Content-hungry youth shaping media landscape

Oct 06 2016 11:51
Jessica Hubbard

Vicki Myburgh, entertainment & media industry leader at PwC Southern Africa

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Digital spend will drive overall media growth in South Africa, analysts predict, with advisory firm PwC forecasting that SA’s internet access market will rise from R39.4bn in 2015 to R68.5bn in 2020, as broadband – both fixed and mobile – becomes an “essential utility”. 

According to PwC’s  Entertainment and Media Outlook: 2016-2020 report – which focuses on SA, Nigeria and Kenya – SA’s entertainment and media industry is expected to grow from R125.7bn in 2015 to R173.3bn in 2020, at a compound annual growth rate (CAGR) of 6.6%.

The firm’s analysis of national entertainment and media markets globally underscored what it calls “an almost perfect correlation between the relative size of the under-35 population and growth in entertainment and media spending – confirming that younger consumers are now the primary drivers of global growth”. 

“The youth are propelling E&M growth,” explains Vicki Myburgh, entertainment & media industry leader at PwC Southern Africa. “Today’s youth are very comfortable with digital consumption of content, and they are also used to staying connected for most of their day.” 

Myburgh adds that, with more than 60% of SA’s population below the age of 35, “a great opportunity awaits” in capitalising on their ever-growing need for content. On average, E&M spending in the 10 youngest markets worldwide is growing three times as rapidly as the 10 oldest markets. 

Younger people are more open to adopting digital behaviours – and to digital spending, she says. 

In her view, the opportunity for media companies is to understand how the youth spend on digital content and to be able to predict when and how they will pivot from, for instance, paying for downloads to streaming content and paying for a streaming service.

Localisation is key

In the world of branding and advertising, forward-looking digital agencies are taking a deep dive into local culture and vernacular to develop content that resonates in specific markets.

“Using global brand content doesn’t make sense anymore,” says Ben Wagner, head of local digital agency Native VML. “Brands that aren’t locally relevant stand to become irrelevant and obsolete. South African brands are learning this very quickly, as the data will highlight their lack of engagement.”

Wagner says consumers are more than willing to pay for content online, increasingly in the form of streaming service subscriptions. To attract these paying customers, however, content needs to be “contextually relevant, inherently shareable, of a high production value and backed by paid media”.

The recent PwC E&M Outlook identified a growing desire among consumers to “design and curate their own media diet”. Consumers avoid being locked into expensive annual subscriptions but are demanding instant access – across various devices – to the best and most current programming. This is forcing cable, tech and telecoms players to rethink their traditional bundles and price packages and devise more tailored and flexible options for fickle audiences.

Above-average growth

For local media companies with an eye on expansion, PwC’s Myburgh says that although their growth forecast has reduced overall to a CAGR of 6.6% (over the forecast period to 2020), SA is still considered a growth market in respect of E&M spending – with the expected growth “far exceeding” SA’s real GDP growth over the forecast period. “In terms of South Africa’s place within the wider ecosystem, the country retains much promise, coming from a position of reasonable scale and above-average growth.”

The E&M Outlook found that SA has the largest television market in Africa, with pay-TV subscription revenues expected to expand by a 5% CAGR to reach R25.2bn in 2020.

The video game market is also a stand-out, and revenue is expected to grow at a CAGR of 5.6% to reach R3.7bn in 2020, up from R2.8bn in 2015.

Social or casual gaming revenue overtook traditional game revenue for the first time in 2015, and this is expected to be the key growth area over the next five years, exceeding R2bn by 2020

This is a shortened version of an article that originally appeared in the 13 October edition of finweek. Buy and download the magazine here