Last year two online video streaming entertainment services were launched in South Africa.

Times Media Group launched Vidi, an online streaming entertainment service that allows customers unlimited access to movies and TV series for R149 a month.

South African based mobile operator MTN launched FrontRow, a streaming video service that offers subscribers access to TV series and movies.

For R199 a month MTN's FrontRow users stream content via a web browser, or use an Android app.

Furthermore, it has been reported that South Africa has been identified as a destination for popular US on-demand internet streaming media provider, Netflix.

What does the launch of these services mean for South Africa's monopoly pay TV service, DStv?

DStv is the digital television service offered by pay-media company MultiChoice across the African continent.

Multichoice through its DStv platform offers subscription bouquets like DStv Premium, DStv Extra, DStv Compact, DStv Family, DStv Access and DStv EasyView.

DStv subscribers have access to a range of movies, sport, documentaries, entertainment, news, children, and music channels.

And the bouquets prices range between R665 a month for DStv Premium to R29 a month for DStv EasyView.

There is speculation that DStv's subscriber numbers in its main market, South Africa, have declined significantly in the last financial year.

However, Multichoice's general manager of corporate affairs, Jackie Rakitla told ITWeb Africa that the information regarding a decline in their subscriber numbers is "incorrect".

"We cannot share current subscriber numbers as we report these as part of the Naspers financial results in June and November," he explained.

Rakitla noted that as at 30 September 2014, MultiChoice had more than 8 million subscribers across the African continent.

According to media group, Naspers, which is DStv's holding company - total subscribers of its pay TV business grew by 342,000 to over 8.4 million households during the six months to November 2014.

The Johannesburg Stock Exchange listed group did not reveal the number of subscribers for each of the regions where it operates including South Africa.

However, in the trading statement it reveals that its pay TV operations, which include DStv had been overtaken by its internet business.

According to the statement although profitable, the pay TV business declined by 11% as result of investments in its digital TV offerings on the continent and online services to expand in South Africa.

It was last reported in June 2013 that DStv's subscription base in South Africa had reached the 4 million mark.

Economic conditions

Strategy Worx chief executive officer and analyst, Steven Ambrose says it is possible that there has been a plateau and even a decline in membership at DStv; however, the reasons are probably more due to the general economic conditions at the moment than alternative platforms.

Ambrose told ITWeb Africa that in terms of switching to online streaming video South Africans will follow other more developed countries, but this may take a a few more years and may never reach the same penetration due to many factors.

"High speed broadband is ramping up fast and competitive platforms such as Vidi and Node are gaining a small amount of traction, but overall video consumption via the web is still a small but growing component of South African video consumption," he said.

There is not directly competitive service to DStv in South Africa unlike in the US, he added.

And according to Ambrose at the high end, which is only a limited number of people in southern African nation, there will be a swing to video on demand.

This has begun and many are using systems which allow the use of Netflix and other systems, he added.

In 2012 research conducted by Discovery Networks revealed that only 17% of South Africa's online audience watched or downloaded TV on demand.

So whether pay TV services like DStv should worry about online streaming video platforms for major African markets like South Africa, Ambrose noted that at this point those services are proof of concept rather than mainstream.

"They both represent a good opportunity for the companies to test the waters for demand for these systems as well as gain valuable mind share and experience in actually serving these platforms to South Africans," he said.

He concluded, "DStv occupies a unique position in the SA market they have no direct competitors. DStv is still an expensive service and has probably reached saturation in its target market. DStv should be and is concerned with online competitors especially those like Netflix and HBO from outside the country.

"They are taking steps to compete with their new explora decoder. Time will tell if they can hold onto their market share."