Shifting consumer preferences, advances in technology and ongoing disruption to business models are the new strategic imperative for entertainment and media (E&M) companies is to turn customers into fans.
Significant shifts are underway in how Africa’s E&M companies compete and generate value, as the quality of the experience they deliver to consumers becomes their primary basis for strategic differentiation and revenue growth.
To thrive in a marketplace that is increasingly competitive and crowded, companies are focusing on implementing strategies and building capabilities to engage with consumers. This is according to PwC’s ‘Entertainment and media outlook: 2017 – 2021: An African perspective’ released today.
By 2021 total E&M revenue in South Africa is expected to reach R177.9 billion, up from R132.7 billion in 2016. Internet access remains the key growth driver and will account for R27 billion of this increase. The fastest growing sectors will be virtual reality (VR) and e-sports compounded annually at 72.6% and 39.6%, although these segments are still new revenue lines and remain the smallest in terms of absolute revenue numbers. Although overall growth in revenue will hold up, it is expected to slow down by the end of 2021.
The Outlook 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 publishing, music, out-of-home, and radio.
“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. These imperatives assume a larger importance because, as we document in the Outlook, the entertainment and media industry is confronting several challenges to continued top-line growth.
Digital spend will continue to drive the overall growth. Nearly 40% of total spend will be derived from Internet access in revenue. South Africa’s mobile Internet penetration is forecast to rise to 77.8% by the end of 2021 from 52.3% in 2016. This increased Internet penetration will drive mobile Internet access revenues, which are projected to grow by a CAGR of 10.7% to nearly R62 billion.
South Africa can expect a CAGR of 7.2% for consumer revenue over the forecast period, rising from R87.4 billion in 2016 to R123.7 billion in 2021. The largest contributor will be Internet access, with a 48% share in 2016 rising to 56% in 2021.
South Africa continues to remain the largest TV market on the African continent, 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.
The video game 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 in the video games market 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.
The growing interest in gaming is helping to fuel the rapid growth in the related segment of VR and e-sports. 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.
The South African cinema sector 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. 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.
South Africa’s music industry is 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 entire Outlook – 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 are 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.
The report shows 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.
Myburgh says: “It is clear that something fundamental has changed in the entertainment and media industry. E&M companies that have become accustomed to competing and creating differentiation, based primarily on content and distribution, need to focus more intensely on the user experience. The marketplace has increasingly become more competitive, slower-growing and dependent on personal recommendations.
“Thriving in this new world of intense competition and continual disruption will be challenging. The opportunities are, however, immense. Across the industry, the resulting quest to create the most compelling, engaging and intuitive user experiences is now the primary objective for growth and investment strategies, with technology and data at the centre.
“Accordingly, companies will need to develop strategies to engage, grow and monetise their most valuable customers: their fans.”
In terms of total E&M revenue, Nigeria is one of the fastest-growing countries in our Outlook, but this figure must be treated with caution, as a huge proportion of that growth comes from Internet access revenue alone–specifically mobile Internet access revenue. Of the US$2.8 billion that the Nigerian market will add between 2016 and 2021, all but US$452 million will come from Internet access revenue. The combined elements of TV and video will add nearly US$200 million in revenue growth to 2021.
The E&M industry was worth US$2.1 billion in 2016, up 13.6% on 2015. Revenue is forecast to grow at an 8.5% CAGR over the next five years, hitting the US$3 billion mark in 2020, and totalling US$3.2 billion in 2021. Internet access is the most established industry within the Kenyan market, boasting the largest revenues and one of the highest growth rates to 2021.
Ghana’s E&M industry is beginning to gear up. In 2012, total revenue was just at US$214 million, but four consecutive years of year-on-year growth above 25% have led it to revenues of US$685 million in 2016. This is forecast to more than double over the next five years, with revenues of U$1 billion being surpassed in 2019 and a total of US$1.5 billion forecast for 2021, thanks to a 16.5% CAGR.
Tanzania’s total E&M revenue stood at US$504 million in 2016, but is set to more than double to US$1.1 billion in 2021, a 17.2% CAGR over the coming five years. The symbolic crossing of the US$1 billion mark is set to occur in 2021. This is significant growth from 2012 where the industry stood at just US$175 million.
