Hong Kong billionaire said to plan South African rival to Netflix

Streaming services are targeting Africa as wireless networks become more widespread and reliable, allowing the delivery of video in a region where mobile connectivity growth is one of the fastest in the world. Photographer: Gallo Images via Getty Images

PCCW Ltd., controlled by Hong Kong billionaire Richard Li, is planning a video-on-demand service for South Africa that would compete with Netflix Inc. and Naspers Ltd.’s ShowMax, according to two people familiar with the matter.

PCCW’s HKT unit will unveil the entertainment service as early as next week, said one of the people, who asked not to be identified as the product isn’t public yet.

Telecommunications conglomerate PCCW bought a majority stake in mobile video-on-demand service Vuclip in March and plans to expand the service into new markets.

Streaming services are targeting countries in Africa as wireless networks become more widespread and reliable, allowing the delivery of video. Local users access content on mobile devices produced by companies such as Nigeria’s iROKO Partners Ltd.

Li, younger son of Cheung Kong Holdings Ltd. Chairman Li Ka-shing, is looking for growth beyond telecommunications, which provided almost 86 percent of PCCW’s sales last year. Its Vuclip video business has 7.5 million subscribers, about 6 million of them in India.

Streaming Costs

PCCW declined to comment in an e-mail. The company’s shares fell 1.5 percent to HK$4.08 at the close of trading in Hong Kong, giving the company a value of HK$30.8 billion ($4 billion). The stock is down 23 percent this year.

The challenges of capturing a potential African audience of more than 1 billion includes persuading users to accept the data costs that result from streaming. Naspers is trying to reduce the price by planning to allow customers to download content rather than just stream when it expands ShowMax beyond South Africa.

Netflix seeks to expand into as many as 200 markets, including South Africa, by the end of next year to boost revenue growth outside the heavily contested markets of North America and Europe. The Los Gatos, California-based company, the world’s largest subscription video-streaming service, made its debut in New Zealand and Australia in March and started its service in Japan last week.

ShowMax is targeting South Africa’s 1 million fixed-line users before expanding further throughout the continent. Naspers, Africa’s largest company by market value, is a 100-year-old publisher of Afrikaans-language newspapers that’s evolving into an online business and an investor in emerging market technology startups.

Source: Bloomberg Business