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DSTV, Nigeria’s leading pay-TV provider, faces increasing scrutiny as analysts question its long-term viability in an era dominated by streaming services.
Experts have raised concerns about the company’s business model, competitiveness, and long-term survival in the face of digital disruption, with many suggesting it must evolve or risk obsolescence.
This was a key topic during a recent episode of Nairametrics’ Drinks and Mics podcast, with industry experts; Tunji Andrews, CEO and Founder of Awabah, Arnold Dublin-Green, Chief Investment Officer at Cordros Capital LTD, Ugodre, Founder of Nairametrics, and Dele Akintola, Chief Commercial Officer of Alerzo.
Tunji Andrews, CEO and Founder of Awabah, stated that the pay-tv provider is losing its grip on consumer loyalty due to a lack of innovation.
Andrews disclosed that DSTV remains dominant in live sports, especially football, but argued that in general entertainment, its stronghold has significantly weakened due to the rise of Netflix, Disney+, and IPTV services.
“The issue right now is that people are not looking at DSTV as value creation because the product itself has not improved in terms of content on the platform,” he said.
“To be honest, the thing that appeared to look like a monopoly for DSTV broke like maybe six, seven years ago. And on the basis of content outside football, you know, movies, people want to get entertained in your house. And then the emergence of things like smart TVs, where you can have all this Netflix and everything on your TV.
You know, this just basically broke their back. However, they still have the football thing,” he stated.
Shift in subscription habits
Dele Akintola highlighted how Nigerian consumers engage with DSTV differently than before, subscribing only for specific events like Big Brother Naija or major sports tournaments rather than maintaining year-round subscriptions.
- This pattern, he said, indicates that DSTV is losing its must-have status. Andrews emphasized that DSTV’s struggle stems from its failure to innovate beyond sports content.
- Andrews recalled a period when a competitor temporarily secured Premier League rights in Nigeria, prompting DSTV to bolster its Africa Magic offerings to retain subscribers.
However, he noted that such aggressive content expansion has since stalled.
“There are very few dedicated sports fans willing to pay for DSTV to watch it, I am not talking about the guys in viewing stations,” he said.
Shareholder value
Akintola weighed in on the financial realities behind the company’s decisions.
He said that DSTV’s pricing decisions are driven by the need to maintain profitability and deliver value to its investors.
“Their job is to create shareholders value and obviously with the way the currency has increased from N400 to whatever it is now, they lost subscribers, cost gone up. So maybe they are making 5% margin, the implication is that as a company that is listed, how do they create shareholder value,” he said
- He argues that, as a business, DSTV must ensure shareholder returns, especially in a challenging economic environment where the Naira has depreciated significantly, leading to higher operational costs.
- He suggests that even though DSTV has increased subscription fees, its profit margins remain relatively low—possibly around 5%—compared to other businesses in Nigeria that enjoy much higher margins, some as high as 65%.
This financial pressure forces DSTV to make difficult pricing decisions to stay competitive and sustainable in the long run.
‘Sell’ or rethink the business model
As discussions on DStv’s survival in the next 3-5 years unfolded, the experts debated whether investors should hold or sell their shares in the company. The consensus leaned toward selling, with concerns over the viability of its current business model.
- Arnold Dublin-Green was direct in his assessment, advising investors to sell DSTV shares unless the company undergoes significant restructuring.
“Those guys are dying, man. They need to figure it out,” Green said, emphasizing that the traditional pay-TV model is struggling against the rise of on-demand streaming services.
- Tunji Andrews, echoed this sentiment, issuing a “super sell” rating. He pointed out that DSTV’s challenges extend beyond Nigeria, affecting markets in Ghana and other regions outside South Africa.
“The situation is not just Nigeria. The situation is Ghana. The situation is across every other country outside South Africa,” he noted.
- He stated that DSTV is essentially an “elevated version of terrestrial TV”, a model that is becoming obsolete.
Dele Akintola stated that unlike streaming platforms like Netflix, Disney+, and Amazon Prime, DSTV relies on a linear broadcasting model that no longer aligns with changing consumer preferences.
“Netflix is charging $25 a month, and they don’t blink at customers. People are willing to pay. But DSTV? They need a complete rethink,” Dele stated.
The conversation also touched on Showmax, DSTV’s streaming service, questioning whether it offers competitive content. While Showmax provides African movies, they argued that top Nollywood films still prefer platforms like Netflix and Amazon Prime for better visibility.
What DSTV needs to do
The experts concluded that DSTV must redefine its identity for the next decade. They suggested a corporate retreat to reassess its strategy, especially as younger audiences gravitate toward digital platforms.
“DSTV needs a retreat. They need to ask themselves: what are we for the next 10 years?” Dele advised.
Additionally, shifts in consumer behavior—such as the rising popularity of Korean dramas among Nigerian female audiences—highlight the urgency for DSTV to evolve or risk losing relevance.