A report by PWC indicates that media and entertainment consumption in Africa is growing at a rapid rate thanks in part to the rise in digital content.
The Entertainment and Media Outlook 2016-2020 report [PDF] covers Kenya, South Africa and Nigeria, three countries with a sizeable entertainment industry.
The data was collected from 12 key areas, including internet, television, filmed entertainment segments, radio, recorded music, publishing, out-of-house advertising, video games, and sports.
The report puts the value of Kenya’s Entertainment and Media Industry at US $2.2 billion, or about KES 200 billion as at 2015 in terms of revenue, further predicting that the internet will account for 43% of the total market by 2020, adding up to US$1 billion in value.
South Africa’s total entertainment and media advertising revenue is expected to rise by 5.6% from US$3.9 billion in 2014 to US$5.2 billion in 2020. Nigeria’s entertainment and media market was valued at US$4 billion in 2014. By 2020, the market will have doubled in size, earning an estimated total revenue of US$8.1 billion.
According to Vicki Myburg the entertainment and media industry leader for PwC South Africa, the media industry has to innovate in order to take advantage of new distribution avenues. The report identifies three main areas that the industry needs to capitalize on: products and user experience, consumer relationships across distribution channels, and mobile and video content.
The report identified five key shifts that are emerging as a direct result of the continuing disruption of the entertainment and media landscape: demography, competition, consumption patterns, geography, and business models.
Shift 1. Demography: Youth are spending more on media and entertainment
From an analysis of national entertainment and media markets globally, it is clear that younger consumers, specifically those under 35, are now the primary drivers of global growth. On average, entertainment and media spending in the 10 youngest markets is growing three times as rapidly as in the 10 oldest markets.
Shift 2. Competition: Content is still king
In a world where Netflix can launch in 130 new countries in a single day, it’s easy to assume that content is becoming more globally homogeneous. But the reality is that content is being redefined by forces of globalisation and localisation simultaneously—and that while much of the industry is growing more global, content tastes and cultures remain steadfastly local.
Shift 3. Consumption: More people are consuming entertainment through their phones
With entertainment content available on a full range of devices, consumers are more able to design and curate their own media diet. As a result, cable, technology, and telecom players are now fighting over access to distribution.
Shift 4. Geography: Growth Markets
The report looks at Kenya, Nigeria and South Africa as Africa's leading entertainment markets. While South Africa is the leading media market on the continent, the other two are fast catching up. especially in terms of market value and consumption patterns. We are likely to see more growth in terms of spending on entertainment as per capita incomes increase in these markets.
Shift 5. Business models: Transforming with trust
Today’s entertainment and media market includes technology companies turning into hybrid content companies, and traditional publishers evolving the other way to emerge as hybrid technology companies. The growth of technology and digitisation is breaking up large, generalist entities to give way to smaller specialists; and allowing smaller, nimble competitors to beat out incumbents.
The rise of online entertainment
The internet is changing media in the region, both in terms of consumption patterns and how we pay for it. The report cites new segments such as over-the-top (OTT) streaming and casual gaming as a potential source of revenue that faster connectivity is contributing towards.
Video games are also becoming more popular, accounting for 9% of new revenues. This is largely due to the popularity of mobile gaming and the increased potential for digital distribution of console games.
The study says the fastest growth will also be seen in filmed entertainment, business–to-business and radio. In five years’ time, TV and radio are forecasted to contribute over US$700 million in revenues to the industry.
Traditional media is stagnating
The report predicts that the slowest growth will be seen in the music, newspapers and magazine circulation, which is linked to the disruption linked to new media channels such as streaming audio and free online alternatives to print media.
Over-the-top content is also seen as a threat by telcos, who argue that the services are directly affecting their revenues; this is partly because the digital technology is said to riding on the existing infrastructure and investments without contributing directly to the infrastructure.
Advertising is shifting to digital
Online advertising is predicted to grow at a faster rate than traditional mediums such as TV, radio and newspapers. Although legacy media continues to be the first choice for most advertisers in the countries surveyed, online advertising is drawing converts due to its relatively low cost.
As more people go online, traditional media continues to lose its appeal. The internet will be the key driver of growth in Africa, and television, filmed entertainment and video games will see the highest growth in customer spend over the next five years.
Homegrown players like Multichoice, iROKO and Buni are likely to experience growth as a result of this spending, and we are likely to see a more robust entertainment industry on the continent.