The impact of over-the-top television services on pay-television subscription services in South Africa

Abstract

Globally, developments and innovations in television technology, including the launch and growth of over-the-top television services (OTT TV), have affected traditional pay-TV operators' ability to grow a subscriber base and retain existing customers. In South Africa, the Independent Communications Authority of South Africa (ICASA) commissioned an inquiry into the state of competition in the pay-TV sector to understand consumer behaviour concerning television broadcasting and video-on-demand services. Its preliminary findings revealed that the impact of OTT TV on pay-TV services was minimal, owing to the unavailability of affordable and quality broadband data. However, South African pay-TV operators such as MultiChoice, who owns DStv, argued that the survey commissioned by ICASA was invalid, as its survey questions did not address a direct assessment of the market definition. Moreover, it ignored the impact the OTT TV services have on pay-TV services, which include cord-cutting, cordshaving and a growing number of cord-nevers. Therefore, in the absence of a comprehensive assessment and credible evidence, this research study's main objective was to ascertain the impact that OTT TV services have on traditional pay-TV services in South Africa. A quantitative research method was adopted using a non-probability sampling technique for data collection. A total of 391 responses were collected utilising an online survey questionnaire and analysed using descriptive statistics on IBM® SPSS® version 26. The main findings of the study showed that OTT TV services are a complementary service to pay-TV services as opposed to a substitute. The results suggest changes to TV consumption, in that more TV consumers are binge watching and streaming content online. Furthermore, the smart TV is the preferred device for TV consumption, and more than five hours a day are spent online consuming TV content, especially by male respondents. Low-income earners are using free/paid mobile applications to consume TV content, and the sharing of OTT TV logon credentials with family and friends is prevalent across all demographic groups. For those who have neither OTT TV nor pay-TV services, free-to-air services are the preferred platform for TV consumption. Renting out sports rights to OTT TV competitors would contribute to pay-TV operators' revenue. Contributions to research funding in this field would benefit all the affected stakeholders. ICASA should put measures in place to regulate the sector. This study benefits all stakeholders in digital media and business strategy, as well as marketing students.