Seasons Greetings from Balancing Act's Broadcast, Film and Convergence

Dear Readers, Contributors and Advertisers

The broadcast and film sectors had a good year in 2011 with higher levels of foreign investment interest and some signs that some of the distribution blockages are beginning to be unlocked. Nevertheless in a highly competitive field, there were casualties and there may be more along the way in 2012.

Key developments we’ve noted this year include:

• Increased international interest in African broadcasting: A number of international companies are looking at expanding into Africa and some of the home-grown crowd (like eTV) have expanded their operations. Some like Viasat have already established themselves a foothold in Ghana. All of this added level of interest has resulted in a ramping up of the broadcast events. Patrick Juchowicki of DISCOP plans to run a monster event called TV Loves Africa (see here) and AfricaCom ran its first broadcast strand Africast with some success.

Africa now has to live up to this increased interest and start professionalizing its broadcast operations. For the new international entrants will raise the bar and make it harder for the “hobby” TV stations. Too many radio and TV stations are run by people close to politicians or by politicians directly and are not at the level of professionalism they should be. Three examples of non-professionalism seen this year: firstly, watching a production crew member duck across in front of the interviewer’s desk in full view; secondly, being shown a pile of goods that a TV station had taken in lieu of advertising payment; and thirdly, the shocking lack of risk-taking in paying (or more like not paying) for audience-attracting programmes.

Indeed on the latter even insisting that the producers buy airtime. You are either running a TV station and if so, content is the meat and drink of the business. Or you are running the on-air equivalent of a taxi service…payment for carriage. The first is a professional business and the second is…you decide.

• Ad spend levels, audiences and content: The big knot at the middle of this lack of professionalism revolves around ad level spends, audiences and content. There are ad spend measuring systems in place in about a dozen countries in Africa but they only measure rate card spend: they track TV, radio and press ads and then use this monitoring with rate cards to produce figures. But as everywhere globally, there is discounting and in Africa, heavy discounting in some countries. We have conducted a detailed assessment of real spending in one African country that will appear in the next version of our report African Broadcast and Film Markets in 2012.

Also, there are only again a handful of countries where is regular market research tracking audience and programme share. But as if this was not bad enough, even where audience research exists, very few advertising agencies and ad clients actually pay any attention to it. The majority still are buying on “gut” feel rather than having a realistic assessment of audience share. With the arrival of multi-channel TV through the implementation of the digital transition, this situation will only get worse unless proper market research surveys are put in place and paid for by the advertisers and broadcasters.

The effect of “intuitive” buying by advertising agencies combined with huge discounting through sponsorship packages means that the development of local content (with the exception of format shows) gets very little chance of a look in. No-one is taking risks and innovating. In one of the continent’s most dynamic markets, it took Citizen TV’s WachiraWaruru six months to get the attention of ad agencies for his local content offer (see here). No wonder local content quotas are becoming a popular regulatory and policy approach.

• Digital transition – where are broadcasters?: The telecoms industry has its eye on the “digital dividend” but there has been very little dialogue between broadcasters and telcos about who gets what in the changeover process. The African Telecommunications Union conference just before Christmas was the first occasion when this occurred and not many broadcasters attended despite invitations. The oft-repeated line about spectrum (even in Africa) is that it is a rare commodity. We have to confess that we might even have said it ourselves a few times.

However, in a recent report written for the African Telecommunications Union looking at the spectrum dividend from the transition to digital broadcasting, we discovered that actually there was only really any spectrum pressure in a relatively small number of countries with developed broadcast sectors and/or more developed national television coverage. To take an extreme example, Liberia is currently only using one channel for television broadcasting in the environs of the capital Monrovia.

The digital transition is hugely difficult and costly but will produce a number of benefits. In all but the countries with developed broadcast sectors, it will shrink the amount of spectrum required by broadcasters even if 2-3 channels are given to each broadcaster. But what about HD and 3D channels for the future? The key question is: what will future demand for African broadcast look like? African broadcasters have no collective, continent-wide body through which it can express its views on this question.

The African Union of Broadcasters is ineffectual on this question and largely unrepresentative of the private sector and there are only really sub-regional bodies (like SADIBA in Southern Africa) or francophone groupings. Africa broadcasters need to find a way of speaking with one voice in the ways that this happens on other continents.

