To the nation’s leading Pay TV operators, a combination of four key factors: VAT increase, COVID-19, naira devaluation and inflation, along with an unbearable spike in operational costs, are majorly responsible for the price adjustments effected by both Multichoice and Startimes in the past few weeks.
Startimes, a joint venture between Nigeria Television Authority (NTA) and Chinese investors recently announced an increase in subscription fees effective from August 1. The company introduced an average of 22% increase across its various bouquets. Startime’s Brand and Marketing Manager, Viki Liu, said: “Our business is not exempted from the effect of the naira depreciation affecting all businesses in the country. All of our foreign content is bought in dollars and to continually serve our subscribers the best content, the subscription price has to be reviewed upwards.”
Just a month after, MultiChoice Nigeria in a message to its GOtv and DStv customers announced an adjustment to some of its subscription packages effective September 1, 2020. According to the company, DStv’s Premium, Compact Plus and Compact packages will see a change of about 13%, while lower tier packages Confam, Yanga and Padi will retain their normal prices.
“We periodically review our pricing, taking into consideration factors such as inflation and operational costs. We acknowledge that the people of Nigeria are living under increased economic pressure and we have made efforts to freeze the subscription prices in the last year, barring any extreme factors such as devaluation of currency and changes to VAT mandated by the government,” the company’s statement reads.
Beyond media and entertainment, however, there have also been significant increments in the prices of foodstuff as well. Speaking on what governments should do to support businesses as the world emerges from the lockdown, Jonathan Lavender, KPMG’s Global Head of Private Enterprise and Head of Markets said, “It has become necessary for governments to introduce incentives and economic relief programmes that help alleviate business stress and bolster economies. Additional financial relief mechanisms include corporate income tax rebates, deferral of government payments, and reductions in tax rates to help owners retain more immediate cash in their business.”
The Nigerian Pay TV market with an estimated 6.5 million customers and the entertainment and media industry, which according to PwC is expected to become a $10.5 billion market by the end of 2023, has also not been spared the impact of the pandemic and other unfavourable economic conditions.
The 2020 half-year Business Insights published by Naspire, a Lagos-based research company, reports that media organisations and pay TV operators have seen a significant reduction in major sources of revenue (advertising, events and circulations) which has led to significant drop in cash flow, leading to exits or divestments, lay-offs, pay cut and increase in prices of some media products and services.
Reacting to the recent news of large retailers exiting the Nigerian market, Tunji Adegbite, a business analyst and founder, Naspire, said: “The ‘exits’ send a negative signal to foreign investors, which Nigeria is in dire need of. Woolworths, Mr. Price, and some other foreign businesses have left while rumours are flying that Multichoice (DStv) is also thinking of pulling out of bidding for the EPL rights for Nigeria. Truthfully, Nigeria is a problematic place to do business. The opportunities may be huge but no investor wants to deal with potential anymore. It is about the reality on the ground. Investment decisions are no longer about ‘how sweet the pot is but also about how easy it is to get meat from the sweet spot’.”