By Ogova Ondego
Published September 16, 2015
The value of Kenya’s entertainment and media industry is expected to hit the US$3.3 billion mark by 2019, up from US$1.8 billion in 2014.
A forecast report by PriceWaterhouseCoopers LLP (PwC) titled Entertainment and media outlook: 2015 – 2019 (South Africa-Nigeria-Kenya) says that though “the Internet is expected to be the largest driver of growth, followed by television and radio”, legacy media–”TV, radio and newspapers–”will continue to be the first choice for most advertisers in Kenya in the foreseeable future.
While TV advertising is expected to overtake radio in 2016, “Internet advertising will see the fastest growth rate at a compound annual growth rate (CAGR) of 16.8%,” Vicki Myburgh, entertainment and media leader for PwC Southern Africa, says.
Businesses seeking to remain relevant in such a market “where the media [are] no longer divided into distinct traditional and digital spheres,” Myburgh says, must “innovate around the product and user experience; develop seamless consumer relationships across distribution channels; and put mobile (and increasingly video) at the centre of the consumer’s experience.”
Turning to Nigeria, the PwC report says the entertainment and media market of Africa’s largest economy that grew by 19.3% and stood at US$4 billion in 2014, “will be more than twice as big, with an estimated total revenue of US$8.1 billion.”
Here, like in Kenya and South Africa, the Internet will be the key driver of growth.
“Television, comprising revenue from TV advertising and subscriptions, is the other main driver,” the PwC report, issued through African Press Organisation, says.
With TV, filmed entertainment and video games being the areas where Nigerian consumers are expected to spend the most over the next five years, the report says, “consumer spend on video games and music is set to see the sharpest rise in forecast CAGRs at 14.3% and 11.4%, respectively.”
Piracy, however, remains a problem in the West African country, limiting growth across several entertainment and media sectors.
The greatest growth–US$13,253,995,995 in 2019, up from US$8,472,633,855 in 2014–in the surveyed markets will be witnessed in South Africa whose entertainment and media industry grows at a CAGR of 9.4%. Overall growth will be fuelled by what PwC calls ‘digital spend’.
South Africa’s Internet access market is expected to rise from US$2,443,710,100 in 2014 to US$5,728,806,678 in 2019, that will be “far ahead of any other consumer spend category, making it the largest contributor to South Africa’s total entertainment and media revenues.”
Myburgh says “consumer demand for entertainment and media experiences will continue to grow, while migrating towards video and mobile.”
Saying consumers “see no significant divide between digital and traditional media”, Myburgh says “what they want is more flexibility, freedom and convenience in when, where and how they interact with their preferred content.”
The Outlook presents annual historical data for 2010-2014 and provides annual forecasts for 2015-2019 in 11 entertainment and media segments: the Internet, television, filmed entertainment, video games, business-to-business publishing, recorded music, newspaper publishing, magazine publishing, book publishing, out-of-home advertising and radio.
Aside from the Internet, the Outlook predicts that the fastest growth will be seen in video games, business-to-business and filmed entertainment.
â€œBut it is Internet access itself that is acting as a driver of revenues in video games and film, creating new revenue streams by making over-the-top (OTT)/streaming or social/casual gaming viable to more consumers and thereby cancelling out physical falls,â€ says Myburgh.
The report, that also looks at live entertainment, shows that South Africaâ€™s total entertainment and media advertising revenue is expected to rise by 5.6% from US$2,985,401,094 in 2014 to US$3,978,028,158 in 2019.
Though TV advertising is the largest contributor to total advertising revenues followed by newspaper advertising, their combined 52% share of total advertising in 2014 will fall slightly to 51% in 2019.
Despite the strong projections for advertising, its share of the entertainment and media mix is predicted to decrease 30% (down from 35% in 2014) by 2019 as consumer spending takes an ever larger part of the pie.
“Affordable Internet access will continue to digitally disrupt the market in novel and innovative ways. The ongoing spread of services to mobile networks, novel devices and emerging markets will change how media and entertainment are served, consumed and monetised in multiple ways. Affordable Internet access will also inhibit the revenue growth of various sectors as consumers use it to access free, ad-funded and lower-priced subscription-based versions of new and existing media services,” says Myburgh.