Nigerians want DStv to introduce pay per view. This is why it is not a better option

Pay Per View (PPV), Pay-As-You-Go (PAYG) and daily access for Pay TV – they sound good on the internet when we want to nail Pay TV operators, but they are not better alternatives to what we have presently. If there is one thing we know about the plan being suggested by some Nigerians, it is the fact that it is not pocket friendly and not a sustainable model for the operators.

In the past week, there have been increasing calls by Nigerians and the government for a change of the existing tariff plan by Pay TV operators in the country to PAYG. The calls are not new, in fact it is a regular agitation that is as old as a decade. But it gained prominence again last month following the implementation of the new 7.5 percent Value Added Tax (VAT) by one of the Pay TV operators in the country – MultiChoice Nigeria.

In May 2020, MultiChoice announced that the new VAT will take effect on all DStv services from June 1. As expected the notification sent to its customers sparked outrage, what many, however, failed to realise is that the new price regime is not an increment, what the firm did was to implement the 2.5 percent increase in VAT from five to 7.5 percent as contained in the 2019 Finance Act signed into law by President Muhammadu Buhari.

The House of Representatives Ad-Hoc committee investigating the non-implementation of pay-as-you-go tariff plan by Broadcast Satellite Service providers in Nigeria and the Minister of Information and Culture, Lai Mohammed further fuelled the agitation with their declaration operators must switch to the PAYG model.  

The clamor for the abolition of the monthly billing system or the introduction of a Pay-As-You-Go (PAYG) plan has been directed at Pay TV operators in the past by Nigerian subscribers due to reasons such as epileptic power supply, subscribers not spending enough time close to their TV to enjoy what they paid for among other reasons.

Mohammed while appearing before the House of Representatives committee had based his argument for the abolition of the monthly billing system and introduction of PAYG on “epileptic power supply or engagements that take them (subscribers) from one location to the other on a daily basis, thus hindering the viewer satisfaction and access to the services provided.”

Several tweets seen by Neusroom suggest that Nigerians are now divided over the calls for a new tariff model. While some are calling for the introduction of the PPV and PAYG models, many are arguing otherwise and explaining why it is not a good option for the country and operators.

From the online debate, it is evident that there is a misconception about PPV and PAYG, the two models are not the same. PPV allows a subscriber to watch special events by paying an extra fee for the event in addition to having an active subscription. 

According to a Twitter user with the handle @EughinoCortez who gave a detailed explanation of how the PPV model works, “Pay-Per-View is for special events like Elite Boxing, Wrestlemania, UFC and Co that are not shown live on normal satellite TV bouquets.” 

 A check by Neusroom on the website of DAZN (a British over-the-top subscription sports streaming service) revealed that ESPN+ subscribers paid $79.99 (pay-per-view cost) to watch the Deontay Wilder vs. Tyson Fury fight in February 2020. The cost did not cover the monthly subscription, the fight plus a month subscription on the ESPN+ cost $84.98, this indicates that subscribers paid more to watch the fight based on the PPV model.

 This also shows the PPV cost for a fight that didn’t last more than two hours will cover two months subscription of DSTV Premium bouquet (N15,800/month as of May 2020) and four months subscription of StarTimes Chinese bouquet (N6,600/month). From this it is clear that the PPV model is not a good alternative for the Nigerian market as it is being suggested in some quarters.

Those advocating for PAYG just like Lai Mohammed based their argument on the assumption that it will reduce cost, they are also quick to make reference to the telecom sector with the PAYG model. Unlike the telecom sector where operators only make a one-off investment in obtaining a license and spectrum and be assured of recouping their investment, Pay TV operators do not always own the content they broadcast, they go through expensive rights acquisition and development process to get the content they broadcast. If such a model is adopted, subscribers will bear the brunt of the high cost and it will also kill businesses of content creators, operators and other industry players.

The Public Relations Manager of StarTimes Nigeria, Lazarus Ibeabuchi, told Neusroom that his company already operates the PAYW (Pay-as-you-watch) model with daily, weekly and monthly plans.

