DSTV: Multichoice, Others Reject Senate’s Pay-per-view Model

Multichoice Nigeria and other stakeholders in the pay-TV industry have rejected a proposed pay-per-view subscription model.

Almost all the stakeholders that made presentations at a public hearing on ‘Pay-TV Hikes And Demand for Pay-per-view Subscription Model’, organised by a Senate Adhoc Committee chaired by the Deputy Chief Whip of the Senate, Senator Sabi Abdullahi, said the pay-per-view model was not in the interest of consumers, adding that it will further hurt the economy.

Speaking at the public hearing, the chief executive officer (CEO) of Multichoice Nigeria, John Ugbe, said for the past 27 years of their operations in Nigeria, the free market economy is not favourable to pay-per-view subscription model.

Ugbe, who said they operate within the framework of the business environment in Nigeria, said Pay TV operators, just like others, should have the freedom to determine their prices.

“Pay television services compete with other services for subscribers’ disposable income, including existing broadcasting services (public, commercial free-to-air and other pay television services), and other entertainment services, such as YouTube, Facebook, cinemas, video rental outlets and DVD retailers.

“The demand for pay television services fluctuates and is very sensitive to the price a subscriber has to pay and affordability factors. For example, demand may be higher during December when subscribers have more discretionary income or are willing to spend more on entertainment and lower during other periods in the year, i.e we see subscribers switching off the service in January when children go back to school and school fees have to be paid. This places constant pressure on MultiChoice to always be price-sensitive.

“If the subscription fees are either too high or too low, the pay television service will fail. If the subscription fees are too high, the subscribers will unsubscribe, or will not subscribe in the first place, and the business will be unable to gain the critical mass necessary for its survival. Similarly, if the subscription fees are too low, the business will be unable to cover its expenses and will inevitably go insolvent.

“In determining subscription fees, MultiChoice takes into account many factors, including inflation, increasing input costs, ever escalating costs of technical upgrades, the impact on subscribers and the exchange rate fluctuations.

“The costs of satellite pay television are massive, ongoing and increase, rather than decrease, with time. Due to the current adverse economic situation, some of these factors which we discuss in detail below have over the years negatively impacted our cost of doing business and have put us under very challenging conditions, ” Ugbe said adding that MultiChoice has made immense contributions to Nigeria’s GDP from FY2014/15 to FY 2020/21.

“The aggregate economic impact over the past five years is estimated to sum to around $2.5bn. By March 2021, it had rolled out the GOtv network across all six geo-political zones of Nigeria, providing coverage to close to 5 million Nigerians.

“With a total of 81 transmission sites, the cumulative spend on transmitter sites alone amounts to N25 billion, 69% of which was spent locally. MultiChoice has provided decoder subsidies to its customers worth N32 billion over the last 5 year period. It has further supported the government’s efforts in educating the public about digital migration and has run a digital migration themed marketing campaign across the country,” he added.

Also speaking, a former NBC DG, Emeka Nba, said a pay-per-view (PPV) model is not the same and is very different from pay-as-you-go (PAYG) model.

“The PPV model allows a subscriber to watch some special one off events, usually of the high-ticket variety in sports and entertainment, by paying for such events in addition to having an active subscription. Pay-As-You-Go accommodates a metered mode of service, where consumers are billed only for the service they consume and not for a fixed period.

“The desire by this Committee to adopt PPV is further challenged by the nonexistence of any technology that can detect and or determine the viewers are tuned in per time. Once it is impossible to have this knowledge, billings based on “per view” become difficult if not almost impossible,” he said.

Making his presentation, the CEO of Billsbox Services, Dr Monday Michaels Ashibogwu, said the assumptions around PPV being better were incorrect and are underpinned by a misunderstanding of the model.

“The simple definition of PPV is a system under which a viewer is required to pay a certain fee for viewing special programmes such as live events or sports. The programme is broadcast at the same time to everyone subscribing to PPV service. Examples of content available on PPV include big-ticket boxing, WWE, UFC

“Pay-Per-View (PPV) means the viewer pays for only what is watched at a fixed broadcast time. The addition of PPV to a package grants viewers access to programmes on a pay per view basis. In fact, this means that viewers purchase individual programmes they desire to watch on a specific PPV channel. The payment is specifically for a programme, show or event.

“Most prominent of PPV offerings are sporting events such as WWE, boxing UFC and other live event shows. That the programmes are broadcast live means that they run on at a fixed time and are not subject to the control of the television package owner, who is more or less a vendor. PPV is essentially a pay as you use feature that is added on, upon payment for specific content, to a pay television package. It is a stand-alone.

“While it is commendable that the Senate cares about consumers, there must also be empathy and care for businesses. It will do the country no good for foreign investors to get the feeling that an arm of the Nigerian government is an adversary of investors. It is our hope that your investigation will throw light to the market realities, regulatory framework and international best practice, “Ashibogwu added.

The Coordinator, Nigerian Viewers Collective, Mr Anthony Iyare, said Nigeria must desist from inflicting further pains on the economy via strangulating the operations of Pay-TV operators.

“We are aware that inflation in the country is now over 20 per cent, the highest in 17 years. The content which they offer is bought in dollars and there has been a geometric drop in the value of the naira to the dollar. Government itself has increased the prices for almost all its services.

“The prices of services and consumer goods, including household ones, have risen astronomically and continue to do so in the last three years. Local and international economics dynamics are responsible.

“Pay TV service providers are not insulated from economic vagaries. Even the government, part of which the esteemed committee is, has raised the pump price of fuel. Diesel and aviation fuel prices have shot up beyond belief.

“The broadcast sector, which includes Pay TV companies, was ignored when palliative measures given to other sectors at the time Covid-19 came to shred finances. For them to remain in business and to continue to maintain the same standards or improve on such, requires them to charge rates that reflect economic realities. Pay TV service providers are victims as much as their subscribers or customers,” he added.

The Senate adhoc committee chairman, Sen Aliyu Sabi Abdullahi, said they don’t want to undermine the freedom of the Pay-Tv, but that in a span of six years, their tariff has increased by 55 per cent.

“We need to have price regulation. Price increases need to be regulated. NBC from all intent and purpose are the problem of the country when it comes to pay TV,” Sabi said.

Senate president, Ahmad Lawan, who was represented by the Senate leader, Abdullahi Ibrahim Gobir, said Nigerians will always go for services that are good and affordable.

Sen Abba Moro, who moved the motion on the floor of the Senate, said the public hearing was prompted on the fact that the pay TV especially the DSTV needed to be considerate in their services