PWC has published the 8th edition of the African Media and Entertainment Outlook which takes an in-depth look at the trends shaping the entertainment and media industry in South Africa, Nigeria, Kenya, Ghana and Tanzania. The report seeks to help companies capture attention and build value by understanding how local and global markets are impacted by the changing pace of the media industry.
The report by PWC forecast over a 5 year period, 2017—2021, consumer and advertising spending in 14 segments namely internet, data consumption, television, cinema, video games, e-sports, virtual reality, newspaper publishing, magazine publishing, book publishing, business-to-business publishing, music, out-of-home, and radio.
Amid shifting consumer preferences, rapid advances in technology and ongoing disruption to business models, the new strategic imperative for E&M companies are to turn customers into fans, by innovating and creating the compelling, engaging, and intuitive user experiences.
On converting consumers to devoted fans, Entertainment and Media Industry Leader for PwC Southern Africa, Vicki Myburgh recommended. “Companies that wish to capture value amid shifting consumer preferences and business model disruptions must focus on an increasingly prominent source of competitive advantage (the user experience), they must harness technology and data to attract, retain and engage users–and convert them into devoted fans,”.
However, thriving in this new world of intense competition and continual disruption will be challenging, the opportunities are immense across the industry. Since the primary objective is growth and investment, companies would need to create strategies that would engage users, monetise their most valuable customers and in turn grow their company.
Although, South Africa has remained the largest TV market in Africa, with total revenues of R40.9 billion in 2016, other countries like Nigeria are speedily catching up in terms of total E&M revenue. According to the report, Nigeria is one of the fastest-growing countries.
Predictions are, the Nigerian market will add US$2.8 billion between 2016 and 2021. Combined elements of TV and video will add nearly US$200 million in revenue growth, while US$452 million will come from Internet access revenue, specifically mobile internet access revenue.
Digital spend will continue to drive the overall growth as nearly 40% of total spend will be derived from Internet access in revenue. In South Africa, mobile Internet penetration is forecast to rise to 77.8% by the end of 2021 from 52.3% in 2016. Driving mobile Internet access revenues growth projection of 10.7% Compound Annual Growth Rate (CAGR) to nearly R62 billion.
Like Nigeria, the largest contributor in South Africa will be Internet access, rising to a 56% in 2021 from 48% share in 2016. South Africa can expect a CAGR of 7.2% for consumer revenue over the forecast period, rising from R87.4 billion in 2016 to R123.7 billion in 2021.
Being the largest Tv market, South Africa’s total TV market is estimated to be worth R51.2 billion by 2021. By then, end-user spending (Pay-Tv subscriptions, physical and Internet home video and license fees) will account for 56.7% of the total TV market.
Asides Tv, the video game market is also performing well and revenue is forecast to grow at a CAGR of 15.4% to reach R5.4 billion in 2021, up from R2.6 billion in 2016. The primary growth driver in the video games market is social/casual gaming revenue, which will be worth R3.7 billion by 2021.
A total of 3.7% rise in CAGR (from R45.3 billion in 2016 to R54.2 billion by 20210) is expected in South Africa’s entertainment and media advertising revenue.
For Kenya, E&M industry revenue is forecast to grow at an 8.5% CAGR from US$2.1 billion in 2016 over the next five years, hitting the US$3 billion mark in 2020, and totalling US$3.2 billion in 2021. Internet access is the most established industry within the Kenyan market.
In 2012, Ghana’s E&M industries total revenue was just at US$214 million, but it is beginning to gear up, showing an increase of US$685 million in 2016 (above 25%) in a 4-consecutive year-on-year growth. Thanks to a 16.5% CAGR, PWC’s outlook forecast the revenue to more than double over the next five years, with revenues of U$1 billion being surpassed in 2019 and a total of US$1.5 billion expectation for 2021.
Tanzania’s total E&M revenue stood at US$504 million in 2016, but is set to more than double to US$1.1 billion in 2021, a 17.2% CAGR over the coming five years. The symbolic crossing of the US$1 billion mark is set to occur in 2021. This is significant growth from 2012 where the industry stood at just US$175 million.
Among the largely non-digital segments, magazines and newspaper revenue are set to continue their decline. For digital components, it is notable that only one is seeing a significant decline in the entire forecast, and that is the digital music downloading revenue, which is forecast to see a -15.7% CAGR, as consumers shift from ownership to access. Digital music streaming revenue is forecast to rise at a CACR of 34.5% to 2021, reaching R518 million in that year. This growth rate is only beaten by new revenue lines from VR and e-sports.
To thrive in a marketplace that is increasingly competitive and crowded, companies are gradually focusing on implementing strategies and building capabilities to engage their consumers. These imperatives assume a larger importance because, the entertainment and media industry is confronting several challenges to continued top-line growth.