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Reuters/Dado Ruvic
The next frontier.
STREAMING IT

These two companies are looking to change the way Africans watch movies

By Omar Mohammed

Naspers, the South African media conglomerate, is one of the leaders of Africa’s pay-TV market. And now, it wants a piece of the region’s growing mobile content business.

The company is in talks with Vodacom, the pan-African telecom firm partly owned by UK’s Vodafone, to distribute video from Naspers’ pay-TV platform, MultiChoice, on mobile devices. ”We are on record as exploring a partnership with Naspers,” Tshepo Ramodibe, head of corporate affairs at Vodacom, confirmed to Reuters yesterday.

The smartphone market in South Africa has grown over the last few years. Mobile penetration stands at 89%, and over a third of mobile users in Africa’s second-largest economy have smartphones, according to data from the Pew Research Centre.

This potential deal should be a win for both companies. Vodacom’s data subscribers in South Africa have grown from 12 million in 2012 to about 18 million in June 2015. The content from Naspers will help it attract data customers and open up a new revenue stream beyond just data. Meanwhile, for Naspers, the deal would open up a new potential market for its wealth of content: Vodacom’s 64 million customers (pdf) in its five markets across Africa.

Television’s new frontier

Africa’s video-on-demand (VOD) market is the next frontier for investors wanting a piece of the continent’s growing consumer class. Netflix recently announced that it is looking to expand to the continent within the next two years, with South Africa being one of its target countries.

But as we wrote recently, the country already has homegrown VOD platforms, which the American streaming service will have to compete with. And Naspers is looking to corner that market before Netflix’s arrival in 2016. Earlier this year, it bought into Icflix, a Dubai-based VOD platform that broadcasts Bollywood and Arabic content in the Middle East and North Africa. And this week, it is looking to launch another VOD service, called Showmax, which focuses on American content. Already, the company has inked distribution agreements with the likes of CBS, Time Warner and the BBC, according to Bloomberg.

By 2020, over 120 million smartphones will be shipped each year in Africa. Expensive data charges have made it hard to distribute content, especially video, via these phones, but prices are falling, which makes deals like the one between Naspers and Vodacom increasingly attractive.

The Naspers-Vodacom deal is also looking to change the way Africans pay for content online. Through Showmax, instead of paying per megabyte as most people do at the moment, users will be able to download or stream a movie on a mobile device for a fixed fee—kind-of like Netflix. Which means that by the time the American service debuts in Africa, it will have its work cut out for it.