In a strategic move aimed at propelling its streaming service, Showmax, to new heights, MultiChoice, the pan-African broadcaster with a reported revenue of $131 million in 2022, has invested a substantial $27 million in the platform. The company unveiled this development in a statement released on November 9 on the Johannesburg Stock Exchange.

Showmax 2.0 is slated for a late-2024 relaunch and will debut on a specialized technology platform integrated with the renowned US streaming service, Peacock, as outlined in the company’s official filings.

MultiChoice emphasized that the increased investment in Showmax is primarily attributed to dual platform costs, which are expected to normalize after the migration of customers to the new Peacock platform.

“We are making a significant investment in Showmax to enhance its capabilities and user experience,” MultiChoice stated. As part of the deal, the company will pay R247 million (approximately $13 million) to license the technology for seven years post the launch of Showmax 2.0.

However, these intensified investments come at a cost. MultiChoice anticipates a reduction in trading profit by up to R1.3 billion (about $70 million), a fact the company disclosed to its shareholders. Trading losses are also Influenced by additional expenses, including a 16% surge in local content investment. The impact on MultiChoice’s share price was immediate, witnessing a 5% decline after the announcement. As the company gears up to unveil its half-year results on November 15, there is heightened anticipation in the market.

This latest financial move follows MultiChoice’s April partnership announcement with US media giant COMCAST, owner of NBCUniversal, and its UK counterpart SKY. Together, they set out to create “Showmax 2.0,” a revamped platform powered by Peacock, with MultiChoice holding a 70% stake and the UK and US partners sharing the remaining 30%.

The original Showmax was introduced in April 2015, and as it faces fierce competition from global players like Netflix, the company is banking on the rejuvenated Showmax 2.0 to accelerate its growth. According to data from research firm Digital TV Research, Netflix is projected to reach seven million subscribers in Africa by 2028, while Showmax is expected to surpass two million.

MultiChoice has ambitious plans for Showmax 2.0, aiming to position it as the leading streaming platform on the continent. The company forecasts $1 billion in revenue within five years, targeting trading profit breakeven by 2027, along with a 25% EBITDA margin and 20% free cash flow margins, both at scale. Furthermore, MultiChoice has revised its growth expectations for the platform threefold by 2032 and envisions a tenfold increase in content production by 2033.

This substantial investment in Showmax is not a newfound strategy for MultiChoice. In its annual results released on March 31, the company declared its decision to withhold dividends from shareholders, redirecting funds to fuel further advancements in Showmax. The move underscores MultiChoice’s unwavering commitment to the success of its streaming service in an increasingly competitive landscape.