Is it the frozen world of single channel Mr President TV or the diverse world of private broadcasters and vernacular channels? (see the example of Kass TV)

This year saw the first TV White Spaces event on the continent and this may lead to a pilot project being under taken in South Africa. Again broadcasters should be aware of these proposals and engage with them (see here)

• The rough and tumble world of Pay TV: The continent represents an enormous opportunity for Pay TV operators. The low-cost bouquets have demonstrated that the Pay TV habit might become far more widely established. With an optimistic view of the continent’s economic growth, affordability levels may change over five years. The digital transition will accustom people to having a multi-channel set-top box and they may want, more, better television. This is certainly the bet that China’s Star Times has made (see here) and it is certainly appears to be getting subscriber numbers even if it may not yet be pulling in high levels of revenue. Also it has now got more than one bouquet…

But it is a tough and unforgiving world out there for Pay TV operators. Having talked about how it was backed by a Swedish pension fund and could therefore take a long view, NGB exited the market before putting its subsidiaries completely into local hands. ToyinSubair’sHiTV finally went bankrupt. It was successful in bidding for the football rights prizes but lost them during the Nigerian banking crisis. Subscriber numbers went from the hundreds of thousands to the tens of thousands and closure followed. (Top TV’s subscribers went up to a high point and have now fallen back down again.)

The implications of these closures would seem to be pessimistic. However, we remain convinced that sport alone is not the likely route to gaining market share against the established players like DStv and Canal Plus. Rumor has it that there will a challenger at some stage to the latter. Furthermore, at a local level DTT and cable challengers continue to enter the market.

• The marriage of broadcast and Internet: With the arrival of many international fibre cables, the price of access to the Internet is falling both for end users and broadcast stations themselves. Organisations like A24 Media that offer programme sales and distribution using the Internet will come into their own. The African Union of Broadcasters are in the process of setting up a programme transfer system via satellite. At the sharp end, African broadcasters need to have the ability to swop and use news footage from around the continent.

Live streaming is now a credible possibility both in terms of adding to broadcasters’ existing channels (for example, office workers can dip in during their lunch hours) and for reaching the diaspora (see here). It also represents an interesting route for establishing an audience in countries which are far less forthcoming with licences. Regulators at the ATU meeting mentioned above were grumbling about its unregulated status but it would be a shame to cut off this interesting side-road for new market development.

Social media (through Facebook, Twitter and You Tube among others) provides a way of keeping in touch with listeners and viewers and for them to contribute both material and programme ideas. It also binds viewers and listeners to the TV talent: for example, NTV’s Larry Madowo has over 16,000 Twitter followers. (To understand how and why to use it, see here)

But we’re waiting for the Internet to have a direct impact on media owners. Who will produce the first mobile TV/newspaper? The audiences and online mobile revenues are beginning to fall into place so will 2012 be the year it arrives?

• African cinema changes shape: 2011 saw the release of Congolese thriller Viva Riva in eighteen countries across the continent and the UK distribution through Odeon Cinemas of several Nollywood films. In addition, Nollywood Love is successfully distributing Nollywood films on a free-to-air basis and paying back royalties to producers. It’s not yet time to declare things done but it is sign of how much things are changing.

The release of Viva Riva is linked in our minds with the ambitions of a young Nigerian (Dayo Ogunyemi) to create a much larger chain of cinemas across the continent which will show commercial African films (see here). More money from the box office means more money that goes back into films and the same is true of the Nollywood releases in the UK via Odeon Cinemas.

The other piece is the arrival of online platforms. Nollywood Love (see here) gets its revenue from You Tube advertising but has only 35,000 users in Nigeria. With broadband Internet improvements in Nigeria (and Africa) in the next 12-18 months, this will easily go into the hundreds of thousands. 60% of searches of searches come from mobile phones in Nigeria so once the mobile broadband prices come down, hold on to your hats. In a parallel development, a Nigerian-Finnish company called Spinlet has launched what has been dubbed the “iTunes of Africa”(see here).

Next month we will publish the second edition of African Broadcast and Film Markets. Apologies for the delays in getting to this point but is a monster 400 page plus report, which we will break down and sell parts separately for those with narrower interests. In addition, we will add to the series of Briefing Papers published looking at specific topics like mobile TV.

Balancing Act has added to the information we provide. There is a regular Twitter feed (@BalancingActAfr) which is a combination of a news stream and provider of occasional market rumours. We’re still refining what works best so let us know how you find. But if you have to have up-to-the-minute information, you should be subscribed.

There’s also a You Tube channel which contains 10-15 minute video clips with industry figures talking about what’s happening in the market. Again you should subscribe because it contains a lot of information and insights not found in the print version of News Update. Click here to subscribe.

This year we have carried out a range of projects - both large and small - for a range of clients, either just research or providing consultancy. Because we operate discreetly, you may not be aware that we offer these services. If you think you have needs or requirements of this kind, talk to us about them. Faced with new circumstances, we will nearly always have both data and ideas to help you find a better way.

African Broadcast, Film and Convergence will return in the New Year with issue 120 on 4 January.

Russell Southwood
CEO
Balancing Act

Isabelle Gross
Research Manager
Balancing Act

Sylvain Beletre
Senior Analyst
Balancing Act