Accra, September 21, 2017//-Nigeria is one of the fastest-growing countries in terms of entertainment and media (E&M) revenue, 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.
This is according to Pwc’s ‘Entertainment and media outlook: 2017 – 2021: An African perspective’ released today.
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.
A 12.2% CAGR expected to 2021
The depreciation of the naira means that Nigerian E&M revenue expressed in US dollars is somewhat depressed compared with last year’s figures. Nonetheless, the market rose year on year to US$3.6 billion in 2016, and will increase at a 12.2% compound annual growth rate (CAGR) to 2021, reaching US$6.4 billion in that year.
Nigeria is one of the fastest-growing countries in the world, but appearances can be deceiving
Internet access revenue can be considered the gateway to classic E&M spend, but in some extreme cases it can distort a country’s growth story.
In terms of total E&M revenue, Nigeria is one of the fastest-growing countries of those considered, 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.
This in itself is an interesting side point, with Nigerians embracing dual-SIM phones in order to circumvent issues with network coverage.
Growth areas cover a range of segments
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, dampening what seems like an optimistic picture for consumer and advertiser revenue growth.
Industries such as the world renowned Nollywood, for instance, don’t generate that much measurable revenue for Nigerian E&M due to issues such as piracy hampering official cinema owners and film vendors. With Internet access revenue excluded from the figures, Nigeria’s CAGR falls to a less stellar 5.4%; that’s behind the 7.7% seen in Kenya.
But there is still much to be positive about in the Nigerian market. The combined elements of TV and video will add nearly US$200 million to 2021. Although the breadth of Internet coverage and speed of service is not yet sufficient to support meaningful Internet video revenue, pay-TV will do well over the forecast period.
Growth was low in 2016 as providers focused on low-cost entrylevel packages designed to entice new customers. This has helped pay-TV households to rocket from 1.9 million in 2012 to 4.0 million in 2016.
Only TV, OOH, Internet and radio have strong advertising revenue
Once the emphasis shifts towards up-selling households to more premium packages with wider ranges of content, HD channels and TV everywhere services, a 4.1% CAGR can be expected. In music, ringtones and ring backs continue to make good running, thanks largely to their piracy-proof nature. And in video games, similarly, the social/casual model is making gamers of anybody with a smartphone, explaining rapid rises in this metric as smartphone connections rise exponentially.
TV is Nigeria’s largest advertising segment, with terrestrial dominant, but with multichannel rising at a double-digit CAGR to 2021 as advertisers chase the country’s increasingly large pay-TV base. Local content remains important and MultiChoice continues to add programming to its DStv and GOtv services. MultiChoice’s dedicated sports channel, SuperSport, has invested significantly in Nigerian content, particularly in football and basketball.
A healthy proliferation of radio stations—Lagos State alone has 23—will also take radio advertising revenue to just shy of US$80 million in 2021, while the country’s rapid rate of urbanisation in particular spells good news for OOH. Internet advertising, though, is the most exciting growth area, with a CAGR of 19.5% expected to propel the segment to US$157 million in 2021. Mobile Internet is seeing especially strong growth, and will overtake wired advertising by the end of the forecast period.
In March 2017, Facebook began accepting payments for advertising space in naira (. Previously, prices were displayed in naira, but payments were not accepted in the currency, meaning that extra currency conversion fees and blocked transactions were commonplace. Businesses can now pay for Facebook’s ad space using local debit cards, improving access to the social network for advertisers and local companies across Nigeria.
This will only improve the transition of advertiser dollars to the segment, even if it may not spell ad revenue for the country’s content producers.
African Eye Report
