As Naspers and Prosus celebrate reaching profitability in their e-commerce portfolio, president and chief investment officer Ervin Tu spoke to Business Day about the group’s growth, portfolio makeup and investment strategy.
Naspers subsidiary Media24 has announced the closure of almost all print operations. What has driven this decision?
SA is enormously important to us. We understand it’s our heritage, we have a lot of people here and understand our importance to the country. It is a priority for us as a group.
Media24 is important to the media landscape. It’s the most important player in that regard. What we’ve experienced and what we announced last week is a consequence of the changes and transitions seen throughout the world, from print to digital. And we are investing in that transition. The content still exists and we still have readership. We’re following our readers, who have moved online.
Transitions can be challenging and difficult as they involve people. These decisions are not taken lightly. Media24 is a profitable business in which we will continue to invest.
Do you have the appetite to invest in any other media assets?
Content businesses have been growth extensions to some of the huge tech players such as Apple. Netflix was originally just a DVD distribution network before becoming a subscription and production company, which has led to their great success.
Content is incredibly expensive and to do it well requires a lot of expertise and experience, so it is unlikely that we would invest in it at this moment. Never say never, however, because as we become bigger and more successful, there may be other avenues to explore content-related businesses.
What about social media content businesses?
One of the brilliant parts of ByteDance in China, otherwise known as TikTok, is its user-generated content. They don’t have content development costs. Yet it has content that is engaging for consumers and audiences everywhere. It’s a brilliant model. I wish we had found that at Prosus/Naspers! When I was at SoftBank, I invested in ByteDance. Once those businesses take off and create their own scale and audience, it’s very difficult to disrupt them.
We have Tencent. In China they have short-video, long-form content, games. We have a lot of content if you include Tencent. It’s primarily in China, though they do have some international games as well.
The group has made it known that it wants to build an ecosystem among its portfolio of businesses. What does this mean?
The definition of ecosystem is important. It’s about having a customer to whom you sell a number of different products and services. Apple and Tencent are great examples. We do that in our individual businesses such as OLX, iFood and eMag in Romania. And it’s not just commerce but also food and groceries, logistics and delivery. There’s a bunch of stuff in their ecosystems. It may actually be the strongest ecosystem play we have in our entire portfolio.
What does that look like for a group such as Naspers/Prosus?
It’s not always about a common customer as we have operations spread far and wide, including in the likes of Romania and Brazil. For our management systems it’s about best practice and knowledge sharing. We are always looking for ways to deploy artificial intelligence across the entire portfolio because it will help our businesses.
Note: This article has been edited for brevity and clarity.
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