South Africa’s growing internet consumption is leading to a rapid rise in subscriptions to video-on-demand (VOD) services, with revenue growth to 2026 expected to outpace TV subscription revenue.
This is one of the key findings of PwC’s latest industry insights report, Africa Entertainment and Media Outlook 2022-2026, unpacked yesterday in Johannesburg.
The report provides a landscape of the entertainment and media (E&M) industry across three regions – Kenya, Nigeria and South Africa – as it is seen as a considerable economic driver in many African countries. It also identifies how large sectors within the industry were adversely impacted by COVID-19.
It assesses evolving consumer behaviours — and the advertising spend that follows those behaviours across the three African markets.
According to the report, SA’s E&M market exceeded pre-COVID levels (2019) in 2021, with a total industry spend of R163 billion, indicating a 15.4% annual growth rate.
Segments such as video games and over-the-top (OTT) streaming services rose to new heights after thriving under lockdown conditions, while other sectors proved to be largely ‘pandemic-proof’.
Podcasting, albeit off a low base, showed resilient revenue growth of 30.4% in 2021, accounting for R137 million of the wider audio landscape in SA, it notes.
Video streaming services reached revenue of R2.648 billion in 2021 and the market is forecast to grow by 5.6% this year. However, this is from a relatively small base, meaning revenue will remain comparatively low.
Alinah Motaung, PwC Africa entertainment and media leader, told ITWeb that the pandemic accelerated changes in local consumer behaviour, and digital adoption grew in leaps and bounds, a trend likely to affect future growth trajectories.
“There has been a huge shift over the past year and COVID-19 has catapulted internet access, and lot of South Africans are now online.Mobile internet penetration is forecast to be at 78% of the population.
“OTT video streaming is seeing a lot of growth influenced by mobile internet penetration, where people are mainly using their devices to consume content. Some formerly niche sectors, such as gaming, will barrel their way into prominence, as other formerly dominant sectors − such as traditional TV, newspapers and consumer magazines − are at risk of seeing their positions erode.”
South Africa’s VOD streaming market has been a hive of activity in recent months, with new entrants British TV online subscription-VOD service BritBox, eMedia Investments’ eVOD, and Disney+.
These new services take on Netflix, Showmax, Video Play from Vodacom, Prime Video from Amazon, Hong Kong-based Viu, Apple TV and TelkomONE (launched in November 2020), which are all available in SA.
Increasing mobile penetration
The outlook also highlights the continued rapid growth of data consumption across African markets, with SA and Nigeria seeing faster growth in 2021 than the global average.
Mobile phones are the most popular tech devices globally and across Africa for data consumption, ahead of the ‘portable devices’ category, which includes laptops, tablets and ‘other devices’, which counts data consumed via devices such as smart TVs and gaming consoles.
Charles Stuart, PwC South Africa entertainment and media partner, commented: “Connectivity in all markets is constrained by underdeveloped infrastructure, meaning the speed and quality of fixed broadband is less reliable, and consumers have instead turned to cheaper mobile packages.”
According to PwC forecasts, 79.7% of E&M revenue gained in SA through to 2026will come from internet advertising and internet access, as consumers and advertisers prioritise digital.
The pandemic accelerated the uptake of e-commerce; advertising spend then followed.
“From an advertising perspective, it is the internet advertising segment that we expect to see the largest gains in advertising revenue terms across the five-year forecast period to 2026,” explained Elenor Jensen, PwC South Africa entertainment and media partner.
“This is a trend seen across SA, Nigeria, Kenya and at a global level, and is due to consumers and advertisers prioritising digital.”
Future E&M growth is expected to come from the development of the metaverse and the use of non-fungible tokens (NFTs), as more local companies explore the emerging technologies to improve their revenue improvements.
“In essence, the media industry is becoming more digital, more mobile, more pitched at media that attract the young, more evenly distributed around the globe and more dependent on advertising in all its forms. According to Meta, the metaverse and NFT are projected to contribute around $40 billion and that contribution will come from Sub-Saharan Africa,” stated Motaung.
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