MTN’s Ex-TV Partner to Start New Rival to Netflix in S. Africa

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  • Investec Bank has option to become equity partner in venture
  • Discover Digital also competes with Naspers in VoD market

MTN Group Ltd.’s former video-on-demand provider is starting a new South African online TV service with lender Investec Plc, just a day after its partnership with Africa’s biggest wireless operator was cancelled.

Closely held Discover Digital will provide a mix of on-demand subscription content and pay-per-view entertainment as well as sports coverage and news services including Bloomberg TV, Managing Director Stephen Watson said in an emailed response to questions. The product, called Digital Entertainment on Demand, effectively takes the place in the market of VU, which was scrapped by Johannesburg-based MTN on Wednesday.

Discover Digital “has been operating in the video-on-demand space for over three years,” Watson said. “There are options for Investec Bank to become an equity partner in the business.”

The new service joins a wave of online TV providers seeking to grab subscribers in Africa as broadband becomes faster and affordable enough to fuel demand for the service. That poses a threat to Naspers Ltd.’s DSTV, which has long dominated the continent’s pay-TV market. The Cape Town-based company started Showmax, its response to the competition, two years ago. U.S. giant Netflix Inc. expanded into Africa in January, 2016.

This type of TV technology can be expanded quickly, without exorbitant infrastructure costs, according to Watson.

“While our immediate focus is sub-Saharan Africa, we have had interest in our services from the Middle East, Eastern Europe and South America,” he said.

MTN Exit

MTN emailed customers to say VU would be shut down, without giving a reason. The company will provide subscribers with three months of access to Showmax as compensation, Techcentral website reported, citing MTN South Africa chief digital officer Maxwell Nonge. The move came less than two months after new Chief Executive Officer Rob Shuter joined from Vodafone Group Plc.

Other new entries to the African market include Econet Wireless Global Ltd., the media company owned by Zimbabwe businessman Strive Masiyiwa, and Ericsson AB’s Nuvu, which has partnered with Bharti Airtel Ltd. in Nigeria. Iflix, a video streaming service with customers mostly in southeast Asia that’s backed by telecommunications giant Liberty Global Plc., plans to start streaming TV shows in Africa this month.

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