MultiChoice revealed that Showmax lost R1.2 billion in the last financial year but would not disclose all historical losses.

Showmax is a core component of MultiChoice’s growth strategy, and it wants to make it the leading streaming service in Africa.

It views Africa as the final frontier for subscription video-on-demand (SVOD) growth and is putting billions behind its streaming plans.

To drive its growth, MultiChoice will relaunch a new version of Showmax powered by NBCUniversal’s Peacock technology platform.

It has partnered with NBCUniversal and Sky to expand its content offering, including live English Premier League football matches.

As part of the partnership, the new Showmax group will be 70% owned by MultiChoice and 30% by NBCUniversal.

MultiChoice’s CEO for connected video and general entertainment, Yolisa Phahle, is upbeat about the streaming service’s prospects.

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

To date, Showmax did not have an easy ride. It failed to gain traction in some markets and closed in Poland due to slow growth.

It also continues to burn cash. However, exactly how much money it has lost remains a closely guarded secret.

MultiChoice CFO Tim Jacobs told analysts that they would not disclose Showmax’s historical losses and has no plans to do so in future.

He revealed that investment in the streaming platform is expected to peak in the 2024 financial year at between R3 billion and R4 billion.

The Showmax investment will depend on the launch date, which will be influenced by two key factors:

• Data connectivity, which is related to broadband penetration
• Data prices

“We need to invest significantly ahead of the curve. You can’t wait for these two trigger events to happen,” he said.

“The adoption rate in other emerging markets shows that it happens very quickly after these events happen. You have to invest early.”

Commenting on when Showmax will start to show a profit, he said they anticipate a short J-curve if the business scales how they anticipate.

Phahle expects ShowMax to have the same 3 to 5-year J-curve as 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.”