growth Strategy

In a bold move, MultiChoice Group is on a mission to reshape its market footprint. Poised for expansion, the South African-based company is intent on more than doubling its subscription numbers from 21 million to an impressive 50 million within the next five years. Tim Jacobs, MultiChoice's CFO, acknowledged the audacity of this trajectory, one that has been decades in the making.

Since its inception 17 years ago, MultiChoice has steadily increased its subscriber count. However, recent times have witnessed a dip—23.5 million subscribers dwindled to slightly under 21 million in a mere six months. Yet, the horizon gleams with potential for the group, which is centering its strategy on the growth of Showmax—its on-demand streaming service.

The ambition is further fueled by a revenue target of around $1 billion from Showmax. MultiChoice is backing this up by significant investments in Showmax's platform and particularly in local content creation, proposing a tenfold increase in a decade.

The streaming industry's competitors have often observed an initial growth curve or 'J-curve', which MultiChoice expects Showmax to replicate within 3 to 5 years. A break-even point on trading profits is anticipated for full-year 2027, with the company targeting EBITDA margins of 25% and free cash flow margins close to 20%, as per former MultiChoice executive Yolisa Phahle.

These targets, while they look promising on paper, are under the scrutiny of skeptics. Achieving exponential subscriber growth—going from an average of 125,000 new subscribers a year to a projected 4.8 million—is not only daunting but requires a jumpstart of subscriber growth by over 3,700%.

This aspiration is even more glaring against the backdrop of the competitive and complex streaming market. Success stories are sparse while tales of struggle abound, with Warner Bros. Discovery, HBO Max, Disney+, and the quickly shuttered CNN+ serving as cautionary precedents.

The figures also reflect the challenging journey ahead, with Showmax reporting a net loss margin of 144%, a net loss of R1.41 billion this past year. MultiChoice's commitment to turn the tide with Showmax 2.0 is clear, as it invests heavily in hopes of making it the top streaming platform in Africa.

Key to this strategy is leveraging its offering of exclusive content like the English Premier League (EPL)—a significant drawcard in the sports-loving continent—and a balance of local and international entertainment options. Jacobs is optimistic that this unparalleled mix is the formula to achieve rapid scale.

The enterprise by MultiChoice sets an unprecedented growth rate in an industry facing losses of over $18 billion amongst major streaming services since 2020. It remains to be seen whether the envisioned 'Showmax miracle' will thrive in the competitive landscape or if reality will temper ambition.