The decline in the growth rate of newspapers and the print media will reach a floor by the end of 2016, according to Vicki Myburgh, the entertainment and media industries leader for auditing and advisory firm PwC Southern Africa.
According to PwC’s South African Media and Entertainment Outlook 2012-2016, published yesterday, the newspapers and print media industry would grow revenue at an annual rate of 5.1 percent over the next five years to R14.6 billion.
Last year, the segment’s turnover advanced 5.7 percent to R11.4bn compared with 1.9 percent growth recorded in 2010.
PwC attributed the rise last year and the projected increase over the next five years to growth in advertising, which offset declines in circulation income.
The report said newspapers and the print media were being eclipsed by tablets, smartphones and new digital and online communications media led by the internet, television advertising and video games.
Myburgh told Business Report: “There is definitely a bottom to the market. I suspect we will reach the bottom by the end of 2016.”
While globally there had been reports of a slump in the newspaper and print market, the situation was expected to bottom out and turn, she said.
“We tend to be two to three years behind the rest.”
PwC said, despite the recent economic uncertainty, sales of tablets and smart devices had increased in the past year both globally and in South Africa.
This trend “underlines the growing revenue opportunities in the digital delivery of entertainment and media content as well as advertising to increasingly connected and mobile consumers”, it said.
Myburgh said companies were planning and executing their strategies “to cross to the digital frontier”.
Last month, Print Media SA changed its name to Print and Digital Media SA to reflect the growing credibility of digital publishing.
The Digital Media and Marketing Association has formed a strategic partnership with the organisation and formulated a plan to accelerate growth of the digital landscape.
According to PwC, South Africa’s entertainment and media companies have reached “the end of the digital beginning” with digital activities “becoming the new normal for traditional media companies”.
Spending on digital media was expected to rise at an approximate 21 percent annual rate during the next five years.
Last year, digital channels comprised 20.4 percent of overall spending and they are expected to generate 52 percent of the total increase in spending over the next five years.
The growth will be driven by broadband internet penetration and consumer spending on television subscriptions and video games, according to PwC.
Digital spending will comprise 32.6 percent of the total entertainment and media market in South Africa by 2016, the report says.
Myburgh said consumers’ growing preference for digital media would mean that effective measurement tools for convincing advertisers of returns by advertising on digital platforms would become critical, while advertising would become more targeted and specific.
The South African entertainment and media industry grew only 7 percent last year compared with 27.6 percent in 2010 when it was boosted by the World Cup.
The internet is expected to be the fastest-growing segment as broadband and cellphone access increases, coupled with double-digit increases in internet advertising.
Television is expected to be the next fastest-growing segment with a projected 10.3 percent compound annual increase.