Internet growth behind Africa's digital opportunity

Internet growth behind Africa's digital opportunity

The clear division between traditional and digital media is fading away according to PwC's Entertainment and media outlook: 2015 – 2019 Report, which also predicts unprecedented growth of the entertainment and media industries in Kenya, South Africa and Nigeria.

The report forecasts that South Africa's entertainment and media industry is expected to grow from R112.7 billion in 2014 to R176.3 billion in 2019, largely fuelled by digital spend and at a compound annual growth rate (CAGR) of 9.4%.

Internet access in South Africa for one, will rise rapidly from R32.5 billion in 2014 to R76.2 billion in 2019 according to the report, making it the largest contributor to South Africa's total entertainment and media revenues.

Vicki Myburgh, entertainment and media leader for PwC Southern Africa says growth will continue into the near future. "This year's Outlook shows consumer demand for entertainment and media experiences will continue to grow, while migrating towards video and mobile. Increasingly, though, it's clear that consumers see no significant divide between digital and traditional media – what they want is more flexibility, freedom and convenience in when, where and how they interact with their preferred content."

Nigeria's entertainment and media market grew by 19.3% in 2014 to reach US$4 billion. By 2019, the market will be more than twice as big, with an estimated total revenue of US$8.1 billion. As in South Africa, the Internet will be the key driver of growth for Nigeria. Television, comprising revenue from TV advertising and subscriptions, is the other main driver.

"Consumers are choosing offerings that combine an outstanding and personalised user experience with an intuitive interface and easy access. This includes shared physical experiences like cinema and live concerts, which appear re-energised by digital and social media," Myburgh continues.

As in South Africa and Nigeria, the Internet in Kenya is expected to be the largest driver of growth, followed by television and radio. TV advertising will overtake radio in 2016, and Internet advertising will see the fastest growth rate at a CAGR of 16.8%. Traditional mediums such as TV, radio and newspapers will continue to be the first choice for most Kenyan advertisers in the foreseeable future.

"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.

The report also details growth of Kenya's entertainment and media industry which was valued at US$1.8 billion in 2014, up 13.3% from 2013, when it stood at US$1.6 billion. The Kenyan market is expected to surpass the US$3 billion mark in 2019 to reach US$3.3 billion.

"Today's 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 the consumer's experience."concluded Myburgh.

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