Netflix coming to Africa, a $3 million investment hattrick and other stories from last week in African tech
A few months ago I started a weekly newsletter covering the most relevant stories from the tech and startup landscape across Africa. The ambition is to give an overview of pan-african developments and connect dots across regions. I have decided to repost the newsletter on Medium going forward but if you want it straight in your inbox every week, you can subscribe here: Subscribe link.
1. Netflix in Africa:
Netflix’s announcement that it will be available in 130 countries around the world and many of them in Africa and the question of what it means for DSTV, IROKOTV etc. was the talk of town for most of the week. The general sentiment about this falls roughly into four camps. I’ll try to explain their perspectives and then synthesize them into my own perspective on the streaming giant’s move:
- Finally! All local streaming platforms are now dead: Some fear that the entry of the 400 pound Gorilla will crush all other players in the market and emerge as the only dominant player. The Facebook and Mxit story gives a recent precedent for a similar case where this happened.
- I don’t care, I’ve been watching Netflix for ever anyway: This camp has been watching Netflix (or its shows) for ever thanks to VPNs or other platforms where they can stream movies and series for free. Since access is free, they won’t pay for Netflix and are not as excited about its entry as other people are.
- Netflix will fail because it doesn’t understand Africa: Netflix doesn’t understand the realities of expensive data, low data penetration and the apparently widespread culture of piracy. People won’t be able or willing to pay for the service and it’s associated costs and it will therefore be unsuccessful.
- There is a market for multiple streaming players: It’s not just about Netflix, but different platforms offer different content selections with different target audiences. There will therefore be more than enough space for multiple streaming players on the continent.
After thinking through the situation, I believe the latter point is the closest to what will really happen. Netflix’s main strength are its brand and its Original IP in form of unique shows such as House of Cards, Breaking Bad etc. This is exclusive Netflix content that is not available on other streaming platforms (except a few exceptions that I expect to end soon) and together with its vast catalogue of hollywood movies and series creates a highly differentiated, but western centric offering. At the same time, companies like IROKO have focused on local content (Nollywood) and have built their lead based on being the best source for this content.
From my perspective, this shows quite clearly that the video streaming market is not a monolithic block, but consists of a number of different markets that are not mutually exclusive but might even overlap. Some people want American content, some people want Nigerian content, other people want Swahili etc. This gives the opportunity for companies to specialize and become complementing instead of competing entities. It is very possible that someone will have a subscription with IROKO for Nollywood content and a subscription with Netflix for American content and who knows how many more.
This also leads to the conclusion that Netflix’s entry will only increase the total market size without stealing too much from existing players.
2. Magic Number 3:
This was a great week in investment news. with 3 African companies closing or announcing investment rounds of $3 million each. These are the lucky startups:
- Kenyan hardware and education startup BRCK has closed a $3 million round from Steve Case and others
- South Africa based Azargen, a life science and biotech company raised $3.1 million
- Kenyan P2P farming information platform is currently raising $3 million USD to fuel its international expansion after having reached early 50k Users in East Africa
3. Fitting a square peg into a round hole:
Many times, people try to transfer technology from the west to Africa without asking themselves if it makes sense locally or how it can be adapted to do so. This week I came across two perfect examples for this:
- The internet of things Africa Summit: Today, the IoT thing has not even really caught up in the west (besides in the industrial world maybe) and has produced very curious results at best (Fridge calendar sync issues anyone?). It is also obvious that people still don’t really know what IoT actually means: is it an industry, a technology or just an empty buzzword combining a lot of things that have nothing to do with each other. I believe that today it is the latter and I find it incomprehensible why we now need to take this to Africa.
- The bitcoin opportunity for remittances: Bitcoin is also a technology in its very early stages and the world hasn’t figured out yet what it actually is. Celebrated as a new global currency initially, people are now focusing more on applications on top of the blockchain. Still, there is the widespread thinking that Bitcoin can disrupt the remittance market. That might be the case eventually, but as long as people don’t understand what they’re doing, what bitcoin is and what the process is to make bitcoin get from A o B it won’t live up to that potential. If Bitcoin is like the internet, it can only become popular if all the technical details disappear from the customer’s eye and they won’t even know that they’re using bitcoin when making a transaction.
4. Ecosystem Roundup: Western Africa
How Nigeria’s Konga is emerging as a technology powerhouse.
The Nigerian government’s approach to startups is quite hard to understand. On the one hand, they announce to invest more in Science, Technology and innovation in 2016 while on the other hand there are complaints from entrepreneurs that the Central Bank is making life for startups especially hard.
5. Ecosystem Roundup: East Africa
Kenya’s iLabAfrica, the research center located at Strathmore University partners with local firm CopyCat to drive IoT research and innovation in Kenya.
Ugandan Startups, Stay Woke. A good overview of the state of the startup ecosystem in Uganda and what needs to happen to make it go further.
4 Kenyan Technology trends to watch out for in 2016.
6. Ecosystem Roundup: Southern Africa
Grotech is raising a $12.8 million VC fund to invest in South African tech startups.
Angola’s first startup hub, KiandaHub is currently looking for funding to kickstart the local entrepreneurship ecosystem.
Custos, the South African startup with a piracy detection system using bitcoin and the blockchain has raised an undisclosed amount of money to fuel its growth plans into hollywood.