1st November, 2013
Nico Meyer, CEO, MultiChoice Africa, sheds light on the company’s activities in Nigeria
How would you assess your operations in Nigeria?
We have been operating in Nigeria for the last 20 years. That is because our philosophy is partnership. This has worked very well in Nigeria. In terms of employment, we have a further philosophy of employing local management and local staff to ensure that we are able to get a proper understanding of what happens in a country. It is wrong for us to stand back and assume that the entire continent is the same. This is because each country has its own peculiarities. From the investment perspective, we have done a lot in 20 years. We have set up multiple offices and we have been running the satellite business. The satellite business creates employment opportunities, both direct and indirect. You have installers, the informal retailers and sellers as well as the super dealers.
Running an operation like MultiChoice Nigeria creates a lot of opportunities in the country. Over and above that, we have also developed the industry quite significantly. Let’s take content development, for instance. We have set up studios in the country. The setting up of studios has provided a springboard for new content development. This has helped Nollywood and assisted the export of its products to the other parts of the continent. We have invested in studios like the M-Net Studio and the Supersport Studio. We also have plans to expand the studios to ensure the set-up is much bigger.
In technology, we are very proud of what we have done. We started way back in the 90s with digital satellite TV. That was a springboard for digital migration. It was our foundation to bring in digital content to Nigeria. It is important for us to be leaders in technology. That is why we bring the best technology to any country where our services are offered. We invest heavily in new technology.
We have adopted DVB-T2 standard, which has proved to be the leading technology. We have also brought products like the PVR, which allows our consumers to record content. We have similarly invested heavily in networks. We have launched our mobile services in Nigeria and we continue to set up terrestrial sites all over the country to bring in new technology and make things easier for the consumers to consume content. There are a lot of things we have done over the last 20 years and we continue to improve in terms of our service delivery. We have continued to expand our call centres as well as introduce improved payment methods. We appreciate that it is sometimes very difficult for somebody to get to a particular pay point to pay for our service. One thing that is true about Nigeria is the propensity of people to use mobile devices. I am not just talking about smartphone devices, but also audio devices. So, we have been working hard to make payment easier for consumers. This, we are doing along with InterSwitch so that people can make mobile payments. Our drive has always been to make things easier for the consumer and I think we have been relatively successful in achieving that.
It is believed that the cost of subscription is higher in Nigeria than in other parts of the continent. Why is this so?
I want to use a very good example. Let’s take a decoder which we import into Nigeria. I want to contrast that to, for instance, with East Africa. In East Africa, we want to promote the digital migration. For that, we were exempted from paying import duties on decoders. For the decoders that we bring into Nigeria, we pay 20 per cent import duties. So, you can see the difference. You can see the challenge that I have. On one product, I pay 20 per cent in one country. On that same product in another country, I pay nothing. We have always been keen to work with government. We say to them, for instance, If we are going the way of digital migration, consider also exempting us from import duties. Our business is not the sale of hardware. In fact, we very often would subsidise hardware going into various countries because our business is really about content. So, using that example, you can understand that I have a challenge with what is particular to a country. Now, there are many other taxes. But it is important to us to bring the price to a level that is attractive to the consumer. As such we don’t have a single price across the continent. We look at all these different dynamics in determining the price. But the price in Nigeria, talking about subscription, is not high. We have been working to keep the price low. One thing I think is very important is content. I buy local content and I also buy international content. International content obviously comes with a price. All these are brought into the offering that we bring to the consumer.
Shouldn’t the price of your subscription be lower in Nigeria, given its huge population of subscribers?
Let’s take CNN for example. I pay per subscriber. If I have a hundred subscribers on this side, I will pay for the hundred subscribers at the same rate that I will pay for, let’s say, 10 subscribers elsewhere. So the fact that we have a much bigger size somewhere does not necessarily mean much. It is not the case that Nigeria will attract a much higher fee per subscriber. Those fees are still the same. The import of a product is almost like a one on one relationship. If I bring decoders into and Nigeria, a much bigger market, I will bring many more decoders into the market. But each decoder still attracts import duty.
I think the benefit we have in Nigeria is that when you a large subscriber base, some of the overhead costs incurred in the country get reduced. The cost per subscriber is comparatively less in Nigeria than in smaller countries.
