MultiChoice needn’t be scared of Netflix in Africa ... yet
Slow and unaffordable internet is to blame
Netflix, a video streaming service that competes with MultiChoice in Africa, is expected to take some time to gain a meaningful foothold on the continent, says Jeffrey Wlodarczak, CEO of the New York-based Pivotal Research Group.
“I am quite conservative on Africa – by 2020 I am only assuming a total of 500,000 Netflix subscribers [across the continent] and about one million by 2024,” said Wlodarczak.
Owing to low penetration rates of fast and affordable internet, Africa accounts for a tiny proportion of Netflix’s subscriber base. Netflix does not provide user numbers by region.
Wlodarczak predicts that Netflix will have as many as 250 million international – or non US – subscribers by 2024. This is from 62.8 million in December 2017.Thanks to strong results, Netflix’s market capitalisation recently overtook the value of MultiChoice parent Naspers. Its share price is up as much as 69% this year alone.
Netflix said in January it added 24 million new subscribers in 2017, bringing the total base to 118 million subscribers. The group expects to add another 6.35 million subscribers in the first quarter of 2018.
Calvo Mawela, CEO of MultiChoice SA, said recently the entry of global players such as Netflix, Hulu and Amazon Prime Video “has impacted on MultiChoice in its traditional pay TV business”.
These operators had “significantly lower entry costs, massive scale and capital, and huge content libraries”.
They were also unregulated and did not have the same licensing obligations as local broadcasters.
But MultiChoice’s Showmax platform, a video-on-demand service, had grown its subscriber base “significantly” over the past year.
“To give an idea of the scale, we’re now streaming billions of minutes of video on an annual basis,” Mawela said.
MultiChoice had also adapted by investing in local shows that told local stories, and in “local versions of big international shows”.
MultiChoice is an important unit for Naspers, which uses much of the company’s cash generation to fund investments in internet-based companies.