Naspers to shed Multichoice; Showmax flexes muscles to fight off Netflix

South African media giant Naspers is all set to spin off Multichoice – the biggest pay-TV service in Africa by subscribers – to free up cash for the unit to deal with the onslaught of Netflix (NFLX), Amazon (AMZN) Prime Video and other streaming offerings.

Naspers, which own a third of the stake in Chinese mammoth Tencent, announced on Monday its plans to separate Multichoice. This gives the latter a more relaxed identity in which it can compete with original content producers such as Netflix.

Multichoice’s internet-streaming service Showmax, launched in 2016, has been accumulating a good portfolio of Hollywood movies, and even local content in the likes of “The Bachelor South Africa” and “Real Househelps of Kawangware.”

Even though there are no official figures from Naspers, research firms estimate at least 334,000 subscribers for Showmax by the end of last year. This is less than half of what Netflix has, and is concentrated in South Africa. In the last financial release in March this year, Multichoice had about $500 million in cash. This amount could be used to scale Showmax up to compete even fiercely in the streaming market.

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How Multichoice deals with the entire situation, and how Netflix will now approach its African assets is yet to be seen. “The combination of Multichoice’s reach, Showmax and DSTV Now cutting-edge internet television services will provide unique and unmatched offering,” said Multichoice Chief Executive Imtiaz Patel. DSTV No is Multichoice’s mobile app for TV.

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