Before Netflix arrived in Africa in 2016, the continent’s online streaming industry was dominated by apps owned by large telecom companies. These apps aired movies, TV shows, and sports, allowing the companies to offer a value-added service to their existing users. Now, the apps are running out of steam as they struggle to compete with streaming giants like Netflix and its South African rival Showmax, which provide specialized content.
In 2022, telecom major Vodacom shut its streaming platform Video Play due to “the rapid evolution of content streaming in recent times.” Just a year before it shut, Video Play held a 17% market share in Sub-Saharan Africa and was the third-largest streaming platform in the region, right behind Netflix and Showmax.
The same year, South Africa’s Telkom also closed its streaming service, TelkomOne. It was later relaunched as SABC+ under the ownership of the South African Broadcasting Corporation. The government-owned organization would do a better job at “sourcing and curating relevant content … for existing and new customers,” Telkom said at the time of the acquisition.
In 2019, Econet, a Zimbabwean telecom firm, shut its streaming platform Kwese TV due to a foreign exchange shortage. “Third-party content providers, on whose content we rely, require payment in foreign currency,” Econet had said in a statement. The same year, another telecom firm, Cell C, pulled the plug on its platform Black — after investing about $80 million, with little growth to show. Douglas Craigie Stevenson, the company’s former CEO, said it was crazy to think Black could compete with Netflix. In 2017, three years after it launched, MTN streaming platform VU closed down. Experts believe telecom companies have failed to lure the country’s 550 million internet users to their streaming services because they lack quality content.
“Acquiring content is expensive,” Léa Zouein, an analyst at Paris-based market intelligence firm Dataxis, told Rest of World. “Producing content requires mobilizing significant resources, whether financial or technical. This is why success can take longer to arrive and be limited compared to services with existing activities.”
Netflix and Showmax have invested significantly in content in Africa, and are estimated to have 18 million video-on-demand subscribers by 2029. Digital TV Research, a market intelligence firm focused on streaming platforms, expects Netflix to lead the African market by then, followed by Showmax, Amazon’s Prime Video, and Disney+.
Netflix has invested $175 million in South Africa, Nigeria, and Kenya between 2016 and 2022, according to a company report released in April. Of this, $125 million went to South Africa, with 173 titles licensed and 16 original shows commissioned. In Nigeria, Netflix invested $23.6 million to license 283 titles and commission three originals. The Black Book, a Nigerian film that Netflix acquired and exclusively aired, reached its top 10 list globally. It is reportedly the platform’s most successful African film.
Showmax, on the other hand, inherits a massive content business from parent company MultiChoice, which has been the biggest producer of African content for years — with 6,500 hours of content made in 22 languages per year, according to Marc Jury, CEO of Showmax. In the 2023 financial year, MultiChoice dedicated 20.9 billion rand ($1 billion) — half its general entertainment budget — to local content, Jury told Rest of World over email. “We’ve produced more than 30 Showmax Originals across South Africa, Nigeria, Kenya and Ghana so far. This is only going to increase in the coming months,” he said. “In December, we’re on track to launch 15 Showmax originals and five films.” Jury said the number of Showmax’s paid subscribers has increased by 26% year-on-year for the last four years.
There’s no room in the market for platforms that only offer third-party content against players like Netflix, a spokesperson from MTN South Africa told Rest of World over email. “MTN was not the only player to launch a VOD [video-on-demand] service at the time. A number of other telcos and media companies also launched similar offerings,” the statement said. “None of these players still have services in the market today. The industry has shifted away from licensed content to original productions. Players like Netflix and Amazon invest billions of dollars in original productions and can distribute them to a global audience.”
“The DNA of the company needs to be content. Live, breathe, and market it.”
Studios like Disney no longer license their content to third parties but keep it exclusive to their streaming platforms. This has made it harder for telecom companies to find content for their apps, the MTN spokesperson said. Vodacom, Cell C, Telkom, and Netflix did not respond to Rest of World’s request for comment.
Scaling a business in the video streaming industry requires spending mountains of capital upfront and enduring significant losses for years, Jason Njoku, co-founder and CEO of Iroko TV, an African streaming platform, told Rest of World. “You need hundreds of millions of dollars and lots of patience,” he said. “I don’t think I have seen a telco-first model work anywhere. The DNA of the company needs to be content. Live, breathe, and market it.” Even Disney, the “king of content,” has struggled to build a profitable streaming business, Njoku said. Since it entered the business in 2019, the company has sustained losses of over $11 billion, including the $512 million recorded in the most recent quarter.
Both Njoku and Zouein said a streaming vertical is a nice-to-have business for telecoms and not a vital contributor to their bottom lines. Zouein said the revenue generated by their streaming services is significantly lower than core businesses like voice calls and internet subscriptions.
Nigerian actor Kunle Remi told Rest of World he believes African telecoms are better off not competing with the likes of Netflix. “I’m not sure if the juice is worth the squeeze to own the complete value chain,” Remi said. “African telecom companies can partner with proven creators on the ground by investing in original “We've produced more than 30 Showmax Originals across South Africa, Nigeria, Kenya and Ghana so far. … business for telecoms and not a vital … that keeps attracting the leaders in global streaming.”
