Six tipping points dominated this year’s PwC Entertainment and Media Outlook report, which looks back at 2017 and predicts trends over the next five years.
The data was unpacked at an intimate gathering at the Crowne Plaza Hotel in Rosebank by Charles Stuart, partner at PwC.
Asked to describe the current South African Entertainment and Media (E&M) Landscape, Stuart replied: “It’s been a pretty challenging year in 2017 from both a macro-economic and political level. Growth was below previous levels, growing at 6.8% to reach R129 billion. Advertising revenue was particularly hard hit, growing at only 1.9% during the year.”
Looking ahead, the South African E&M market is projected to grow at a Compound Annual Growth Rate (CAGR) of 6.5%, reaching R177 billion in revenue by 2022.
The six tipping points were:
1. In 2020, overall digital revenue will exceed non-digital revenue for the first time
2. 2022 will see internet advertising emerge as the largest advertising segment, overtaking TV advertising revenue. It is projected to grow at a 13% CAGR over the next five years to reach R9.4 billion.
3. In 2017, data consumption via smartphones exceeded data consumption via fixed broadband for the first time
4. In 2017, music streaming exceeded digital downloads for the first time
5. In 2017, internet video exceeded home video for the first time
6. In 2017, casual and social gaming exceeded traditional gaming revenue for the first time, and it will continue to accelerate away from the latter in the next five years.
A further indicator of digital’s dominance could be seen in the overall increases, with digitally driven segments seeing the fastest projected revenue growth. Virtual reality will lead the way, albeit from a low base, at a five-year CAGR of 55% to reach R671 billion in 2022, from R75 billion in 2017.
Convergence, connections and trust
Three trends driving the South African E&M market are convergence, connections and trust.
“The media system is experiencing a third wave of convergence. Call it Convergence 3.0. Companies that hail from different starting points are aiming at business models that revolve around comprehensive direct-to-consumer relationships,” said the PwC report.
It added, “As they transform, E&M players are building up and leveraging their connections with users, partners and other stakeholders to develop new revenue streams.
“The growing power of technology and importance of data is pushing trust to an even more central focus. Strong capabilities to build trust with users, improve value exchange and drive transparency while ensuring safeguards and protection are vital differentiators for E&M businesses.”
Advice for E&M brands
Having unpacked all the data, Stuart had some words of advice for E&M businesses. “The pace of change is not going to let up anytime soon. Investments in new technologies like augmented reality, artificial intelligence will continue to redefine the battleground. The ability of companies to develop and engender trust is going to be a key differentiator for them going forward.
“They need to re-envision every aspect of what they do and how they do it. In order to succeed they are going to need to have or have access to the right technology, excellent content delivered in a cost effective way to consumers who trust the brand. For companies that get that right, the opportunities are significant.”
Here are some pics from the event:
Other African markets
Aside from South Africa, the PwC E&M Outlook explores four other African markets; Nigeria, Ghana, Kenya, and Tanzania.
Here is a summary giving an overview of each of their E&M markets:
Nigeria: The continuing depreciation of the naira against the dollar in 2017 sees Nigerian E&M revenue come in significantly below the early part of the previous year’s figures. Conversely, renewed optimism about the scale of the mobile Internet access opportunity puts forecast revenue well above last year’s table. Nigeria saw a huge 25.5% rise in E&M revenue in 2017 to US$3.8 billion, although US$605 million of this US$764 million rise was attributable to Internet access. A 21.5% CAGR is anticipated to 2022, with revenue reaching US$9.9 billion in that year. Again, Internet access revenue will account for 89.6% of this absolute growth.
Kenya: Kenya’s E&M industry saw 17.0% year-on-year growth in 2017, again propelled by growth in the Internet sector. An 11.6% CAGR will take the country to US$2.9 billion in 2022, from US$1.7 billion in 2017.
Ghana: Ghana’s E&M industry has more than tripled in value since 2013, with the total revenue reaching US$752 million in 2017. It should breach US$1 billion in 2019 to total US$1.5 billion in 2022, increasing at a 14.2% CAGR.
Tanzania: Total E&M revenue in Tanzania stood at US$496 million in 2017, having risen 28.2% year on year. Continued momentum at an 18.3% CAGR will see revenue reach US$1.1 billion in 2022, 2.3 times the size of the 2017 figure.
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