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ZARc - 0.00%Investor briefcase Strategy
Investor briefcase Strategy
Our ambition is to create value for our shareholders on a sustainable basis by leveraging our existing platform to create a broader ecosystem of consumer services. We plan to do this by maintaining a leadership position in our traditional video business, and by capturing the nascent African SVOD opportunity with our global streaming partner. We also aim to support investee companies, KingMakers (sports betting) and Moment (fintech), on their development paths and will consider further targeted investments or strategic partnerships over time.
In an evolving video entertainment industry, a differentiated content strategy is key to long-term success. Our strength lies in our local content expertise, the appeal of our sports offering, our ability to aggregate and connect our viewers to a full-service video entertainment offering.
Our significant investment in local content sets us apart from international competitors at a time when many are reducing their local investment. Like elsewhere in the world, African viewers love to see content in their own languages, with local actors telling stories that resonate culturally. The return on our investment in local content remains favourable at scale , with local content carrying lower currency risk than international content. We believe we have reached a suitable level of run-rate investment in local content following our ramp-up over recent years.
The quality of our sports offering is well recognised. We remain committed to providing our customers with access to the best and most exciting local and global sports events, while at the same time carefully managing the cost of acquiring sports broadcasting rights to ensure suitable returns. We are the largest funder of sport on the African continent and support the sporting ecosystem from grassroots up. Our local production capability is unmatched and is globally recognised by peers and sports bodies for its professional expertise and quality.
Growing and maintaining a vibrant subscriber base remains key to our long-term success as a group, even if short-term macro-economic headwinds saw the group lose linear subscribers in FY24 and FY25. The group grew its DStv Stream and DStv Internet services.
Our linear Pay-TV base forms the foundation for our broader set of strategic priorities and sub-Saharan Africa offers a large addressable market for our portfolio of products and services given a growing working age population, improving urbanisation and electrification rates, and the adoption of mobile connectivity, smart connected devices, and financial services. Our aim is to capture this opportunity through strategic innovation and partnerships in our priority verticals to sustain growth and support customer activity levels, retention, and loyalty.
Our South African subscriber base reflects unique characteristics across the various packaged tiers, requiring us to cater differently for our subscribers' specific requirements and circumstances. Given South Africa’s current economic challenges, we are particularly focused on retention and demonstrating value to our customer base
Implementing inflation-linked pricing and prioritising retention overgrowth are an essential element of the Rest of Africa segment’s short-term strategy to return to trading profit breakeven. Our Rest of Africa markets remain underpenetrated and supportive of sustained growth outside of periodic short-term macroeconomic and currency-led market challenges.
We are developing future revenue streams that are consumer-focused, leverage our scale and local advantages, and are underpinned by scalable technology. We reach over 93m households across 50 countries, understand our customers’ individual needs, can navigate the regulations in the countries in which we operate, and can leverage established supplier relationships and payment and distribution networks.
We have now positioned ourselves in our preferred target verticals with high growth potential through KingMakers (interactive entertainment and sports betting), Moment (fintech and payments) and NMSIS (insurance) with strategic partners in market segments outside of our core competencies, notably Sanlam in Insurance.
Our track record reflects our ability to innovate and adopt new technologies with the aim of catering for our customers' ever-evolving needs. Although there have historically been challenges around broadband access and affordability in our markets, customer behaviour is increasingly moving online and we believe that we are approaching an inflection point in the coming years in terms of broadband availability and affordability. This will support an acceleration in the adoption of streaming services across the continent.
We partnered with Comcast to build on Showmax’s historic streaming success and support the uptake of our SVOD service by leveraging our local content and execution capabilities with the Comcast group’s international content and scaled technology capabilities. We are aiming to become the leading streaming service on the continent as the market opportunity scales by:
Streaming is quickly becoming a consumer preference in developed markets and, notwithstanding necessary refinements to the Showmax business model to accommodate local appetite and adoption rates, the world is not going to walk back from this technology-enabled evolution in video. Our objective, then, is to become the streaming service of choice for all Africans as part of our broader set of video services that cater to the needs of all our consumers.
Our aim is to deliver positive operating leverage through time — keeping the organic growth in our cost base below the organic growth in revenue, thereby supporting group margins and free cash flow generation. We continuously strive for operational excellence and optimising cost efficiencies across our business. From time to time, this may require some upfront investment as we redesign certain critical systems to support our future business requirements and customer needs. We are also scaling our analytics and AI capabilities, focusing on improving customer experience, driving revenue, enhancing content discovery and reducing costs.
Our Advertising business, DStv Media Sales, is one of the leading advertising platforms and partners on the continent. Our aim is to drive revenue market share through our B2B platforms to enhance group revenues and supporting overall group margins and free cash flow generation.
As observed in the ‘risk’ section, digital content piracy is a key challenge for all video entertainment businesses worldwide, given the widespread availability of low-cost connectivity and the use of multiple platforms, such as social media sites, that enable rapid proliferation of piracy. In addition to creating the risk of subscriber churn for video entertainment platforms, piracy undermines the creative ecosystem that enables local content (and local employment) to be delivered to Africa’s households.
Our Technology business, Irdeto, is one of the leading companies globally providing digital platform security, content protection applications and cybersecurity solutions for the media and entertainment industry. In addition to contributing revenue and profit to the Group, we leverage Irdeto to reduce and counter pirate activity across Africa.
Piracy has increased in recent years due to increased Internet connectivity and reduced data costs (including uncapped data packages). We aim to reduce piracy from current levels via a comprehensive approach including technical, legal, and operational activities.
