Pay TV Operators Defend Subscription Fees’ Hike

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As Nigerian businesses battle tough economic conditions brought about by the Covid-19 pandemic lockdown, inflation, naira devaluation, VAT increase and a host of other factors, consumers are beginning to feel the pain of paying significantly more for essential commodities and luxury goods and services.

MultiChoice Nigeria, the country’s leading Pay TV operator recently notified customers of an increase in the subscription price of its DStv and GOtv packages which becomes effective from September 1, 2020.

The adjustments, according to the company, would only affect the packages in the upper tiered premium, compact plus and compact packages with about 13 per cent change, while the prices of other packages Confam, Yanga and Padi in the lower cadre remain unchanged.

According to Multichoice, the high cost of operating its business in Nigeria has increased significantly in recent times due to several unfavourable economic factors which include: naira devaluation, the effects of COVID-19, inflation at 12.82 per cent and increase in VAT to 7.5 per cent.

“We periodically review our pricing, taking into consideration factors such as inflation and operational costs. We acknowledge that the people of Nigeria are living under increased economic pressure and we have made efforts to freeze the subscription prices in the last year, barring any extreme factors such as devaluation of currency and changes to VAT mandated by the government,” the company said in a message to customers,” he explained.

Similarly, Startimes, the nation’s second biggest Pay TV operator, also raised prices of its subscription plans by an average of 22 per cent effective August 1, 2020.

In explaining the price increase, Startime’s Brand and Marketing Manager, Viki Liu, said it was due to increased value-added tax (VAT) from five per cent to 7.5 per cent, as well as the foreign exchange rate which has impacted its cost of operation.

“Our business is not exempted from the effect of the naira depreciation affecting all businesses in the country. All of our foreign content is bought in dollars and to continually serve our subscribers the best content, the subscription price has to be reviewed upwards,” Liu added.

Factors such as inflation, devaluation and slowed economic growth in 2020 have been threatening the survival of businesses in Nigeria, and forcing organisations to either take the hard decision of reviewing their prices to maintain a balance amid the turbulence, or lay off hundreds of workers to trim down their wage bill as running costs take the larger chunk of revenue.

Between April and July 2020, some organisations have laid off employees to sustain their businesses.

According to the 2020 Half-year Business Insights report by Naspire, a Lagos based research company, this was largely due to the pandemic and the reduction in major sources of revenue for traditional media (advertising, events set-ups and circulations) which have led to significant drop in media cash flows.

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