Naspers in Talks With Vodacom to Offer Africans Video-on-Demand

Digital Content

Naspers Ltd. is in talks with wireless carrier Vodacom Group Ltd. about delivering video content to mobile devices across Africa as the media company seeks to compete with Netflix Inc. in offering movies and TV in the continent of 1 billion people.

An agreement would give Naspers additional distribution for a video-on-demand service, dubbed Showmax, that the company plans to start this week, according to two people familiar with the matter. The product initially will target South Africa’s 1 million fixed-line broadband users, and within three years will be accessed predominantly by smart-device users across Africa, said the people, who asked not to be named as the plans are private.

“These discussions are still ongoing,” Vodacom spokesman Tshepo Ramodibe said in an e-mailed response to questions. “This conversation is in line with our business strategy to add new service offerings, including content.”

Naspers, Africa’s most-valuable stock at 716 billion rand ($56 billion), is investing in mobile applications to deliver TV content more widely in a region where high-speed landline connections are still rare. It’s also producing more African shows as its targets further expansion in Kenya and Nigeria to ward off competition from Netflix.

A spokeswoman for Naspers’ service declined to comment on the plans.

Vodacom has 64 million subscribers and runs mobile networks in South Africa, Tanzania, the Democratic Republic of Congo, Mozambique and Lesotho. Cape Town, South Africa-based Naspers owns 34 percent of Chinese Internet operator Tencent, has online-service interests in about 40 countries and is Africa’s biggest seller of pay TV.
African Content

Naspers has partnered with studios including CBS Corp., Time Warner Inc., Metro-Goldwyn-Mayer Inc. and the British Broadcasting Corp. to distribute shows and movies, according to one of the people.

Mybroadband reported Naspers’ plans to start Showmax last week.

Netflix, which has 66 million customers in about 50 countries, plans to expand to about 200 countries, including in Africa, by the end 2016. Press representatives for the company declined to comment further on Netflix plans.

Los Gatos, California-based Netflix is trying to build the first global TV network delivered over the Internet and has encountered strong local competition in several markets, including major broadcasters with their own streaming services in the U.K., Sweden and Germany.

Naspers sees Netflix, Apple Inc., Amazon’s Prime and the U.K.’s Lovefilm service as direct competitors, billionaire Chairman Koos Bekker said in an interview in May.

Naspers will allow Showmax to compete directly with its Multichoice unit, Africa’s largest pay-TV company with 8 million subscribers, according to the people. South Africa’s main video-on-demand services are Times Media Group Ltd.’s Vidi and MTN Group Ltd.’s FrontRow.
Source: Bloomberg 17 August 2015