The CEO of MultiChoice, John Ugbe, has spoken: MultiChoice, the owner of DStv and GOtv brands, does not have the technology to deliver Pay As You Go (PAYG) in Nigeria. Yes, PAYG is neither technically possible nor commercially feasible. And because those cannot happen, MultiChoice will not offer PAYG as it is impossible at the moment. He made that claim under oath before elected leaders in the House of Representatives Nigeria who are tasked with finding why satellite TV providers have been unable to offer Nigerians PAYG.
He said the Pay- As-You- Go can only be feasible if there is a total and global remodelling of the satellite broadcasting technical and billing architecture, adding the result will be that consumers will have to much higher tariffs to access the service.
“The economies of scale model employed by broadcasters mean that subscribers pay less.
“We are yet to see a pay TV business anywhere in the world that does PAYG in the sense intended here. We do not believe the model is technically or commercially feasible,” Ugbe declared.
He maintained that Pay-Per-View, is however different from PAYG and more expensive, as it entails a broadcaster transmitting a single event at the same time to its subscribers who have paid to watch the event.
“A subscriber who wants to watch an event on PPV is required to pay an additional fee besides his subscription.
“A typical example would be the Mayweather and Pacquiao, and Wilder and Fury II boxing bouts which were retailed on PPV in the United States for $100 and $79.99 respectively.
Mr Ugbe has a tough job to explain to Nigerians that if you have to use Pay Per View or broadly Pay As You Go, the economics changes. If a monthly service plan costs N10,000 for the average of 720 hours in a month, a provider will not accept N30 for your two-hour English Premiership game under Pay Per View. Simply, the cost of that two-hour game could rise to N2,000.
It is the same thing which happens in airline tickets. If you buy a ticket which you are not guaranteed a refund, it is typically cheaper. But if you want one with a guaranteed refund, it costs more since the airline has to actually “preserve” that seat for you no matter what happens.
More so, if you do not allow airtime credits to expire, it will cost more for everyone, since everyone would then be able to spend airtimes, no matter the time, costing the telcos resources. But if the airtime could expire, telcos use probability of usage to reduce the airtime cost for everyone knowing that say 20% of the purchased airtime will not be used. The discount cost on airtime calibrates out the unused airtime.
Pay As You Go or Pay As You View is easy to implement technically. But the problem is when people start complaining that they are asked to pay N2,000 for a two-hour game. So, Mr. Ugbe has to improve his communication on that.
Star Times has unveiled PAYG for Nigerians. So, the technical element is possible, But that does not mean that it is a good business for MultiChoice. If you launch that, possibly, many would just pay for European football and that would do it for them.
At the end, it comes down to having a credible competitor to MultiChoice. Remember the MTN “impossible” per second billing and the pivot when Glo offered it. That is what Nigeria needs – find an alternative, and MultiChoice will adjust. Every other thing is siddon-look.