Digital TV in Sub-Saharan Africa is set to Explode
31 Jan 2014
Sub-Saharan Africa remains one of the biggest untapped TV markets in the world. It is widely viewed as being a market of great potential, with favorable demographic trends and huge room for growth in TV households
Africa has the world’s fastest-growing population, with the market characterised by a youthful and expanding working-age population. UN statistics report that from 2010-2015 the region’s population will grow 2.6%, with the 23% aged between 10 and 19. Globally overall growth is 1.1% and 17% age 10-19, but with substantial variations - as low as 0.4% and 9% in Spain / -0.2 and 11% in Russia, and higher in markets such as India 1.2% and 19% / Indonesia 1.2% and 17%.
With increasing income levels per capita, a growing middle class and infrastructure improvements, TV is becoming affordable and available to a broader segment of consumers. In a market of 150 million households only approximately 40 million have televisions and in global terms the potential for growth in TV households alone is incomparable. Household TV set penetration is less than 30% in Sub-Saharan Africa, compared to 60% in India, 70% in APAC, and over 95% in virtually all other developed countries.
South Africa stands out as an obvious exception, but Pay TV subscriber levels are also much lower than all other regions of the world. Across Sub-Saharan Africa the average is approximately 23%, but this drops to 15% when you exclude South Africa. In APAC the average Pay TV penetration is over 50% and global averages are 56%.
With increased competition in Pay TV, investment from both inside and outside of Africa, and free digital TV opportunities arising as governments look for future digital switchover dividends the TV market is growing. One Pay TV operator, DStv, has dominated the English-speaking market for many years and the company provides television services to 7.3 million households. Two key challengers have appeared in recent years: the Chinese based company Star Times (which recently acquired Top TV) and Kenya-based Zuku. However, when you investigate the market in more detail you find a considerable number of operators. These include operators backed by small, medium and large-scale local businesses, and services provided by multi-national companies, with some in launch mode or planning start-ups. These include My TV, UAU!TV, Azam TV, Zap TV, CanalSat Afrique, Sahara, Multi TV etc… Launching Pay TV services remains a considerable challenge though due to the extensive and often exclusive content deals controlled by DStv.
The deadline for digital switchover is 2015, but the pace of transition has been slow, with different models and licensing frameworks across the region. The potential funding support on a local level of any free digital television initiatives questionable, but in turn this opens up opportunities for outsiders such as Star Times.
Video on Demand (VOD) is also becoming a hot topic in the region. iROKO launched from Nigeria with a Nollywood focussed proposition in 2010 but generates most of it’s revenue from the diaspora out side Africa. However we are aware of numerous start-ups across Africa with Subscription VOD (SVOD) and Transactional VOD (TVOD) models, some of which are well funded. The importance of mobile platforms in Africa could benefit the development of VOD services.
There remain many challenges for the market. Pay TV itself is still dominated by DStv, with only Star Times approaching any kind of scale and balancing the immediate Pay TV opportunity with future prospects will be an on-going challenge for many players. But the market is certainly not to be ignored by content owners, video service providers, channels and technology companies.
3Vision in Africa – we have worked extensively in the African TV market for over 7 years helping companies launch pay TV platforms and bring their content into the region – and so we have more experience than any other content consultancy on the opportunity. We also have an extensive database of available local and international content along with pricing benchmarks and so we are well placed to help any company planning to launch or build their content business in Africa. Please get in touch if you would like to discuss this opportunity.