In what country do you have the largest number of subscribers?
We have completely separated the South African business from the African business. We have completely separated the CEOs. We have a separate CEO for the African business and another for the South African business. We even use different satellites to service the two different businesses. So, the two core structures are completely separated. There are some commonalities like the billing system, but it is quite limited in terms of common cost that we have for the two businesses. The content in Africa is also different from the content we broadcast in South Africa. So we look at the African business as a separate leg from the South African business. Though they have common shareholders, they are completely separate.
Now, in terms of which of the 50 countries that we operate is our largest market. It is simply determined by the number of consumers that we have in each country. Nigeria is a very big market for us, so we focus on the country. A lot of our investments actually goes to Nigeria. That is why, in terms of studios, it is where our biggest investment lies. In term of network roll-out, that is where we put the most money. I think the fact that we have been in Nigeria for the past 20 years shows that we believe in Nigeria and that is why we continue to invest in the country.
For a long time, you had the field all to yourself. Now the Chinese are here with StarTimes. What do you make of their arrival?
I have always welcomed competition and it is a crazy statement to make. What it does is that it makes the industry grow up and that is what we are interested in. The more the players, the more the market and the more opportunity it is for growth in the country. Competition makes the quality of content grow. That is hugely beneficial to us. If you have a very small industry, it is very little content that comes out of it. Competition actually helps the industry to grow and that is exactly what is happening in Nigeria. Nollywood content is growing, so we started AfricaMagic. As it grew, you saw other operators coming on stream and even content providers. It started in Nigeria and now we’ve taken it to the continent. The vision we have is to take around the globe. The stronger the content, the better the industry.
We have the PVR technology which allows you to record content. We are also going to bring Box Office to Nigeria. Box Office is not only going to be international content; I also want to take the best of Nollywood and also put that into the offering. This, again, gives content producers the opportunity to continue to expand. This is what helps the industry to become stronger.
Many are of the view that you launched GOtv as a response to StarTimes
Let me talk a bit about our strategy. If you look back, when we launched our satellite service, it was perceived to be catering for the higher end of the market, with the price ranging from $70 to roughly $100. But there is big component of the market which we still want to address and that component is the low end of the market. It desires a more affordable product, a product much easier to install. I think our plan around GOtv is to make available much affordable product and one that is easier to install. This product will address a much bigger slice of the population.
How is your organisation coping with the piracy of its content?
Piracy is something that has been there for a very long time and we are aggressively fighting it. Piracy has evolved over time from the approach of simply connecting a cable to the highly sophisticated system used to distribute pirated signals. It is quite prevalent in the market. The distribution of pirated signals has also evolved over time. Now, it has started on mobile devices. But as the pirate has evolved, so have we and we are aggressively attacking what the pirates bring to the market. I think the important thing to understand is that piracy is really bad. It is bad for the industry because if you have piracy in a particular market, it will completely destroy the broadcasting of content in the market. This is because producers will produce content, but will never be able to monitor the content because that content will easily find its way unto a pirate network. And if all the content is for free, it will completely destroy the industry that we actually want to grow. It is fundamental for us to conquer piracy.
Piracy is almost like a game. It flares up, we bring a counter-measure and it dies down. But again, it flares up and it dies down. What is important is the counter-measures we adopt.
In Nigeria, movie producers have had cause to complain that they do not get what is due them from the screening of their films. How are you handling this?
I think the fact that you have seen how AfricaMagic has grown shows you how this has been addressed. We continue to get more and more content from producers. I think producers are very comfortable with working with us in terms of producing content and making it available on our platforms. We have many platforms and as such, they have more opportunities to bring content.
What has your company done in terms of Corporate Social Responsibility?
MultiChoice Nigeria is a strong supporter of the Sickle Cell Foundation – Nigeria. We have done many things in terms of giving back to the society. The biggest one is the Multichoice Resource Centre, MRC, project, which we have built in schools and have trained teachers to use them. We have built over 300 of such in 21 states. We also provide content, instructional materials, television sets and TV recorders to ensure that the children learn. Channels like Discovery Channel and History Channel are provided within a framework to enable the training of teachers as well as to get the children educated.