Factors That Determine Pay-TV Pricing…

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By Olalekan Bilesanmi
VIEWPOINT IN BRIEF: No immunity on the cost of production…

Debates around subscription for pay-television services in the country are always impassioned. The widespread belief is that pay-television services are too expensive, particularly when operators increase prices for their services. MultiChoice, owner of DStv and GOtv platforms, is the biggest pay-television operator in the country.

On account of the quality of its offerings, it has the largest number of subscribers. While there is no debate about the quality of its programming, consumers tend to think its services should be less pricey. For any pay-television operator, programme content plays a central role. In choosing between distributors, consumers base their choice largely on the programming available from each one. In particular, highly attractive ‘premium’ programming, especially live coverage of popular sports events and recent Hollywood movies, drive consumer choice.

Compelling content, however, is not cheap. Contracts for the rebroadcasting of such attract astronomical sums, especially when they are about to be reviewed. Content owners, knowing the value of what they have, ask for more money for rights to such any time they want to review the contracts. This leaves pay-television companies at their mercy. To remain in business, pay television operators periodically must review their prices. This, naturally, never sits well with their customers. It is the major reason MultiChoice comes under fire.

Subscribers also tend to ignore the fact that pricing is affected by operational costs, government regulations and the economy. For three years on the bounce, prices of goods and services in the country have continued to rise astronomically. The weakness of the national currency against the dollar, the international currency of business, has continued to make things difficult for companies who import. Television content, including the popular Nollywood films, is paid for in dollars, leaving pay television operators exposed to the volatility of exchange rates.

The same fate, of course, is suffered by other sectors and even those who source their input locally, as prices of other commodities affect theirs. The prices of toothpaste, detergents, alcoholic beverages, fish, meat and other commodities have been adjusted many times in the last two years. Pay-television companies are not immune to what other sectors endure and therefore, have valid reasons to raise prices when the need arises. Three years ago, StarTimes increased prices twice in one year, following its acquisition of broadcast rights to an important sporting content.

Without doing so, it would probably have folded, throwing many into the labour market. In 2015, MultiChoice’s decision to increase prices created a storm of immense proportions, partly because of an unsubstantiated and widely circulated claim that its Nigerian subscribers pay more than those in other countries where it operates. Can pay-television companies ignore economic realities, including those of the eco-system in which they operate? Not a possibility. Market conditions would always be major determinants of pricing.

They partly explain why Nigerians pay $40.78 for DStv Premium, $27.46 for Compact Plus and $17.48 for Compact, while subscribers in Zambia pay $80.83 for Premium, $46.04 for Compact Plus and $30.69 for Compact. Ghanaian subscribers pay $75.09 for Premium, $44.37 for Compact Plus and $28 44 for Compact. In Zimbabwe, the prices are $62, $40 and $25 respectively. If any of these markets are affected by foreign exchange volatility, as most likely, it would be impossible for any business to keep prices the same.

The post Factors That Determine Pay-TV Pricing appeared first on Vanguard News.

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