The Ultimate Competitor to Naspers’ MultiChoice (DStv, GOtv) Is Coming To Africa

The world of video streaming seems to be gyrating: Walmart is joining the party. Typically, when Walmart joins a club, prices of things drop. It does not live on the notion of premium brand and exclusivity. Walmart makes things affordable for the people. If it takes that model into video streaming, Middle America will believe, and Africa will possibly connect.

Walmart is battling Amazon in online retail, groceries, and urban home delivery. It may now be opening up another front in its war: video streaming.

Walmart, the world’s biggest company by revenue, is considering building its own Netflix-like service to compete directly with Amazon Prime, as well as Netflix, Hulu, AT&T’s Audience, and impending products from Disney and Apple, The Information reported (paywall).

Walmart already owns Vudu, a video-on-demand platform for Hollywood movies and TV, but it’s reportedly contemplating developing its own programming and offering it for less than $8, undercutting Netflix and Amazon.

MultiChoice has been focusing on Netflix as it devises ways to compete and hold its territories. Now, the real competition is coming. While Netflix attacks MultiChoice premium subscribers in Africa, Walmart will go after the customers which have sustained MultiChoice for years. Those are the customers who are signing up in millions across continental Africa on MultiChoice properties. To a large extent, Netflix does not care about them: they are the GOtv users.

For MultiChoice and other video streaming companies in Africa, if Netflix and Walmart converge in Africa, it would be a double whammy. Largely, American companies are just good in creating contents that transcend cultures and boundaries more than their local competitors. The implication is that they have better unit economics to win any sustained competition because of larger scale of distribution.

The problem MultiChoice is facing today with the loss of subscribers is not really about Netflix. Simply, MultiChoice knew that the trajectory of entertainment was moving online and will continue to do so. Online is going to become the equilibrium state of “view entertainment”. Yet, MultiChoice did nothing. It is typical; I called it the monopoly hangover when I wrote about Interswitch. These entities are making so much money in the present model to creatively destroy it. Typically, someone else has to do it for them as that is the only way they can wake up.

But MultiChoice may be happy for one thing: Walmart has presence in South Africa, and can indeed be regulated, if necessary, unlike Netflix which pipes videos from U.S. with no way for the South African regulators to extract anything from it. I remain skeptical if any regulator can change the trajectory. The internet is very notorious in taking down anything on its path despite any efforts to regulate it. Yes, if South Africans want to watch Netflix, they would always find ways despite what any regulator can put there. The nation has a strong free speech (and choice); no one will destroy that tradition because it wants to help a monopoly.

Massmart is a South African-based globally competitive regional management group, invested in a portfolio of differentiated, complementary, focused wholesale and retail formats. Walmart acquired a majority stake in Massmart Holdings Ltd. in 2011. Massmart operates more than 400 stores in South Africa and 12 other sub-Saharan countries.

All Together

How can the VOD (video on demand) companies in Africa go further? The competition is now global. Customers are going to win because more choices will be available. But as that happens, many players will certainly be knocked out, in a world of winner-takes-all, as I noted in a recent piece in the Harvard Business Review. I just wish our companies will have the vision to come together, and merge, as that seems to be the best way to remain competitive: size matters.

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