Showmax sees strong growth while still making losses

MultiChoice’s annual results for the year ended March 31, 2024, paint a positive picture, particularly for their streaming service, Showmax. The platform achieved a significant milestone, reporting revenue of R1 billion for the financial year, representing a robust 22% increase compared to the previous year.

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This growth comes on the heels of a pivotal year for Showmax. After finalizing their partnership with Comcast in April 2023, the highly anticipated relaunch of the platform took place in February 2024. Despite concerns surrounding the relaunch timing, Showmax’s performance has been encouraging.

While trading losses did increase to R2.6 billion, this figure fell below the projected range of R3 billion to R4 billion. MultiChoice attributes this positive variance to a strategic shift, with some operational expenditures and depreciation planned for the launch being deferred to FY2025.

The relaunch of Showmax, facilitated by the Comcast partnership, appears to have been a success. This is evidenced by the platform’s ability to compensate for the discontinuation of the higher-priced Showmax Pro service, which previously enjoyed a higher average revenue per user (ARPU).

MultiChoice itself acknowledges the early traction Showmax has gained since the relaunch. They report record subscriber growth achieved in March 2024, with the paying subscriber base expanding by an impressive 16% compared to the migrated base at the time of relaunch. Interestingly, revenue from Showmax subscription fees only saw a modest 1% year-on-year increase.

Further highlighting the success of the relaunch, MultiChoice emphasizes several key metrics related to the post-relaunch subscriber base. Notably, they report a 100% migration rate, indicating all subscribers successfully transitioned to the new platform and subscriptions. Additionally, an impressive 88% of migrated users remain active and continue to pay for the service, demonstrating strong customer retention.

Looking ahead, MultiChoice’s vision for Showmax is ambitious. Their long-term goals were previously outlined by former MultiChoice connected video boss, Yolisa Phahle, in late May 2023. Phahle projected R18 billion in net revenue for Showmax within five years, coupled with a targeted EBITDA margin of 25%. This ambitious vision is further bolstered by MultiChoice’s own targets, aiming to generate revenue exceeding $1 billion after five years and achieve a trading profit breakeven by the end of full-year 2027. Phahle’s comments also highlight the growing recognition of Africa as a prime market for SVOD services, a view shared by MultiChoice. With Showmax 2.0, they aim to capitalize on this opportunity and establish themselves as the leading streaming platform in Africa. The platform’s successful relaunch, coupled with strong early traction and ambitious future plans, suggests Showmax is well-positioned to achieve its goals and become a major player in the African streaming landscape.