African entertainment & media to embrace Convergence 3.0 paradigm

Global professional services firm PwC has released the Africa edition of its Entertainment & Media (E&M) Outlook, which reveals high revenues and a transforming market across the continent. Aside from South Africa, Nigeria, Kenya and Ghana are the largest markets for E&M on the continent. 

While Industry 4.0 might be the buzzword for the current scenario in the digital arena, the E&M sector has a buzzword of its own – Convergence 3.0. A new report from Big Four accounting and advisory firm describes Convergence 3.0 as “a new and different wave of convergence driven by different capabilities and higher expectations, and manifesting itself simultaneously in multiple dimensions.”

Broadly, a number of “supercompetitors” are emerging in the sector, which has drastically altered industry dynamics, in addition to a transformation in traditional sources of revenue brought about by an increase in digital access. Companies now have easy and low-cost ways in which to reach their customers through mobile services.

Africa is a prime market for firms to experiment with the new Convergence 3.0 paradigm, given that the large and relatively untapped market will rest on 1 billion mobile internet connections by as early as 2022. PwC has analysed some of the key markets in this scenario, with projections of where they might end up over the same period.

The largest E&M market, by far, on the continent is South Africa, with total revenues from last year coming in at just under $10 billion. Perhaps an indication of the relatively low level of digital permeation in the continent is the fact that revenues from the non-digital E&M segment exceeded that from the digital E&M segment.

The next biggest market on the list – perhaps expectedly – is that of Nigeria, which has the largest population on the continent, of which the digitally connected portion is increasing by the day. At the end of 2017, the country’s revenues from the E&M sector stood at over $3.5 billion – a figure that is projected to surpass $4.5 billion by the end of this year.

By 2022, the E&M sector in Nigeria will reach a value of just under $10 billion, although the composition of the revenue sources is expected to remain more or less stable. The two segments that have dominated since 2012 have been TV & Video and out-of-home entertainment, both of which will remain dominant till 2022. One sector that is expected to emerge neck and neck with these sectors, meanwhile, is the business-to-business segment.

Kenya’s revenue stream is relatively more modest, coming in at just over $1.6 billion for last year. The sector’s growth is also expected to be relatively sluggish for this year, with projected revenues jumping less than $200 million for 2018. By 2022, Kenya’s M&E sector will be generating revenues of nearly $3 billion.

Nevertheless, the country has the added advantage of being more politically stable than the others, which will make it a popular destination for investment over the next few years. The country appears to be lagging behind the global market in some respects, given that the lion’s share of E&M content will continue to be consumed via 3G connections.

The next largest E&M market on the continent is that of Ghana, which lags significantly behind the rest at a revenue level of $750 million last year – projected to reach nearly $900 million by the end of this year. The sector is expected to break through the $1 billion barrier by next year, and will reach nearly $1.5 billion by 2022.

Much like Kenya, Ghana also has political stability to rely on, although the country’s year-on-year-growth (Y-o-Y) in the E&M sector is on a steady decline and will continue to be all the way till 2022. On the other hand, the Y-o-Y growth with internet access far exceeds the figure without internet access.