Despite a difficult 2022 for the media and entertainment (M&E) industry, PwC’s latest Africa Entertainment & Media Outlook 2023-2027 report suggests growth is still likely in the coming years. That growth, however, will be lumpy.
Growth in the South African M&E industry stabilised at 8.8% in 2022, down from 15.4% in 2021 – when it was rebounding after the end of the Covid-19 pandemic.
Still, this growth will outpace the global average over each year of the forecast period, with total revenue increasing from R176.7-billion in 2022 to R231.2-billion in 2027, at a 5.5% compound growth annual rate.
And while – predictably – newspapers, consumer magazines and books continue to decline in South Africa, the largest revenue gains will come from growth in internet access, which PwC includes in its report, as new users take out subscriptions to mobile and fixed broadband services, and existing customers upgrade their packages.
South Africa’s internet access has had a steady increase over the past five years. That will continue, with data consumption set to triple in the forecast period.
PwC Africa entertainment and media leader Alinah Motaung said mobile is the key driver of internet access in Africa and the roll-out of fast and reliable 5G networks is progressing, although efforts are being hampered by factors including regulation and affordability.
A tipping point will be marked by the Middle East and Africa region overtaking Latin America in internet access revenue in 2023, driven by Nigeria.
Mobile first
5G smartphones accounted for 19.3% of global connections in 2022. “Despite the low uptake of 5G, African markets are mobile first, with fixed broadband penetration levels below the global average.”
In South Africa, the music streaming market continues to enjoy strong growth in subscription revenue. “Spotify has grown a sizeable foothold in South Africa,” said PwC entertainment and media partner Charles Stuart. “South African users have streamed more than 1.2 billion hours of music since Spotify launched in 2018.”
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The service has also benefited local artists, although South African musicians still struggle to generate a significant income from music streaming.
Stuart said last year advertising became a key factor that forced industry leaders to reassess and reinvent how they operate. Competition for consumers’ attention, and the revenue that follows, is heightening thanks in part to a steady stream of new entrants.
Motaung said: “Streaming services continue to apply pressure to traditional TV services, with many now forgoing them and paying for services that instead provide an abundance of on-demand video content.
“Total TV advertising revenue contracted by 3.3% in South Africa in 2022, predominantly due to a fall in terrestrial TV advertising. However, this is expected to be temporary, with the segment forecast to rebound in 2024 and increase at an overall 1.2% compound annual growth rate through to 2027.” — © 2023 NewsCentral Media