When Naspers, Africa’s biggest media company, recently acquired online video-on-demand ShowMax, some pundits questioned why they had done it.
They wondered about the wisdom of this move considering the fact that international on-demand streaming movie heavyweight Netflix was rumoured to be targeting Africa in its drive to expand to 200 countries.
It also didn’t make sense for Naspers to set up competition between companies in its own group, they said.
Naspers owns pay TV giant MultiChoice, which has subscriber services in 49 countries in Africa and operates sub-Saharan Africa’s biggest pay-TV service, DStv. One report billed the move as ShowMax versus DStv: The fight is on.
But a clue to their real intent lay in Naspers’ results announcement, in which it reported that video-entertainment services “now reach 10.2m homes across the African continent… revenues were R22.6bn and profits relatively flat”.
And then… Bloomberg revealed the bigger picture. And a large screen picture at that. Naspers, it said, was planning to take on Netflix. Not just in Africa, but around the world.
With a well-endowed war chest and massive revenues pouring into its coffers, it would be foolish to simply dismiss Naspers as an upstart challenger to the world’s biggest on-demand streaming TV company.
When it announced its six-month results last week Naspers, not surprisingly, reported a 24 percent year on year increase to $5.9bn.
Chairman Koos Bekker said the company was continuing to “build consumer platforms in growth market.” He attributed the ‘revenue expansion’ to a strong performance by Tencent in China and its growing e-commerce arm. Naspers acquired a 46.5 percent stake for $35m 14 years ago when the company was just a start-up providing instant messaging services. Tencent is now worth $125bn.
It also helps explains why 64 percent of Naspers’ $65bn business stems from its internet businesses.
CEO Bob van Dijk told South African daily, Business Day,”E-commerce is still very much an area of focus for us and I think that the majority of our investment will actually go into e-commerce models. We also like connected video.”
But back to ShowMax.
“The company will target more than 15m customers outside its home market of South Africa, providing content across Europe, North America and Australasia,” Bloomberg reported. It would provide Afrikaans content in international markets next month, targeting the huge ex pat South African diaspora scattered around the world, followed by West African content next year, Bloomberg reported. Van Dijk, it added, would oversee the expansion of ShowMax across Africa and abroad – just as Netflix tries to complete its worldwide rollout.
It’s got a powerful weapon in its armory to use in the coming battle. According to Bloomberg, ShowMax has signed a deal with Samsung Electronics to include its service on its smart TVs. Samsung, Quartz reported, “controls almost a third of the global smart TV market. That’s a potential audience of about 60m people”.
To put it in perspective, Business Insider says, Netflix currently has over 60m subscribers worldwide. Then there’s Hulu with nine million paid subscribers and Amazon Prime “which might have 60-80m subscribers globally,” according to analysts at RBC Capital Markets.
ShowMax, while offering traditional programming from the likes of BBC, Time Warner and CBS, would also show content from Africa, Quartz said.
“Through its MultiChoice outlet, the pan-African pay-TV platform, the company has access to significant content from across the region. This could help it attract the sizable African diaspora, which is estimated to be about 30 million people worldwide, to its platform.” Plus Naspers has a stake in Icflix, a Middle Eastern platform specialising in Bollywood and Arabic content.
And, if that isn’t enough, IT Web Africa reported from AfricaCom that mobile operator Airtel Nigeria had partnered with Ericsson to deliver NuVu, an “end-to-end subscription video on demand (VoD) service in the West African country”. NuVu, it reported, would allow users “to directly download content onto their gadgets without incurring additional data costs during the network’s off-peak times. They would also enjoy access for 30 days after downloading such contents”.
Ericsson’s head of broadcast and media services, Thorsten Sauer, said there was a “huge opportunity to open up a window to a world of content through mobile devices that may not be easily accessed otherwise. Airtel is the perfect partner to help us launch NuVu as one of the largest operators across Africa and the third-largest mobile operator in the world”.
Then news broke that Vodacom, the South African subsidiary of Vodafone, was in talks with Netflix. Vodacom CEO Shameel Joosub told TechCentral that the mobile operator had approached Netflix and other VOD players about “utilising the company’s billing infrastructure to provide consumers with flat-rate access to movies, series and other content” even as it readied itself for a comprehensive offering on its own. Its platform would allow “VOD providers’ subscribers to pay for content using airtime (in the case of prepaid users) or be invoiced (if they are contract subscribers)”, he said.
Also in the mix is Tuluntulu, voted by Unilever Foundry50 as one of the top 50 start-ups in the world, which in 2014 launched an app that allows mobile users access to 10 TV channels “as free as possible” across Africa via Apple iOS and Google Android stores.
Entrepreneur Pierre van der Hoven told The Media Online that their technology would “unlock video streaming as an industry in Africa. No licences or new transmitter networks are required, opening the industry up to new players. Of the launch channels, only two are established broadcast TV channels. The rest are new players in the market who would not have had a chance on conventional television platforms”.
“The technology automatically adjusts picture quality to ensure that video does not have to buffer or break. Users can increase video quality with a simple volume-like button, controlling their data costs themselves,” Van der Hoven said.
For Africa, and its limited broadband access and connectivity issues, this could be a game changer.
What is clear is that Africa’s online video entertainment industry is set to take off. So kick back, crack a beer and get ready to enjoy the action.
This story was first published by FIPP, the worldwide magazine association. Follow on Twitter @FIPPWorld
Raymond Joseph (@rayjoe) is ICFJ/Knight International Journalism Fellow at International Centre for Journalists (ICFJ).
The FIPP Middle East & Africa conference, is taking place from 10-11 February 2016 in Dubai, the UAE. It will not only shine a spotlight on media developments in these regions, but will also bring perspectives from other parts of the world to Dubai to make for a truly international conference experience. South Africa’s editor of FAIRLADY, Suzy Brokensha, is one of several speakers.
