Digital video consumption to experience strong growth in North Africa

13 February 2018 4 min. read

As access to digital platforms becomes more widespread, digital consumption in North Africa has reached a substantial level, well above the consumption levels of the Middle Eastern Countries in the MENA region. According to new research from global professional services firm EY; video revenues in the MENA region are projected to grow between 22% and 35% annually till 2021.

Africa is set to become economically vibrant in coming decades, particularly in light of the fact that the continent has the youngest population in the world. In addition, the continent is set to have more than one billion mobile-internet connections over the next five years, breaking open new avenues of economic activity in the region.

A new report from Big Four accounting and advisory firm EY titled ‘Videonomics' reveals that one of the major beneficiaries of this growth will be the online video industry, which is currently in very high demand and use, particularly across North Africa.

MENA’s video market

The report states that the share of digital video consumption in overall video revenues for the MENA region will increase from 9.6% last year to 17.3% in 2021. The growth, according to the report, will be driven specifically by the substantial youth population, which has an affinity for digital consumption, and will now have easy access to online media.

Currently, the video market in the MENA region is valued at just over $3 billion. Of this, the highest share of $1.58 billion is contributed by TV advertising, followed by $1.2 billion from the TV subscription segment. The two segments are due to grow at moderate compounded annual growth rates (CAGR) of 5.5% and 7.4% respectively, to reach values of $1.95 billion and $1.6 billion by 2021.

MENA’s linear TV landscape

The smallest segments are Advertising Video on Demand (AVoD) and Subscription and Transactional Video on Demand (SVoD/TVoD), currently contributing $162 million and $135 million respectively. Nevertheless, these segments are due to skyrocket till 2021, growing at CAGRs of 25.5% and 26.2% respectively. As a result, the AVoD segment will reach a size of $402 million, while the SVoD/TVoD segment will hit a value of $342 million.

Value by country

Within the MENA region, video consumption in much higher in North Africa than it is in the Middle East. For example, the highest number of TV households in the region are in Egypt, standing at 20.3 million subscriptions. The country is way ahead of the others in the region, which might also be attributed to it being the third wealthiest country by GDP in Africa, behind only Nigeria and South Africa.

In second place for linear TV connections in the MENA region is Algeria, with 7.5 million, followed by Morocco, with 6.3 million. The two countries also follow Egypt in fourth and fifth in terms of GDP in Africa. The highest number of connections in the Middle East region is in Saudi Arabia, with 5.5 million connections.

MENA’s online video landscape

A similar situation can be seen in terms of the number of households that watch online/ TV videos on a regular basis. Three out of the top four countries are from the North African region, namely: Egypt in first with 3.3 million; Algeria in third with 1.2 million; and Morocco tied with UAE in fourth with 0.8 million. The second spot is occupied by Saudi Arabia, with 1.5 million households.

In conclusion, the report makes projections about the future landscape of video consumption in the region, stating, “We believe that new customer segments will emerge. At the top of the video consumption pyramid will be the cord cutters, who will focus exclusively on online-only consumption. In addition, there will be a large share of TV subscribers who will also subscribe to one or more OTT platforms or procure content piecemeal. The next segment will be TV customers who will only watch free digital content. Finally, at the bottom of the pyramid, are free customers who will not pay and can only be monetised through advertising.”