Personalisation is the theme of PwC’s 10th annual edition of the Entertainment & Media Outlook: 2019-2023 – An African perspective, which highlights the increasing momentum of personal and personalised media interaction, fuelled by technology and evolving customer behaviour.
“This year, The Outlook looks at the industry through the eyes of the consumer – the central theme of this growing media is personal and increasingly digital. There is an increasing shift to personalised experiences all around us in the fast-changing human behaviours involving E&M,” explains Vicki Myburgh, Entertainment and Media leader for PwC Southern Africa.
The Outlook,released this week, is a comprehensive source of analyses and five-year forecasts 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, music, out-of-home (OOH) and radio.
Putting the me in media
The report highlights how consumers are using an array of connected devices to organise, curate and discover their own unique worlds of media. In response, companies are designing their offerings to revolve around personal preferences, using data and usage patterns to pitch their products not at audiences of billions, but separately at billions of individuals.
These profound shifts are taking place against a background of ongoing global growth in entertainment and media (E&M) revenues. By 2023 total E&M revenue in South Africa is expected to reach R170.5 billion, up from R128.9 billion in 2018. Consumer spend on Internet access is a major contributor to growth, accounting for 61% of the overall rise in E&M revenue. Total Internet access is forecast to increase at an 8.2% CAGR over the forecast period and reach R77.7 billion in 2023.
“The advent of 5G networks will also impact the entire technology, media and telecommunications value chain over the next decade,” notes Charles Stuart, Entertainment and Media Partner, PwC South Africa. “5G will impact virtually every industry, but E&M companies will be among the earliest to incorporate 5G into their offerings and business models. It will also enhance the customer experience further and accelerate growth for many subsectors within the E&M industry, from video games to high-definition video streaming of sporting events,” he adds.
The growing segments of VR, AR and mixed reality (MR) will also accelerate as a result of 5G – offering exciting prospects for agile and innovative E&M companies to create new revenue streams stretching into, and fundamentally changing the future.
SA’s growing market, in segments
Digital revenue in South Africa will continue to make up more and more of the industry’s income, with overall digital spend to exceed non-digital this year.
South Africa, the continent’s most mature mobile market, trends towards the global average revenue and growth, with consumer revenue set for a 6.4% Compound Annual Growth Rates (CAGR) between 2018 and 2023, increasing from R99.4 billion to R135.6 billion. Predictions for advertising revenue – which rose by 2.8% year-on-year in 2018 to reach a total of R29.5 billion – are that a CAGR of 3.4% will see the total reach R34.9 billion in 2023.
Although Internet revenue takes a major proportion of overall revenue, the good news is that three other sectors – video games, e-sports and virtual reality – have stronger CAGRs than Internet to 2023. Music and podcasts are also proving good sources for consumer revenue, as is television. International evidence, however, suggests that Internet advertising will continue to catch up rapidly, to overtake TV advertising in 2022.
• Growth in the video games market will continue over the next five years, with total revenue rising from R3.5 billion in 2018 to R5.4 billion in 2023. Social/casual gaming represented 56.6% of total video games revenue in 2018 and is set to increase significantly to 68.4% in 2023.
• Digital music-streaming providers continue to gain traction among consumers: revenue reached R325 million in 2018, up almost 57% year on year and is set to increase at a 20.1% CAGR to total R815 million in 2023.
• South Africa continues to be the largest TV market on the African continent. Despite challenges, the TV industry will expand at 3.9% CAGR to R40.5 billion in 2023. TV advertising will grow at 1.8% CAGR but will account for a smaller proportion of the market in 2023.
• Virtual reality (VR) remains a niche category, but continues to attract significant investment from major media and technology companies that are eager to seize a share of this fast-growing market.
• E-sports’ popularity in South Africa is indisputable. Total e-sports revenue is forecast to reach R138 million in 2023, a 24.7% CAGR rise from the R46 million recorded in 2018.
• Radio continues to have a solid listener base in South Africa with 47% of listeners tuning in for more than 20 hours in a given week. All being well over the next five years, total radio revenue has the potential to edge towards the R5.0 billion-mark, totaling R4.8 billion in 2023.
• The print-exposed newspapers, books and consumer magazines segments have the worst forecasts through to 2023, with revenues projected to suffer declining or constrained CAGRs of -2.3%, 0.3% and 1.1% respectively
“The breakneck pace of technological progress is the catalyst for growth, as Internet access revenue rises drive overall revenue forward. But away from this, trends and norms differ greatly by country, with markets firmly resisting easy characterisation.
“All of this means that companies that want to position themselves for a successful future will have to focus intently on consumers, innovate and experiment continually and be prepared to make significant investments,” Myburgh concludes.
