Naspers bets big on low-cost digital pay-TV, GOtv, in Africa

by Gugu Lourie 0

Africa’s fastest growing digital terrestrial television platform GOtv is quietly transforming the face of pay-television on the continent.

GOtv is evidently altering the consumption of pay-TV by providing quality and accessible digital television at an affordable rate to the mass market.

The low-cost pay-TV service is gaining good traction with more subscribers signing up. It is, in fact, the most affordable platform to access digital terrestrial television (DTT) in Africa. It offers 20 to 40 channels via two bouquets, GOtv and GOtv Plus.

To grow this platform, [DATA NPN:Naspers] invested 1.33 billion rands into GOtv in the year to end-March 2014. The company has experienced a 13 per cent growth in trading profit of its pay-TV division, which includes MultiChoice and GOtv (DTT).

Naspers attributes this growth to continued expansion of its DTT services.

“Our belief is that, through a combination of attractive markets with development potential and appealing customer product offerings such as online classifieds, etail and DTT, we have realistic, solid prospects for growth and value creation over time,” said Naspers CEO, Bob van Dijk.

Founded in September 2011, GOtv had attracted 816 925 subscribers at the end of March this year up from 547 000 subscribers the previous year. The company had 23 000 subscribers during the year to end-March 2012.

GOtv is available in Ghana, Kenya, Malawi, Mozambique, Namibia, Nigeria, Rwanda, Uganda and Zambia. It covers 112 cities in Africa making it the continent’s biggest DTT operator.

This development has been achieved within few years indicating that GOtv is slowly catching up with DStv, a pay-TV brand of MultiChoice, in terms of its geographic footprint.  

MultiChoice added 1.3 million new households taking its base to more than 8 million homes across 50 countries in sub-Saharan Africa. However, the biggest growth might be lying in GOtv, which is largely considered as an affordable version of DStv.

Questions about whether Naspers will get good returns from its investment in GOtv are already being answered by the impressive performance so far.

In fact Naspers is already reaping the benefits – its investment in DTT allows it to target the neglected pay-TV mass market.

It is clear Naspers is doing well and must continue to seek to and capture opportunities in DTT across Africa.

The DTT operator could accelerate the signing up of more subscribers by simply increasing local content on GOtv.

In markets like Nigeria GOtv is competing with Star Times, which is failing to gain any traction in South Africa after it bought struggling pay-TV broadcaster TopTV. In South Africa Star Times launched low-cost packages in an attempt to entice new customers, but they have failed to have an impact on DStv, the home market for Naspers/MultiChoice.

What sets GOtv apart from its competitors is its channel line-up, which is uniquely placed to enable GOtv to be the home of affordable digital pay-TV.

In Nigeria, GOtv is distinguishing itself by delivering local content such as Africa Magic Movies, Africa Magic Yoruba, Africa Magic Hausa, etc.

Providing a selection of local channels made in Africa for Africa could yet prove to be GOtv’s winning formulae.

Furthermore, GOtv is playing a crucial role in helping African countries accelerate their digital migration processes.

This platform allows for a seamless migration from analogue to digital broadcasting at an affordable and flexible price tailored for different countries.

GOtv has managed to make available an alternative pay television service in 11 African countries and it is geared to do the same in other countries on the continent.

Naspers is planning to increase its investment into GOtv in order to attract and capture new markets.

However, for now, Naspers will have to feel the pain of investing in other African countries as it seeks to expand its GOtv platform – this means that the more it seeks to expand its GOtv services the more its near-term margins at its pay-TV unit could be diluted.

Naspers has already noted that margins on its pay-TV business have come under pressure, due to investment in local content and DTT costs (including inventory build-up).

All things considered, this is a small price to pay for Naspers as the investment in GOtv will enable the company to capture more growth opportunities in DTT across the rest of Africa and further diversify its revenue streams.