In the last few months, Multichoice, Africa’s largest pay TV operator, has made headlines for several significant developments. Late last year, the company experienced a substantial $1.7 billion drop in share price over six months. This was followed by the announcement that their digital terrestrial television (DTT) service, GOtv, was evolving into a streaming platform. Not long ago, Multichoice settled a long-running tax dispute with Nigeria for $37.3 million, shortly after they rejected French company Vivendi’s Canal Plus’ buyout offer. Two days ago, the pay-TV operator announced a new licensing agreement with Paramount Global Content Distribution, known for its distribution of premium content across diverse media platforms.

The primary objective of this licensing agreement with Paramount Global Content Distribution is to facilitate the global expansion of the Paramount+ brand. African audiences will now have direct access to a wide array of fresh and returning Paramount+ television series and feature films through dedicated, branded icons within the DStv and Showmax apps. This launch marks the inaugural introduction of the Paramount+ brand across the African continent. The aim is simple: provide African audiences with direct access to fresh and returning television series, along with feature films. Yet, this move holds more significance than meets the eye.

MultiChoice is the largest pay-TV on the continent. It has physical operations in over 13 African countries, services available in 50 countries, and has traditionally excelled in homegrown content, yet viewers are concerned about its repetitive programming, leading to subscriber losses. In the first half of 2023, MultiChoice reported a loss of nearly half a million DStv subscribers in South Africa and a $50 million loss in its 2022/2023 financial year. Paramount Global Content Distribution is one of the world’s leading distributors of premium content, with a library of over 140,000 hours of programming, including global franchises such as CSI: Crime Scene Investigation, NCIS, Star Trek, and more. The company’s streaming service attracted over 43.4 million global subscribers by the end of 2022. This strategic partnership also addresses Multichoice’s challenge by diversifying the content library. Fresher content from Paramount+ is expected to significantly enhance MultiChoice’s offerings, providing subscribers with broader range of stories and genres to explore. This diversification has the potential to not only revitalize the viewing experience but also potentially win back lost subscribers and attract new ones.

Secondly, the launch strengthens Mulitichoice’s position in Africa’s streaming market wars, against giants like Netflix and Amazon Prime Video. As per the deal, paramount content will be accessible through its streaming arms Showmax and the DStv app. Last November, Showmax displaced Netflix as the biggest streaming service in Africa. This is after Multichoice had invested R500 million ($27 million) in Showmax, its streaming service. Showmax then announced it would be having a relaunch, dubbed Showmax 2.0, in late 2024. Interestingly, Showmax 2.0 launched on the 12th of February, earlier than expected. The onboarding of Paramount+ further fuels the anticipation around the improved Showmax. Africa’s streaming market is projected to generate $4.7 million by 2024. Moreover, whenever there is one competitor it becomes harder. Others tend to focus on strategies like price reduction to attract customers. A strengthened competition could potentially benefit consumers by driving down prices. It could also encourage further investment in more localized content, a feature that Multichoice’s Showmax currently leads in.

And lastly, the deal buttresses the growing importance of the African market for global media companies. According to Statista, the number of internet users in Africa reached 570 million in 2022, representing 43% of the population. With a gross national income per capita of $1,569. As internet penetration and disposable income continue to rise across the continent, Africa is becoming an increasingly attractive market for streaming services. The commitment to tap into the African audience transcends streamers. Recently, Music label owner Micheal Collins Ajereh aka Don Jazzy announced that his label Mavin was seeking investment or considering a full sale. A few days ago, Mavin Records announced that it had sold a majority stake to Universal Music Group (UMG), one of the biggest music companies in the world. 

Nevertheless, both Multichoice and Paramount+ will need to tread carefully. Africa remains a tough and dynamic market to operate in, especially for markets like entertainment. In January, Amazon Prime announced it was downsizing and halting local content production in Africa, barely one year and four months after it launched Moreover, in 2024, Paramount Global was put on “credit watch negative” by ratings agency S&P Global due to “weak” cash flow trends. The agency expressed concerns about the company’s transition to streaming and its smaller scale and diversification compared to its peers. While the full impact of Multichoice’s agreement with Paramount+ remains to be seen, it’s another signal of a positive trajectory for the company. Recently, MultiChoice renewed its agreement with CBS competitor Disney, extending the agreement to carry channels including National Geographic, Disney Channel, and ESPN through to 2027. Perhaps these are some of the many reasons the Multichoice board deemed Vivendi’s Canal Plus 31.7 billion rand buyout offer, a significant undervaluation. 

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