Naspers creates new video on demand unit as Netflix rivalry heats up

FILE PHOTO: Satellite dishes connect township residents to South Africa's DSTV television network, owned by telecommunications giant Naspers, in Khayelitsha township, Cape Town, May 19, 2017. REUTERS/Mike Hutchings/File Photo

JOHANNESBURG (Reuters) - Naspers’ video entertainment division has created a new over-the-top (OTT) video unit to be headed by Niclas Ekdahl in a bid to counter stiff competition for video on demand from global players such as Netflix.

OTT video services, which are transmitted via the internet without requiring users to subscribe to a traditional cable or satellite pay-TV service, are growing rapidly across Africa.

South Africa’s Naspers faces competition from Netflix, Amazon and local players like Cell C Black, Kwese and Vodacom VideoPlay who continue to offer alternative video content.

To counter this, it said on Wednesday it merged in the second quarter its video on demand business Showmax Africa and internet TV service Dstv Digital Media to form a unit called Connected Video.

The CEO of Naspers’ Video Entertainment business Imtiaz Patel said in a statement the firm had made a healthy start in its OTT business through Showmax and DStv Now services, which allow users to view sports and movies on their mobile handsets.

“It’s now time to consolidate those learnings in a single unit to build the best possible services for our customers,” Patel said.

Ekdahl, a former managing director for Ericsson’s video on demand service NuVu, will start on Sept.10, the company said.

Naspers’ video entertainment business increased subscriber numbers by 1.5 million to over 13 million subscribers in Africa in the year to end March, while trading profit rose 29 percent to $369 million. [nJseV0034a]

Reporting by Nqobile Dludla; Editing by James Macharia and Emelia Sithole-Matarise