Creating a customised user experience is paramount to ensuring that a media type succeeds in these challenging times. This was the key takeaway from PwC’s latest report titled ‘Entertainment and media outlook: 2017 – 2021: An African perspective’.
In a space with increasing clutter, shifting consumer preferences and rapid advances in technology, this approach will help a brand stand out from the rest.
“Companies that wish to capture value amid shifting consumer preferences and business model disruptions must focus on an increasingly prominent source of competitive advantage: the user experience. They must harness technology and data to attract, retain and engage users – and convert them into devoted fans,” says Vicki Myburgh, entertainment and media industry leader for PwC Southern Africa.
Speaking at The SpaceStation’s recent digital SALT conference about the research, Myburgh added, “Winning in this slowing entertainment and media environment is about making choices. Making choices between what the consumer is demanding and all of the technology that is available, and enables you to build a consumer experience that is relevant to them”.
Myburgh stressed that companies needed to get closer to the consumer, creating unique, immersive, engaging experiences in order to keep their business and that for them to grow, it will be more about taking share rather than market expansion.
The major trends
The outlook’s overall prediction is that by 2021 total entertainment and media revenue in South Africa is expected to reach R177.9 billion, up from R132.7 billion in 2016. R27 billion of this increase can be attributed to internet access, which remains the key growth driver. The country can also expect a compound annual growth rate (CAGR) of 7.2% for consumer revenue over the forecast period, rising from R87.4 billion in 2016 to R123.7 billion in 2021.
Similar to revenue, the largest contributor to the latter will be internet access, with a 48% share in 2016 rising to 56% in 2021. The report also predicts that South Africa’s total entertainment and media advertising revenue is expected to rise to R54.2 billion by 2021 from R45.3 billion in 2016, representing a 3.7% CAGR. TV advertising remains dominant, but in terms of absolute growth it is Internet advertising that is almost an equal contributor, helped by a sizeable 12.9% CAGR.
South Africa continues to remain the largest TV market in Africa, with total revenues of R40.9 billion in 2016. The total TV market is estimated to be worth R51.2 billion by 2021. At this time, end-user spending (pay-TV subscriptions, physical and internet home video and licence fees) will account for 56.7% of the total TV market.
Like television, this market is also performing well and revenue is forecast to grow at a CAGR of 15.4% to reach R5.4 billion in 2021, up from R2.6 billion in 2016. The primary growth driver is social/casual gaming revenue, which will be worth R3.7 billion by 2021. Furthermore, the console and PC markets are experiencing a significant shift towards digital and online/micro transaction revenue, which will exceed physical sales for the first time in 2020. “This market wasn’t one that was cannibalised, it’s a new revenue stream … That’s an example of the opportunities that are available,” she said.
The growing interest in gaming is helping to fuel the rapid growth in the related segment of VR and e-sports. These are the fastest growing sectors, compounded annually at 72.6% and 39.6% respectively. As a segment that only reached consumers in 2016, almost the entire VR market is new. According to the outlook, the consumer VR content market will be worth R455 million by 2021. Of this, R282 million will be spending on VR video.
Alongside video, the B2B market is showing continued growth. In 2016 revenues grew by 3.8% to R9.7 billion and by 2021 this is forecast to rise to R11 billion, a CAGR of 2.6%. The slowdown in growth is largely attributable to ongoing macroeconomic challenges which are likely to weigh on B2B revenues.
This sector in South Africa currently presents a mixed picture. Overall revenue, including box office and cinema advertising, is expected to reach R2.2 billion in 2021, up from R1.9 billion in 2016. “Cinema remains a very good evening’s entertainment and people are prepared to pay for Box Office to go and watch a movie,” Myburgh said.
South Africa continues to be an attractive destination for international filmmakers. Although some short-term economic and political issues are impacting the film sector, it is expected in the long term to continue to expand.
This industry is currently on a growth curve with live music being a key driver. Live music revenue is expected to rise from R1.2 billion in 2016 to R1.7 billion in 2021, a CAGR of 7.4% over the forecast period.
It is notable that only one digital subcomponent is seeing a significant decline in the research – digital music downloading revenue, which is forecast to see a -15.7% CAGR, as consumers shift from ownership to access. Digital music streaming revenue is forecast to rise at a CACR of 34.5% to 2021, reaching R518 million in that year. This growth rate is only beaten by new revenue lines from VR and e-sports.
Among the largely non-digital segments, magazines and newspaper revenue is set to continue their decline. Total newspaper revenue in the South African newspaper market has been unpredictable. The market showed growth in 2013, declined in 2014 and bounced back marginally in 2015, contracting at a slower rate. In 2016, total newspaper revenue was worth R8.9 billion, but this figure is forecast to drop to R7.4 billion in 2021. Marginal growth is expected for the book publishing industry over the next five years. The educational book market will contract by a -0.1% CAGR. On the contrary, professional titles and consumer books will exhibit some growth as e-book revenues continue to grow.
Myburgh comments that artificial intelligence will revolutionise the consumer experience over the next couple of years. “AI is the brain that allows you to filter for content, to sort it down and to come up with just what you are looking for. It’s still very much in its early days, a lot of development is still to come, but companies are certainly recognising that it’s not just an investment that they make… it needs to be impacting every part of their business”.
About the research
PwC’s outlook is an analysis and five-year forecast of consumer and advertising spending across five countries (South Africa, Nigeria, Kenya, Ghana and Tanzania) and 14 segments: Internet, data consumption, television, cinema, video games, e-sports, virtual reality, newspaper publishing, magazine publishing, book publishing, business-to-business publishing, music, out-of-home, and radio.
To see a summary of the full report, click here.
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