Masterclass Notes – Johanna McDowell

Masterclass Notes: Entertainment and media in SA, Nigeria, Kenya

by Johanna McDowell (@jomcdowell) PwC presented the results of its annual Entertainment and media outlook: 2015 – 2019 (South Africa – Nigeria — Kenya), the sixth year of this initiative. This outlook is used by marketers and agencies alike — although I suspect that many do not know of its existence.

Based upon what Chris Botha told us a few months ago at his masterclass, this kind of information is becoming more and more valuable as Africa emerges. When coupled with the information available from EY and its Africa Attractiveness Survey and its Africa Cube, marketers and agencies cannot say that they do not have sufficient information now in order to explore new countries.

Only source of comparable data

PwC’s Outlook is the only source of comparable forecast consumer and advertising spend data for 11 industry segments across South Africa, Nigeria and Kenya. The study uncovers how shifts in spending are shaping the future of the industry and 11 entertainment and media segments, from filmed entertainment to internet advertising and including radio, video games, newspaper publishing, out of home, B2B, music, book publishing, television and magazines.

After a decade or more of digital disruption, it is increasingly evident that consumers now see no significant divide between digital and traditional media. Consumers want more flexibility and freedom — for which they read “choice” — in when and how they consume any kind of content, be it newspaper, movie or rock concert.

Today’s entertainment and media companies need to do three things to succeed: innovate around the product and user experience, develop seamless consumer relationships across distribution channels, and put mobile and increasingly video at the centre of consumer offerings.

Report highlights

Some highlights from the very comprehensive report were as follows:

Growth in the SA entertainment and media industry continues to grow and is expected to remain in double digits until end 2016. Industry revenue in 2014 was approximately US$10bn.
This growth will far exceed the average EMEA growth and is expected to be US$17bn by 2019.
Nigeria’s entertainment and media market grew by 19.3% in 2014 to reach US$4bn.
By 2019, the market will be more than twice as big, with estimated total revenue of US$8.1 bn.
In Kenya, the entertainment and media industry was valued at US$1.8bn in 2014 — it is expected to reach the US$3bn mark by 2019.

What is interesting about these figures is the sheer size and development of the SA media and entertainment market in comparison. But, while SA is in double digit growth now, this is expected to slow after 2016.

Nigeria, of course, will continue to grow rapidly. How soon will it catch up? It could take over after the next 10 years, I suppose given its growth and its market growth.

In terms of the 11 segments surveyed by PWC, here are some key points:

Internet-access revenues are expected to more than double by 2019, widening the gap between consumer spend on internet access and other media. Internet-access marketing in SA will rise rapidly from R32.5bn in 2014 to R 76.2bn in 2019, far ahead of any other consumer-spend category, making it the major contributor to SA’s total entertainment and media revenues.
The mobile platform pulls ever further away. Currently sitting at R 28.3bn in 2014, this will increase to R69.1bn by 2019 and account for 90.7% of all internet-access revenues. More simply put, nine out of ten rands will be spent via mobile.
Mainly due to the increased usage of smartphones, these connections are expected to more than double from 22.8m in 2014 to 52.3m in 2019.
Nigeria, Kenya and SA will continue to see very fast growth rates with Compound Average Growth Rates (CAGR) of approximately 20% each.

In television, the following comparisons emerge:

SA has the largest TV market on the continent and is expected to reach R 40.9bn by 2019, representing a CAGR of 4.8% for that period.
In Nigeria, the number of pay-TV households is expected to reach 3.2m in 2019, compared to R 1m in 2010. Digital migration from analogue has been hampered by government intervention and inefficiencies. The majority of pay TV users are still on analogue signal.
Kenyan pay TV penetration is currently at 11.9% and is expected to increase to 18.2 % by 2019.

Newspaper publishing, an area under threat, generally will show the following:

Moderate-to-slow growth in SA
Flat growth in Nigeria, with advertisers using other means to reach consumers
Good, robust growth in Kenya as the economy grows and there is a growing middle class of consumer

Magazines:

SA will continue to grow but at a slower pace. This includes consumer and trade publications.
In Nigeria, growth is hampered by the ability to distribute magazines outside of urban centres.
In Kenya, magazine growth will continue at a good pace but off a low base, relative to the above two countries.

Out-of-home (OOH) advertising:

SA continues to grow steadily, with a CAGR of just over 3.5% by 2019.
Of this growth the digital OOH (DOOH) will increase a great deal so that SA will be the most DOOH on the continent and will be in the top 30 worldwide.
Interactive DOOH will continue to be an exciting part of OOH, and we saw that recently in some of the entries in the 2015 Assegai Awards, where the results of OOH campaigns can now be actively measured and which now leads to all sorts of possibilities for advertisers and their agencies.
In Nigeria, OOH is an actively growing medium and will have a CAGR of 7.2%. The rapid urbanisation of the country is proving very beneficial for the OOH industry.
In Kenya, more good growth expected in this already popular medium. DOOH has arrived and is being used at shopping malls in the main.

Great deal of interest

In summary, our marketers learned that generally the media and entertainment revenues are all enjoying growth at varying rates. There are some surprises, of course, but always a great deal of interest in what is happening on other parts of our continent.

Johanna McDowell (@jomcdowell) is managing director of the Independent Agency Search and Selection Company (IAS), and she is one of the few experts driving this mediation and advisory service in SA and globally. Currently she is running the IAS Marketers Masterclass, a programme consisting of masterclasses held in Cape Town and in Johannesburg. Twice a year she attends AdForum Worldwide Summits.