 “StarTimes already operate the pay-as-you-watch model,” Lazarus told Neusroom.

“And I can tell you it is good for the business and the people.”

Mohammed also made reference to the StarTimes model and said the Chinese-owned company has been operating the mode without running at loss. “Talking about StarTimes, I can inform you, Honourable Chairman, that this Pay TV provider is already operating a PAYG plan on both its DTT (Digital Terrestrial Television) and DTH (Direct-To-Home) platforms in Nigeria,” the minister said.

While making reference to the StarTimes model, the minister did not mention that StarTimes is a Chinese government-owned entity in a joint venture with the Nigerian Television Authority (NTA) which is funded by the Nigerian government. While other operators in the Pay TV industry are in business for profit making, the same cannot be said about StarTimes set up mainly to drive Chinese diplomacy in Africa, it does not necessarily have to make profit since it is funded by the government.

Meanwhile, a few days after Lazarus told Neusroom correspondent about the company’s pay-as-you-watch model, StarTimes also announced a new price regime to implement the 2.5 percent increase in VAT from 5 to 7.5 percent.

“Earlier this year, the Federal Government increased the rate of the Value Added tax (VAT) from 5% to 7.5%. This increase did have an effect on our cost of business but in consideration of customers; plight, we have continued to bear the extra cost,” StarTimes said in a statement on July 10, 2020.

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The statement added: “More recently is the impact of the foreign exchange rate; our business is not exempted from the effect of the Naira depreciation affecting all businesses in the country. Our foreign content is bought in dollars and to continually serve our subscribers the best content, we regret to announce that the subscription price has to be reviewed upwards. Unfortunately, these external factors are beyond our control, we are forced to adjust to the realities before us.”

Since StarTimes announced the price increase, the Minister of Information who has been citing the company as a reference point is yet to make any pronouncement against the move.

In a thread of tweets, a Twitter user with the handle @EughinoCortez warned that what Pay TV operator like DStv is offering Nigerians is wholesale and forcing the company to switch to PAYG which is retail would lead to a spike in the price of subscription.

“The cost of a Tomato when you buy a basket is different from the price when you buy just 3 pieces,” he wrote. “Wholesale Vs Retail. The DSTV price is the wholesale price. Pay-as-you-go will be expensive. SkyTV Daily Pass is £10 = N4880. So as you can see, SkyTV has a Daily Pass that lets you watch for ONE DAY, it costs £10. £10 is almost N5000 for One Day, DSTV Premium is N16, 200.”

He added that “So let’s say DSTV is nice and makes it available for N4000 daily, will you pay? This principle of higher price for small sales quantities is why a hotel room can cost 20k a night while the average MONTHLY (30days) cost of renting a flat could be 80k.”

Popular journalist and social commentator, David Hundeyin, while contributing to the ongoing debate on PPV, argued that if the model is adopted in the Nigerian market, operating incomes of Pay TV operators would almost certainly plunge as consumers use the extra disposable income on other discretionary expenditure. 

“This might on the surface look like it would benefit Nigerian consumers, but in the long run it would force Pay TV operators out of business and cost the Nigerian economy billions in lost productivity and investment. It would mean effectively sacrificing the strategic economic war to win an easy populist battle,” Hundeyin wrote in an article on his Medium page.

From the comparisons with what is obtainable in other nations like the US and UK that are Tier 1 economies (high income nations), it is evident that the PPV model does not fit into the Nigerian market which is a Tier 3 economy where consumers rationale bulk of their income on food and consumables.

Except the aim of the government and those advocating for the implementation of PPV  is to cripple businesses, send investors out of the country and render thousands of Nigerians working in the industry jobless, it is not a good option for our nascent economy.

We may consider the PPV conversation when Nigeria moves into the league of Tier 1 economies, but for now it is immature to do so. We may not be able to say how long it will take to make the move because that is where the government needs to channel its focus and energy.