“Nigerians pay lower for DSTV subscription than consumers in other countries”

Tim Jacobs, Chief executive officer of Multichoice has said Nigerians pay lower for DSTV subscription than consumers in other countries, premium Times reports.

This statement was made in a recently held interactive session with Journalists in Kenya, Tim Jacobs, chief executive officer of Multichoice and John Ugbe, the company’s managing director in Nigeria.

Read excerpts below:

Q: How will strike a balance between the cost of doing business in Nigeria and the target of making profit without coming up with another subscription price increase?

Jacobs: Just to put this into context, Nigeria is actually one of the cheapest subscription models that we run on the continent. You guys can easily go to the Internet and see what consumers in other countries pay. Nigerians pay $20 dollars cheaper than probably all of your neighbours. Now, some of that is because of other considerations … there’s the VAT rate and other things that the consumer has to pay for in other country.

But Nigeria is a very affordable pay television market; it is one of the cheapest in the world. What we have done in the Nigerian market is we have kept the price low over many years in order to try and stimulate the market, because Nigeria is a potentially large economy. We have so many potential subscribers. Our growth in Nigeria, I would say, has been good. I think our GOtv platform, which kind of attracts the lower end of the market, has been doing incredibly well over the last year, particularly about December last year when we introduced a very cheap price. So we subsidize very deep to get to $20.

That has obviously stimulated demand, but we need scale.

In Nigeria, what we are always hoping for is that we can keep the prices reasonably low if we get the scale… We just launched Mnet Igbo as we continue trying to satisfy many segments of the market. We are happy to continue to invest, but we need to obviously see the scale coming into the business. When we get that, then we keep the balance, then we keep the price reasonably low and provide good additional content.

Q: What is your take on pay per view?

Jacobs: Pay per view is a very simple financial equation. If you want to do pay per view, you have to take whatever content the person wants to watch; Let us take the obvious one, the EPL. You take the cost of the EPL, you say how many subscribers do I have, then I divide the cost by the number of subscribers that want to watch EPL and that’s how many people pay for it.

Now we have worked the numbers. Anywhere in the world, pay per view is materially more expensive for the person who wants to watch only that piece of content, than binding all the content together and spreading over the time market. It is just a mathematical calculation; it is not that complicated.

I have got two examples that can show you what has happened elsewhere in the world. In the U.S., the Manny Pacquiao and Mayweather fight, if you wanted to watch it for one evening, one day, cost $99. It’s not a full day; it’s a couple of hours. Rugby World Cup in the US at the moment, as I understand it, is also close to $90, $89 or something, for the duration of the World Cup. So let’s call that a month and half.

If you want watch Rugby World Cup in the US, you pay a single fee of almost $90. In Nigeria, you guys are paying for Premium subscription just over $60 a month equivalent and for that $60 a month gives you all of the content. Okay, maybe Nigerians don’t want to watch Rugby, but the same principles apply if we want to charge you the same way – pay as you go for the EPL. Remember, the EPL is a right cost and much more expensive than the Rugby World Cup or the Manny Pacquiao fight.

The pay as you go is a nice concept. Everybody likes it. And the reason people think that is an option is that they think about Netflix. You know that I can go and get a VPN and I can just watch whatever I want with $10 a month. But remember, their content is an old content. Its stuff that is not fresh. It is not stuff that is happening now and with sport TV in particular, it only means anything to people when they watch it live. Nobody wants to go three weeks after Chelsea plays Man U and say watch it over again. It has 10 per cent the value of the live match. So I don’t know if that just helps you to understand a little bit about how the pay per view module works.

Ugbe: Maybe to distinguish, because some people say pay per view when they are talking about pay as you go, which is not a TV model, it is a communication model because you can start and stop the conversation.

Think about it. If you are watching an EPL game and you stop at the 30th minute, what do you do? Do you pay for the game or do you not? So, it is not a TV content model. There is a lot of confusion about it in the market. It is a communication thing because it’s two-ways. But for TV, you can’t watch 10 minutes of a movie and just pay for 10 minutes.

Read more from the session here

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