Netflix’s deal to acquire Warner Bros may have an impact on MultiChoice’s more than R3bn effort to establish Showmax as the continent’s dominant paid video-on-demand service.
Consolidation of the media continues to affect operators and audiences around the world. While operators look for ways to combine their efforts to achieve lower costs and maximise revenue, consumers are increasingly demanding more affordable entertainment bundles that give them access to an assortment of options.
Last week, Netflix and Warner Bros Discovery (WBD) announced they had entered into a definitive agreement that will see the world’s largest paid video streamer acquire Warner Bros, including its film and television studios, HBO Max and HBO.
What is unclear is how Netflix plans to make use of these properties if the transaction is allowed to go through, particularly for content aggregators such as MultiChoice.
The group, now a part of Canal+ Africa, has continued to invest in its video streaming services, recognising the shift towards people consuming film, TV and live programming online.
The group has positioned itself as the go-to platform for paid video entertainment audiences on the continent. Key to this strategy has been securing agreements with Netflix, Amazon Prime Video, HBO, Disney, NBCUniversal, Canal+, Sky and Paramount to bring all streaming content under one roof so that consumers do not have to pay multiple subscriptions.
For instance, HBO’s streaming service HBO Max does not operate on the continent, instead using Showmax as its distribution channel.
Read: Netflix’s purchase of Warner Bros Discovery comes as DStv set to cut 12 channels
Going forward, Netflix could choose to continue operating HBO Max separately or consolidate the structure into its existing platform, which would be likely to affect where and how HBO’s content is distributed.
In addition, Showmax has a section specifically for Warner Bros content. The storied Hollywood studio is home to the likes of the Batman and Superman franchises as part of DC Comics, as well as the Harry Potters.
If Netflix takes over Warner Bros, it will raise questions about how the studio’s productions will be distributed on streaming platforms. Some industry players have also raised concerns about Netflix possibly choosing to minimise theatrical releases as it now does for its own productions. The box office is a huge source of revenue for filmmakers and studios.
Warner Bros is likely to add to Netflix’s already sizeable $17bn a year production capability. Netflix may push some of that towards African productions, an area that the company has already been investing in. MultiChoice has long prided itself as having the biggest library of local film and television in the African countries in which it operates.
These are the issues that Canal+ and MultiChoice are likely to be mulling over in this transaction.
Since taking control of MultiChoice, Canal+ has been working on how it will consolidate its video-on-demand services to effectively compete with deep-pocketed international players such as Netflix, Disney and Amazon.
The group has indicated that it is looking to create a one-stop super app that brings its various video streaming services onto one platform.
A new updated version of Showmax, underpinned by technology from US giant NBCUniversal, began operating in February 2024. The R3bn project has helped the group to defend Showmax’s place as the largest streaming platform in Africa, ahead of international rivals.
In April, MultiChoice said since September 27 2024 it and NBC had provided $145m (R2.6bn) in equity funding to Showmax in proportion to their shareholdings. In addition, MultiChoice provided another $800,000 as equity funding to cover its specific shareholder costs. This adds to the $164m spent by the DStv operator and NBC between April and September 2024.
A new Showmax group was created in 2023. It is 70% owned by MultiChoice and 30% by Comcast-owned NBCUniversal and powered by its Peacock technology. Expenses for the business and future profits are shared in the same ratio.
This comes as the DStv operator is negotiating the future of 12 channels from WBD on its platform. If a deal is not reached by December 31, channels such as Discovery Channel and CNN International will fall away from Africa’s largest pay-TV service.
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