(Bloomberg) -- MTN Group Ltd.'s former video-on-demand provider Discover Digital is starting a new South African online TV service with lender Investec Plc, just a day after its partnership with Africa's biggest wireless operator was canceled.
The closely held company will provide a mix of on-demand subscription content and pay-per-view entertainment as well as sports coverage and news services including Bloomberg TV, Managing Director Stephen Watson said in an emailed response to questions. The product, called Digital Entertainment on Demand, effectively takes the place in the market of VU, which was scrapped by Johannesburg-based MTN on Wednesday.
Discover Digital “has been operating in the video-on-demand space for over three years,” Watson said. “There are options for Investec Bank to become an equity partner in the business.”
The new service joins a wave of online TV providers seeking to grab subscribers in Africa as broadband becomes faster and affordable enough to fuel demand for the service. That poses a threat to Naspers Ltd.'s DSTV, which has long dominated the continent's pay-TV market. The Cape Town-based company started Showmax, its response to the competition, two years ago. U.S. giant Netflix Inc. expanded into Africa in January 2016.
Sun Partnership
Discover Digital has signed a partnership agreement with South African leisure company Sun International Ltd. that will enable guests at its hotels to access the content for free, Watson told reporters at a press conference on Thursday. The TV provider has secured licensing deals with six Hollywood studios, including Sony Corp. and Walt Disney Co., he said.
This type of TV technology can be expanded quickly, without exorbitant infrastructure costs, according to Watson. The next countries earmarked for expansion are Zimbabwe and Zambia.
“While our immediate focus is sub-Saharan Africa, we have had interest in our services from the Middle East, Eastern Europe and South America,” he said.
MTN emailed customers to say VU would be shut down, without giving a reason. The company will provide subscribers with three months of access to Showmax as compensation, Techcentral website reported, citing MTN South Africa Chief Digital Officer Maxwell Nonge. The move came less than two months after new Chief Executive Officer Rob Shuter joined from Vodafone Group Plc.
Other new entries to the African market include Econet Wireless Global Ltd., the media company owned by Zimbabwe businessman Strive Masiyiwa, and Ericsson AB's Nuvu, which has partnered with Bharti Airtel Ltd. in Nigeria. Iflix, a video streaming service with customers mostly in southeast Asia that's backed by telecommunications giant Liberty Global Plc., plans to start streaming TV shows in Africa this month.
DEOD's sports packages will be charged at 99 rand ($7.31) a month, news channels for 49 rand a month and an on-demand video service at 79 rand a month, Watson said.
To contact the reporters on this story: Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net, Aarti Bhana in Johannesburg at abhana1@bloomberg.net.
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, John Bowker, John Viljoen
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