MultiChoice’s strategy to make Showmax its growth engine and reach revenue of $1 billion and 16 million active subscribers failed spectacularly.

MultiChoice has been punting Showmax as a core component of its growth strategy. It budgeted billions to make it the leading streaming service in Africa.

In May 2023, former MultiChoice executive Yolisa Phahle stated that Showmax was poised to generate R18 billion in net revenue within five years.

She added that they expected to achieve an earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin of 25%.

MultiChoice said Africa was the final frontier for subscription video-on-demand (SVOD) growth, which is why many international players are targeting the continent.

Despite increased competition, Phahle was confident that Showmax could become the leading streaming service in Africa.

Although Showmax was well behind Netflix in subscribers, Phahle argued they have a competitive edge over their international rivals.

By partnering with Comcast and through its planned product offerings and pricing, MultiChoice expected a step-change in customer numbers in the future.

“Speaking to affordability and content preferences of African customers, we expect to have three times more customers than initially envisaged,” she said.

To facilitate this growth, MultiChoice increased its investment in the Showmax platform and local content.

MultiChoice expected Showmax to exhibit a similar 3- to 5-year J-curve to its global peers in the streaming industry.

“We are aiming to generate revenue of more than $1 billion after 5 years, with a trading profit breakeven target in full-year 2027,” she said.

“We are targeting EBITDA margins of 25% and free cash flow margins of around 20% at scale.”

To generate this revenue, it will need to have around 16 million active subscribers paying an average of R99 per month.

MultiChoice was so bullish it stated that the streaming platform would help it reach a combined DStv and Showmax subscriber base of 50 million users by 2028.

Reality sets in for MultiChoice and Showmax

To achieve these lofty targets, Showmax had to experience exponential growth between 2023 and 2028. This did not happen.

Showmax was relaunched in 44 African markets in February 2024 with new branding, packages, and plans.

“We believe now is the right time to double down on Showmax as broadband connectivity and affordability are approaching an inflexion point across Africa,” it said.

In 2024, MultiChoice spent R1.7 billion in platform advances to customise the Peacock platform for the Showmax instance in Africa.

It was ready for the rapid growth of Showmax 2.0 following its relaunch and rebranding. However, this growth never materialised.

Instead of the exponential revenue growth needed to reach its $1 billion target, there was a decline in paying subscriber revenues in the 2025 financial year.

What was even more painful for MultiChoice was that there was an 88% increase in trading losses in the last financial year.

The 44% growth in paying subscribers, which included lower-priced packages, was insufficient to increase revenue, and the losses are mounting.

In the 2025 financial year, Showmax reported trading losses of R4.9 billion, up from R2.6 billion the previous year.

Many investors raised concerns about the substantial investment required to relaunch the Showmax business.

They referred to MultiChoice’s R12 billion multi-party term loan facility to fund its working capital and to support the re-launched Showmax business.

“Lenders are concerned about the impact of the Showmax funding requirements on our loan covenants,” MultiChoice said.

The company promised to scale the business while managing costs and funding requirements to navigate the investment curve and reach breakeven.

MultiChoice’s latest results showed that this did not happen, at least not over the last financial year.

The MultiChoice management team missed its Showmax targets by a country mile. “Subscriber growth and revenues were well short of the 2025 targets,” it said.

It was clearly time to rethink the Showmax strategy, as the results fell far short of what MultiChoice had promised the market in 2023. (MyBroadband)