SA entertainment to hit R176bn in 2019
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Johannesburg - The digital ecosphere will continue to drive the entertainment and media industry in Africa with consumers increasingly demanding access to media such as live concerts streamed on their phones.
This is according to PricewaterhouseCoopers’ latest report, Entertainment and Media Outlook, which was released on Thursday.
The auditing, accounting and analytical firm notes the African entertainment and media industry has entered a new landscape after more than a decade of digital disruption. This new era is one in which media is no longer divided into distinct traditional and digital spheres.
This shift shows that the line between traditional media and digital media is blurred as consumers want more flexibility and freedom in how they consume content.
PwC’s report, which looks ahead to 2019 for South Africa, Nigeria and Kenya, predicts SA’s entertainment and media sector will grow from being worth R112.7 billion in 2014 to R176.3 billion in 2019, with digital spend fuelling overall growth.
However, it seems the growth rate has slowed, which could be a function of the current subdued economic climate. In last year’s report, this sector was anticipated to hit R190 billion by 2018.
The report also notes that SA’s Internet market will rise “rapidly” from being worth R32.5 billion in 2014 to R76.2 billion in 2019, which makes it far ahead of any other consumer spend category.
This will take it to the largest contributor to South Africa’s total entertainment and media revenues.
In February, global networking giant Cisco noted many more people are coming online via mobile devices, with almost half a billion mobile devices and connections being added in 2014. This brings the number of connected to devices to 7.4 billion, which speaks to the trend of multi-simming as the globe only has 7 billion inhabitants.
Globally, smart devices make up a quarter of all devices, and the use of data grew as worldwide mobile data traffic reached 2.5 exabytes per month at the end of 2014, up from 1.5 exabytes per month at the end of 2013, says Cisco.
“Last year’s mobile data traffic was nearly 30 times the size of the entire global Internet in 2000. One exabyte of traffic traversed the global Internet in 2000, and in 2014 mobile networks carried nearly 30 exabytes of traffic.”
These global trends are being followed in SA, although the country lags global experiences by a few years.
Vicki Myburgh, entertainment and media leader for PwC Southern Africa, notes the report indicates “consumer demand for entertainment and media experiences will continue to grow”.
She adds consumers’ needs will move 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.
“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.”
The outlook says the fastest growth areas - apart from the Internet - will be in video games, business-to-business and filmed entertainment.
Music, magazines and newspapers, which will show only moderate consumer growth, are three segments that face strong competition from the Internet.
The music market was worth R2.01 billion in 2014, compared to R2.08 billion in 2013 and annual revenue is only expected to grow at a marginal 1.3 percent over the next five years.
Television is still a significant contributor to consumer spending, with combined revenues from TV subscriptions, advertising and licence fees projected to reach R40.9 billion by 2019.
Locally and globally, there is an increasing shift in consumer spending to video-based content and services. Recently, these services having been taking off in SA with several offerings entering the fray, the latest being Naspers’ Showmax. Netflix and a Hong Kong service are also reportedly keen on the local market.
PwC notes another thriving source of revenue between 2014 and 2019 will be live events.
The report predicts income from live music is expected to grow at a compound annual growth rate of 7.9 percent in the next five years, reaching R1.5 billion in 2019.
Box office revenues are also steadily increasing at a compound annual growth rate of 3 percent to reach R972 million by the end of the forecast period.
These two growth markets have also had a positive effect on related advertising revenues, with local cinema advertising revenue rising at a compound annual rate of 6.7 percent to hit R884 million in 2019.
“It is clear that consumers value – and are willing to pay a premium for – real-life physical entertainment experiences, and these in turn are the types of consumers that advertisers wish to target,” explains Myburgh.
SA’s overall entertainment and media advertising revenue is expected to rise by 5.6 percent to R52.1 billion in 2019, the report predicts. TV is the biggest contributor, followed by newspapers, to advertising.
However, their combined 52 percent share of total advertising in 2014 will fall slightly to 51 percent in 2019.
“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,” notes Myburgh.IOL