Low-cost wireless sport earphones get a kickstart
Wireless earphone brands are common, but not crowdfunded brands. BRYAN TURNER takes the K Sport Wireless for a run.
As wireless technology becomes better, Bluetooth earphones have become popular in the consumer market. KuaiFit aspires to make them even more accessible to more people through a cheaper, quality product, by selling the K Sport Wireless Earphones directly from its Kickstarter page
KuaiFit has an app by the same name which offers voice-guided personal training services in almost every type of exercise, from cardio to weight-lifting. A vast range of connectivity to third-party sensors is available, like heart rate sensors and GPS devices, which work well with guided coaching.
The app starts off with selecting a fitness level: beginner, intermediate and advanced. Thereafter, one has the ability to connect with real personal trainers via a subscription to its paid service. The subscription comes free for 6 months with the earphones, and R30 per month thereafter.
The box includes a manual, a USB to two USB Type B connectors, different sized soft plastic eartips and the two earphone units. Each earphone is wireless and connects to the other independently of wires. This puts the K Sport Wireless in the realm of the Apple Earpods in terms of connection style.
The earphones are just over 2cm wide and 2cm high. The set is black with a light blue KuaiFit logo on the earphone’s button.
The button functions as an on/off switch when long-pressed and a play/pause button when quick-pressed. The dual-button set-up is convenient in everyday use, allowing for playback control depending on which hand is free. Two connectivity modes are available, single earphone mode or dual earphone mode. The dual earphone mode intelligently connects the second earphone and syncs stereo audio a few seconds after powering on.
In terms of connectivity, the earphones are Bluetooth 4.1 with a massive 10-meter range, provided there are no obstacles between the device and the earphones. While it’s not Bluetooth 5, it still falls into the Bluetooth Low Energy connection category, meaning that the smartphone’s battery won’t be drastically affected by a consistent connection to the earphones. The batteries within the earphones aren’t specifically listed but last anywhere between 3 and 6 hours, depending on the mode.
Audio quality is surprisingly good for earphones at this price point. The headset style is restricted to in-ear due to its small design and probable usage in movement-intensive activities. As a result, one has to be very careful how one puts these earphones, in because bass has the potential of getting reduced from an incorrect in-ear placement. In-ear earphones are usually notorious for ear discomfort and suction pain after extended usage. These earphones are one of the very few in this price range that are comfortable and don’t cause discomfort. The good quality of the soft plastic ear tip is definitely a factor in the high level of comfort of the in-ear earphone experience.
Overall, the K Sport Wireless earphones are great considering the sound quality and the low price: US$30 on Kickstarter.
Find them on Kickstarter here.
Taxify enters Google Maps
A recent update to Taxify now uses Google Maps which allows users to identify their drivers, find public transport and search for billing options.
People planning their travel routes using Google Maps will now see a Taxify icon in the app, in addition to the familiar car, public transport, walking and billing options.
Taxify started operating in South Africa in 2016 and as of October 2018 operates in seven South African cities – Johannesburg, Ekurhuleni, Tshwane, Cape Town, Durban, Port Elizabeth and Polokwane.
Once riders have searched for their destination and asked the app for directions, Google Maps shares the proximity of cars on the Taxify platform, as well as an estimated fare for the trip.
If users see that taking the Taxify option is their best bet, they can simply tap on the ‘Open app’ icon, to complete the process of booking the ride. Customers without the app on their device will be prompted to install Taxify first.
This integration makes it possible for users to evaluate which of the private, public or e-hailing modes of transport are most time-efficient and cost-effective.
“This integration with Google Maps makes it so much easier for users to choose the best way to move around their city,” says Gareth Taylor, Taxify’s country manager for South Africa. “They’ll have quick comparisons between estimated arrival times for the different modes of transport, as well as fares they can expect to pay, which will help save both time and money,” he added.
Taxify rides in Google Maps are rolling out globally today and will be available in more than 15 countries, with South Africa being one of the first countries to benefit from this convenient service.