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Monday, 13 November 2023 22:09

Internet access will drive growth in the media and entertainment sector – PwC.

By Lehlohonolo Lehana.


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.. 

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.

The report highlights the challenges faced by the E&M industry in 2022, including the impact of the global economy struggling to return to normalcy. Factors such as falling stock markets, rising interest rates, and the tapering of pandemic-era growth trends have led to slower rates of expansion compared to the rebound growth experienced in 2021. However, overall revenue still rose in 2022, despite sluggish consumer spending.

The influence of consumer spending on E&M products and services is declining, while the influence of advertising is rising, forcing industry leaders to reassess and reinvent their strategies. The competition for consumers' attention and revenue is intensifying, with the emergence of new entrants such as Disney+ and Paramount+ in the African market.

The report also highlights the impact of streaming services on traditional TV services, with many consumers forgoing traditional TV in favor of on-demand video content. While total TV advertising revenue contracted in South Africa in 2022, it is expected to rebound and increase at an overall compound annual growth rate (CAGR) through 2027. In Nigeria and Kenya, TV advertising growth is projected to be much stronger over the next five years.

According to PwC, linear TV remains essential for brand awareness and reaching audiences, while digital advertising offers short-term boosts. The report emphasizes the need for traditional broadcasters to engage with younger audiences and enhance their online video streaming platforms to remain competitive in the evolving E&M landscape.

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.

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."

The service has also benefited local artists, although South African musicians still struggle to generate a significant income from music streaming.