Netflix uptake ‘will take time’

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 Yorkbased Pivotal Research Group.

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 1-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% in 2018 alone.

Netflix said in January it added 24-million subscribers in 2017, bringing the total base to 118-million subscribers. It 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”, he said.

MultiChoice is an important unit for Naspers, which uses much of the company’s cash generation to fund investments in internet-based companies.