Pay TV service providers point to the rising cost of doing business as the main driver for the increase in subscription prices. PHOTO/ EDGAR R BATTE
When Doreen Anyijukire received a GOtv message on September 16, she thought it was another random text.
Yet, in there, was an unusual notice of a price adjustment - another in just months.
She had only received a similar text in March, informing her of a price adjustment upwards of her GOtv Supa package from Shs65,000 to Shs69,000 effective April 1. Therefore, she wondered why within a space of only seven months there would be another increment.
In a conversation early in September when the adjustments were announced, Anyijukire said: “GOtv needs to stop”, suggesting that “subscription rates cannot be adjusting - [albeit upwards] - all the time”.
This is not unique to Anyijukire. It is a well shared suggestion among different subscribers, many of whom have voiced the same, especially through social media.
Sanyu Zimbe lives in Muyenga, Kampala, and just like Anyijukire, wonders why MultiChoice can’t find a pricing model that doesn’t seem routine.
She is a subscriber on GOtv, paying for the Supa Plus package, whose subscription was through a three-month promotion ending November 10, reduced from Shs110,000 to Shs90,000.
On October 1, MultiChoice increased package prices across GOtv and DStv by an average of 2.8 percent.
It was the second time the prices were being adjusted upwards, coming from an average increase of 5.7 percent just in April.
Thus, the new rates meant that Anyijukire, who subscribes to the GOtv Supa package, would increase to Shs71,000, from Shs69,000.
Price adjustments - across DStv and GOtv - have been moving northwards in the last two years, returning an incremental gross of between Shs15,000 and Shs20,000.
For instance, GOtv Supa has in the period increased by Shs16,000, rising from Shs55,000 in April 2022 to Shs71,000.
The adjustments are not unique to MultiChoice, but the frequency with which they come appear to be a pain point for some subscripbers.
On average GOtv and DStv subscription prices for some packages have been adjusted twice each year in the last two years to October 2024.
However, MultiChoice says the process of defining subscription rates takes into account several commercial, economic, and strategic factors, including, “cost of our satellites and distribution equipment, acquisition of local and international content, infrastructure and monitoring services”, which keep adjusting.
In an emailed response to questions that sought to understand why price adjustments had become frequent, Mr Rinaldi Jamugisa, the MultiChioce public relations and communications manager, told Daily Monitor that when designing pricing, a lot of costs are compressed into the final consumer price, putting in consideration both micro and macro-economic factors such as inflation and currency fluctuations.
“We charge customers for each package the fair value for the channels they receive. Some channels are superior and carry exclusive, first-run content, which is very expensive, ” he said.
Thus, he notes as a result of a surge in cost of doing business across Africa, “we need to adjust the prices of our packages” to offer customers the best content.
The pay TV subsector is regulated by Uganda Communications Commission (UCC) and recent data shows a sector that has been growing, but has recently lost some good numbers.
It is not clear why, but suggestions indicate pricing challenges and the increasing penetration of the internet.
A UCC report published mid last month, which measures the performance of telecoms, post and courier services and broadcast and , shows that as of June 2024, there were 1.4 million pay TV subscribers, which was a decline of almost 70,000 customers from 1.47 million registered in March 2024.
The decline seems to be consistent, with UCC data showing that pay TV subscribers had by March 2023 grown to 2.4 million, largely driven by new additions from DStv, which has a quarterly growth averaging at 140 new subscribers.
However, the report does not go into market share details.
It was not immediately clear how price adjustments impact MultiChoice numbers.
But at the Group level, MultiChoice subscribers had been dropping, reducing by 9 percent to 15.68 million as of March 2024 as mass-market customers in several countries scaled back on subscriptions.
Thus, it is a delicate balance that MultiChoice, just like many other business, especially in media, finds itself in at a time when most businesses and individuals are cutting back expenditure pressures or are shifting to new alternatives enhanced by the internet.
The South African company, which operates in 50 countries across sub-Saharan Africa, has already announced price adjustments in several markets where it operates including in Kenya.
On its part, UCC says while pay TV price adjustments “may appear frequent, they are often driven by various factors that finally feed into the final consumer price.
For instance, UCC says, content acquisition costs, changes in operational expenses, inflation, exchange rate fluctuations, and other macroeconomic conditions, are some of the considerations.
“The frequency is not unusual in industries where costs fluctuate regularly. However, we ensure that all price adjustments are transparent, comply with consumer protection regulations, and are communicated clearly to subscribers,” says Fred Otunnu, the UCC corporate affairs director.
UCC, he adds, also reviews and approves all price adjustments - be it an increase or decrease - before they are implemented to ensure that they align with regulatory standards, safeguard consumer interests, and promote transparency and fairness in pricing practices.
However, whereas several economic fundamentals remain elevated, inflation and currency movements have been less volatile, moving southwards.
For instance, the shilling has strengthened against the dollar since March appreciating from Shs3,850 to Shs3,669 as of close of business yesterday.
Similarly, inflation has in the last three months decelerated, dropping from 3.5 percent in August to 3 percent.
Thus, save for a few goods and services, price adjustments upwards have remained passive for at least three months now and Bank of Uganda projects the trend to continue into next year, which begs the question of why Pay Tvs are increasing prices.
Additional reporting by Dorothy Nakaweesi
PAY TV PRICES INCREASES ARE NOT UNUSUAL - UCC
Some pay TVs have increased package prices at least twice a year in the last two years. Is this a normal procedure? While price adjustments may appear frequent, such increases are often driven by various factors, which include exchange rate fluctuations, and other macroeconomic conditions. The frequency is not unusual in industries where costs fluctuate regularly. However, we ensure that all price adjustments are transparent, comply with consumer protection regulations, and are communicated clearly to subscribers. Do they seek approval for price adjustments from UCC? Yes, they obtain approval before implementing any price increases or even decreases. The proposed prices are assessed to ensure they align with regulatory standards, safeguard consumer interests, promote transparency and fairness in pricing practices. What determines the pricing of a particular pay TV package?- Subscription rates are influenced by several factors, including the cost of acquiring and distributing content, the variety and exclusivity of channels offered, market demand, and operational costs such as infrastructure, licensing, and taxes. Additionally, macroeconomic factors like inflation, exchange rates, and energy costs influence pricing decisions. Pay TVs also consider the target audience and consumer affordability when setting different prices. As regulators, do you look into what is contained in a pay-TV package? We routinely evaluate the content to ensure compliance with relevant laws in Uganda. Why do pay TVs block free-to-air channels once subscription expires? Pay TV providers are required to carry the government channel, UBC, even after a subscription has expired, as per regulatory obligations. However, the continued provision of other free-to-air channels incurs a cost for pay TV providers. Once a subscription expires, there is no financial incentive for pay TV providers to continue offering these channels without compensation. Therefore, they often block access to free-to-air channels until the subscription is renewed, ensuring that their operational costs are covered. UCC Director of Corporate Affairs Mr Fred Otunnu
