The MultiChoice Group (MCG) is a complex business. It operates across multiple markets with different regulatory requirements, volatile foreign exchange rates, and customers with varying economic circumstances, emerging technologies and the rising cost of content. MCG’s CEO explains why – despite these challenges – the group’s success ultimately depends on delivering and protecting value.
The African broadcasting industry remains challenging – audiences across the continent are increasingly spoiled for choice, driven by changes in technology and access to more content. Despite these challenges, our primary focus remains squarely on delivering value to our viewers across this diverse continent. It is in this arena that the company continues to hold its own, as reflected in our customer base of more than 15m households and our trading profit of R7bn reported for the 2019 financial year.
What’s certainly counting in our favour is the fact that Africa is one of the fastest-growing video entertainment markets in the world. Unlike other global markets, it has a growing youth market that is feeding a burgeoning labour market, which, combined with the high rate of urbanisation, is creating demand for entertainment and other services. As the continent’s middle class grows and discretionary income levels increase, MCG sees great opportunity in being one of Africa’s premier entertainment brands.
Although the challenges may be considerable, MCG has a long history in over 50 African countries. This experience and intrinsic market knowledge means we are well placed to deliver maximum value to our customers through our channels – both new and existing. Although much has been made of a decline in premium-segment customer numbers in South Africa and the potential threat posed by streaming and OTT content, we have continued to rapidly grow our subscriber base and improved our retention rates. Both of these indicate a relevant and profitable future.
Delivering value, of course, is what drives our profitability and long-term sustainability. It is worth noting that value creation is also measured in various ways. On a continental level, it means delivering entertainment to more than 15.m African households. To governments, value is measured through contributions to national GDP and income from taxes. To our distributors, agents and installers the value lies in business opportunities. To the video industry, value is created by a growing demand for local content. For communities as a whole, value is derived from our community investments, promotion of education and participation in helping the disadvantaged.
Undoubtedly, though, our success in delivering customer value depends on our ability to maintain and expand on our undertaking to deliver entertainment Anytime, Anywhere. Our ability to deliver depends on several realities, namely:
Coping with economic conditions which have seen major African currencies depreciate materially against the US dollar. The immediate impact has been on the spiralling cost of content, which is purchased primarily in dollars and involves long-term commitments.
Dealing with changing consumer patterns across the continent. In South Africa, the middle and mass markets have grown, while the number of premium subscribers declined.
Delivering the best customer experiences possible, adapting bouquet offerings to different market segments and accurately matching price and value propositions correctly.
Maximising the Connected Video division’s strong focus on growing our online properties. We doubled the number of active users during the financial year, reflecting the vital importance of our digital strategy in securing our future. Our objective remains to be the leading online viewing destination in Africa.
Keeping abreast of Fourth Industrial Revolution technologies to increase business opportunities in connected industries. This includes applications that make use of the Internet of Things (IoT) or home-entertainment experiences allowing us to continue in enhancing our current product offering to deliver world-class solutions to subscribers.
Controlling the escalating costs of acquiring content. This is particularity important given the decline in average revenue per user from R252 to R241, and an average decrease of 10% in the value of African currencies against the dollar. Alternative OTT suppliers competing for content could also markedly increase content prices.
Navigating an increasingly complex regulatory environment involving reviews of broadcasting codes in some jurisdictions, amended licence renewal conditions, and proposed amendments to copyright legislation.
Countering the impact of increased competition due to the growth of online video streaming and the provision of OTT services by global players like Netflix, Amazon, Facebook and iFlix, which increase the number of alternative entertainment offerings in MultiChoice territories.
Improving mobile broadband penetration which facilitates growing competition in the provision of OTT services.
To protect value, and ensure we thrive within the complex realities, we have embarked on several successful initiatives, including: Commissioning local content in markets – for example: South Africa, Zambia, Kenya and Nigeria.
Offering exclusive sports content on DStv. In addition to screening high-profile international events across many sporting codes, local productions have led to more interest in our products. So far, streaming players have not shown much appetite for sport.
Keeping true to its commitment of providing entertainment Anytime, Anywhere, MCG has added to mobility and satisfaction levels by introducing Showmax as a free additional service to DStv Premium subscribers. The service is now also offering live sporting events.
Enabling DStv Now subscribers to access programming on-demand through a variety of devices, including mobile phones.
Working on the development of ‘dish-less’ services to take costs out of the distribution chain. This should offer cheaper access as the costs required for a de-coder and satellite dish are re-moved from set up costs.
Keeping abreast of regulatory changes in our countries of operation by being involved in public processes to amend key legislation governing competition, copyright and performers’ rights, film classification and the electronic communications sector.
All these efforts dovetail into the delivery of value-added services which are measured through customer satisfaction levels. In 2019, these surveys revealed that 76% of our customers in South Africa were satisfied with 8.2 offerings. In Africa, the level was recorded at 70% for DStv and 67% for GOtv.
As Africa’s most-loved storyteller, MCG will continue to work towards development and support of local content and bringing unrivalled entertainment to the African continent. If it’s valuable, we will support it, and we hope our customers feel the same.
Source: https://african.business/2019/10/economy/multichoice-group-despite-complex-challenges-success-comes-down- tovalue/
Answer ALL the questions in this section.
Question 1 (25 Marks)
“The African broadcasting industry remains challenging – audiences across the continent are increasingly spoiled for choice, driven by changes in technology and access to more content.” In the capacity of a Business Development Consultant, contracted to advise the top management team of MultiChoice Group, use the case study and recent literature to appraise the impact of the macro-environmental factors on their business operations in the African continent and provide possible strategies for the organisation to deal with these dynamics.
Question 2 (25 Marks)
MultiChoice is operating in a dynamic business environment and needs to keep abreast of Fourth Industrial Revolution technologies to increase business opportunities in connected industries. In order for the team to consider your advice and recommendations, critically evaluate how the company can effectively apply the Kurt Lewin’s Change Model to enhance a smooth transition in change interventions, as the company adapts to the advances in technology and increasing competition in the continent.
Question 3 (25 Marks)
“Although much has been made of a decline in premium-segment customer numbers in South Africa and the potential threat posed by streaming and OTT content, we have continued to rapidly grow our subscriber base and improved our retention rates”.
In the context of this statement, critically analyse the impact of the task environmental factors on the business strategy of MultiChoice, and advise the management on how to apply the Porter’s Five Forces Model to analyse the competitiveness of the organisation and protect their subscriber base.
Question 4 (25 Marks)
The Systems Theory of an organisation is based on the perception that businesses and the environment are interrelated and interdependent. Refer to the business environment of MultiChoice and use the Systems Theory to critically argue to the Board of Directors the significance of the interdependent relationship that exist between the organisation and wider business environment. Apply relevant examples to provide a convincing discussion.
Get answers on above case study on MultiChoice Group
Answer 1: Each and every business is affected by the internal and external environment that it faces. In the given case scenario of MultiChoice Group, the impact of macro environmental factors on their business operations is significant especially in the African continent because the company has its viewers across the diverse African continent which makes it essential for the company to consider the requirements of its diverse customers in order to fulfill their expectation. The market is extremely competitive and is faced with a complex environment, and all these macro environmental factors directly impact the performance of the company.
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