Consumers are the ultimate winners in competition between service providers

13 January 2017
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It has taken a while to reach South Africa, but, at last, it has finally arrived; Netflix and the disruption it causes. So much disruption that DSTV and M-Net have to change their approach to package-deals. Many DSTV customers bemoan the fact that, to get channel 201 (rugby) for example, they have to purchase the full Premium package, which weighs in at a premium price. However, thousands of customers do not watch sport, and here, Netflix and ShowMax enter the picture.

As more and more people gain access to the internet, they can download all the shows and movies they want to watch at a time when they want to watch them. DSTV’s restrictive packages and repetitive programming are making people look elsewhere for their entertainment. And this is where competition, so often maligned, is stepping in and going to result in lower prices and more options for the consumer.

M-Net’s CEO, Yolisa Phahle, was interviewed recently by Bruce Whitfield on Talk Radio 702. In the wide-ranging discussion, she stated that their “biggest competitors are the Netflixes and Amazons, not other channels.”

When people have good internet access, they need no longer be bound to a lengthy contract; they do not have to pay for a TV license or a dish and other related costs, and they have a lot more content from which to choose.

DSTV can do many things to improve its customer retention rate – chief amongst these is to offer a more diverse range of content, both local and international. Whatever it does none of its plans will work if it does not revise its charges and gives its customers more content choice.

The more competitive the market, the better for consumers. When there is a monopoly, a company can still offer cheap products to its customers, but there is always the danger of complacency and disillusion. The threat of losing revenue is incredibly effective in making a company change its offerings. We will see how this exact process plays out as DSTV reacts to new challenges. Giving consumers more choice of content they actually want will lead to an increase in the number of subscriptions and therefore generate greater revenue for the company.

Of course, not every DSTV customer has internet access. Those who feel they do have an option to leave will still benefit thanks to the competition and disruption caused by the likes of Netflix and ShowMax. These avenues of entertainment are not TV stations/institutions such as DSTV, and they do not have the same infrastructure which DSTV has here in South Africa. They do not need to install terrestrial communication dishes in every home like DSTV. But they do provide excellent service and a wide range of consumer content. Furthermore, with the great expansion we see in fibre to the home products, companies such as Telkom and ShowMax are partnering up to provide discounts and thereby more content to attract new customers. If DSTV were to do something similar with an internet service provider for the Explora decoder, or even a trial period with ShowMax, they could arguably get their foot in the door of a market that craves more and more data and content.

You may not be a data/TV expert, but that is the beauty of a competitive market. There are so many options and permutations that may play out, all because companies must innovate and adapt to convince you, the consumer, that their offer is worth your hard-earned money. Whereas politicians can act with impunity, companies have to make sure they provide a service that offers more value than anyone else. From DSTV to Netflix to Telkom, competition amongst all of these means you, the consumer, are the ultimate winner.


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