RESEARCH: Media Industry Trends Highlights
Recent Western Cape Business News
The first edition of the PwC’s South African entertainment and media outlook (The Outlook) presents annual historical data for 2005-2009 and provides annual forecasts for 2010-2014 in 12 entertainment and media segments.
The Outlook includes historical and forecast data on the Internet, television, filmed entertainment, radio, recorded music, consumer magazine publishing, consumer and educational book publishing, newspaper publishing, business-to-business publishing, out-of-home advertising, video games and sports industries. It gives a detailed breakdown of each of these sectors.
Vicki Myburgh, South African Entertainment & Media Industry Leader for PwC Southern Africa says, “The Entertainment and Media (E&M) Industry is recovering from the economic downturn and the resilience of E&M products and services during the recession is evident. Total South African E&M spending grew by 1.8% in 2009, in contrast to the 1.8% decline globally, but this is down from the 8.5% growth seen in 2008.”
Globally, the speed at which consumers have transitioned to digital has accelerated beyond expectations. While spending on digital media in South Africa is expected to grow, it is unlikely that it will dominate in the forecast period. Non-digital revenue streams are expected to be much higher and will still account for 69.1% of total South African spending in 2014.
Appropriately, forward-thinking E&M companies will use digital technologies to generate revenue while still supporting their non-digital offerings in set markets.
Advertising fell 14.3% as the full effect of the recession hit in 2009. However, consumer/end-user spending countered this effect with a booming box office market, continued growth in TV subscription spending and a jump in broadband spending.
Even with a surge in the number of households using broadband, the Internet market in South Africa is still in its developmental stage. Less than 10% of households had a broadband connection in 2009 but this is expected to quadruple over the next five years.
There were more than 1.3 million mobile broadband users in 2009 in South Africa, compared to 800,000 fixed broadband users. When including the 3.2 million dial-up users, the total number of internet users was only 5.3 million.
According to the Outlook, mobile broadband will be the fastest-growing technology over the next five years, with an expected increase of 50.7% or 10.1 million users by 2014. By 2014, 72% of broadband users will access the Internet through mobile devices and 63% of all Internet users will access it through mobile devices.
Video games enjoyed a 13.4% growth in 2009, second only to the Internet which witnessed a 29.8% increase in the same period. Sports revenue increased 5.8% in 2009, aided by new tournaments, merchandising and growing interest in the sponsorship market.
New technology such as mobile broadcasting will see new competitors enter the market which will generate an additional advertising stream, projected to reach R15 million by 2014.
Broadcasting in South Africa is highly regulated and outlets are limited. There are four free-to-air channels and two pay television providers that operate a terrestrial pay channel and a digital satellite network. The three SABC channels account for more than two-thirds of the television audience, and free-to-air broadcasting generates 90% of total viewing.
The Outlook projects public TV license fees to increase by 0.9% compounded annually from R1.02 billion in 2009 to R1.07 billion in 2014. Broadcast advertising will expand at a 9.6% compound annual rate during the next five years to R11.9 billion in 2014, from R7.5 billion in 2009.
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