Introduction:

Multichoice, a leading media company, is intensifying its focus on Showmax, its streaming platform, as revealed in its annual results for the year ended on March 31, 2023. The company has chosen not to issue dividends to shareholders and instead plans to invest further in Showmax. Multichoice aims to establish Showmax as the leading streaming platform in Africa, forming strategic partnerships and setting ambitious revenue and growth targets.

Showmax 2.0 Partnership and Expansion Plans:

Multichoice recently announced a partnership with US media giant COMCAST and UK counterpart SKY to create “Showmax 2.0.” Leveraging Peacock’s technology and a vast content library, including local and global content, the platform aims to rival global streaming giants like Netflix and Disney+ as well as African platforms. Showmax 2.0 is expected to launch in the second half of the 2024 financial year.

Investment Strategy and Future Projections:

Multichoice is committed to making Showmax the largest streaming platform in Africa. The company projects reaching $1 billion in revenue within five years and achieving trading profit breakeven by 2027. Ambitious targets also include a 25% EBITDA margin and 20% free cash flow margins at scale. Multichoice aims to triple the growth of the platform by 2032 and increase content production tenfold by 2033.

Financial Impact and Shareholder Response:

To support its Showmax ambitions, Multichoice continues to allocate significant funds to the project, impacting its margins, which contracted by 7% during the past financial year. Shareholders have shown understanding and support, leading to a marginal increase in the share price after the annual results were announced. However, the share price has decreased by 38% over the last four months, highlighting concerns amidst challenges in the core market and new product offerings.

Potential Challenges and Opportunities:

Multichoice faces challenges, including a decline in its core offering, DStv, subscriber numbers, shareholder disinterest in opex-heavy products, and macroeconomic difficulties in South Africa. In response, the company may consider a potential acquisition offer from French media giant Canal+, which has steadily acquired Multichoice’s ordinary shares. Showmax’s success is crucial for Multichoice’s future prospects, as indicated by the company’s emphasis on the platform’s growth and the limited mention of DStv in its financial results.

Conclusion:

Multichoice’s annual results highlight the company’s strong commitment to the growth and success of Showmax. By postponing dividends and prioritizing investments in the streaming platform, Multichoice aims to solidify its position in the African streaming market. The company faces challenges and must navigate tough market conditions, but Showmax’s performance will likely play a significant role in determining Multichoice’s future trajectory.