MultiChoice, the pan-African broadcaster that reported $131m in revenue in 2022, has invested R500 million (~$27 million) in Showmax, its streaming service, ahead of a late-2024 relaunch. This is according to a statement the company released on the Johannesburg Stock Exchange on November 9. Showmax 2.0 will launch on a specialised technology platform on the US streaming service, Peacock, according to the company’s filings. “It also incorporates the higher investment in Showmax, primarily related to dual platform costs that will normalise once customers have been migrated from the current platform to the new Peacock platform,” MultiChoice said. The company will pay R247 million (~$13 million) to license the use of that technology for seven years after Showmax 2.0 launch.

Increased investments into Showmax will reduce trading profit by as much as R1.3 billion (~$70 million) as the company releases half-year results next week, MultiChoice told its shareholders. Other expenses including a 16% increase in local content investment, also contributed to the trading losses. The company’s share price, which is down 43% year-on-year, fell by as much as 5% after the announcement. The company’s half-year results for the period ended September 30, 2023, will be released on November 15.

Key Takeaways

MultiChoice invested a further R500 million (~$27 million) into Showmax revamp.

The investment contributed to a projected R1.3 billion (~$70 million) loss in trading profit in the first half of FY2023.

Showmax 2.0 is scheduled for launch in the second half of FY2024. 

In April, Multichoice announced a partnership with US media giant COMCAST, owners of NBCUniversal, and its UK counterpart SKY to create “Showmax 2.0”. Showmax 2.0 would be a new platform powered by Peacock—70% owned by MultiChoice and 30% (stake sold for $30 million) owned by the aforementioned UK and US partners. The first iteration of Showmax was launched in April 2015 and as the platform struggles to keep up with global players like Netflix, it hopes a revamped Showmax might accelerate that process. According to data from research firm Digital TV Research, Netflix is projected to clock seven million subscribers on the continent by 2028 while Showmax will reach just over 2 million.

MultiChoice has big ambitions for Showmax 2.0. It states it wants to make Showmax the biggest streaming platform on the continent, forecasting $1 billion in revenue in five years, trading profit breakeven by 2027, as well as a 25% EBITDA margin, and 20% free cash flow margins, both at scale. Additionally, Multichoice has also bumped up its growth expectations of the platform by a multiple of three by 2032 and content production by a multiple of 10 by 2033.

This is not the first time that MultiChoice has officially announced the impact of the Showmax 2.0 investment in its operations and shareholders. In its annual results released on 31 March, the company announced that it would withhold dividends to shareholders to make further investments into Showmax.