Faced with the growing competition from Netflix, the CEO of Multichoice, Calvo Mawela declared that Netflix is enjoying an unfair advantage media streaming sector.
Global over-the-top media services provider, Netflix launched in South Africa in 2016. However, the introduction of an alternative entertainment platform has been detrimental for subscription satellite-service operator MultiChoice. Today, OTT video streaming has become the new normal since no one wants to pay a lot of cash for a lot of stuff they don’t want.
Mr. Mawela says that Netflix’s unfair advantage stems from the fact that it doesn’t pay any income tax wherever in Africa the company operates. Whereas Multichoice pays income tax anywhere it operates. Also, he highlighted that very low operational cost to deliver its services in South Africa was another way Netflix was gaining an unfair advantage over Multichoice. He noted that Netflix’s low operational cost was as a result of the company not employing any South African labor (and African labor). Mr. Mawela said;
They do not pay a cent in this country for tax. They do not pay income tax………….(Netflix do not employ locals), that, we think, is an unfair advantage
According to one estimate by MyBroadBand, Netflix has grown to between 300,000 and 400,000 subscribers in South Africa since its arrival.
MultiChoice launched its streaming service, ShowMax, in 2015 to preempt Netflix (by that time Netflix had not yet entered South Africa) and made it available at no extra cost to DStv Premium subscribers last year. But ShowMax is proving not to be in the same league as Netflix. Netflix is not dominating the streaming market just because it got there first. The platform has achieved critical mass and scale, so it has leverage with major studios as well as deep pockets for funding its own original content.
Taxing Over-The-Top Media services in Africa
Many countries are grappling with the same problem of trying to find a way to tax OTT media services because people are having to pay monthly subscriptions using funds that are coming from a country’s respective financial system. Hence, foreign companies are just coming to make money from African audiences but not contributing anything to African economies. Which is unfair.
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6 comments
They should have learnt from face book you a service provider like mtn vodafon did not create their own social media like they did showmax. Bad choices they should have integrated netflix not some bad platform. One word which kills all these iflix feceas
DSTV does not get why pay for premium $120 to get access to showmax plus internet charges when I can pay a few dollers and watch everything for $10 remember when people opted to pay for only channels they want and DSTV said technically it wasnt possible turns out with netflix and tvboxes it is go figure
Welcome to the world of internet growth where new gods are created and old ones are slaughtered.
World economy is changing, and fast because of internet. MultiChoiae needs to find a working internet model, and fast. This habit of finsing excuses is not going to get them anywhere except loosing precious time they must be investing.
People want services cheaper, good quality, readily available everywhere and accessible as well. Excuses and not investingis not an option
Boo hoo, my competitor has a better business model than me, that’s not fair, tax him so that I can continue to charge ridiculous prices for an outdated service.
One of the reasons why DSTV is super expensive is to do with the high costs of Satelite broadcasting. Long term, DSTV is planning to go online and ditch satellite broadcasting. As long as internet costs are still high in most parts of Africa, satellite broadcasting will still be required. Netflix is taking off in S.A due to the low cost of fibre to home internet in the big metros. Multichoice still has an edge though, they have sports and local content which Netflix lacks.
Arent NetFlix paying taxes in US? Its just that they are paying taxes to US not SA in my opinion. The talking point maybe the difference in tax rates. On employment, DStv can choose to reduce operational costs the same route as NetFlix, thats purely a business decision.