Seasons Greetings from Balancing Act

20 December 2018

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Dear readers, viewers, contributors and advertisers

 

2018 has been a tough year for Africa’s broadcasters. Poor macro economic performance and consolidation in the mobile industry continues to damage advertising potential. New competition for young viewers comes from everything online including social media and You Tube. Nevertheless, for those who see themselves as content producers in this coming multi-platform world there are still exciting opportunities.

 

Potential for growth despite the prevailing headwinds

One of the challenges this year is that many of the major players are facing big challenges either right here in the African markets or in their international markets. Canal+ has seen huge growth in francophone Africa but is threatened by a decline in its home market.

DStv is facing pressure on its premium subscribers from Netflix, is slimming down its channel commitments and is being spun out of Naspers. Wananchi’s shareholders were recently reported as putting it up for sale.

According to Patrick Zuchowicki, DISCOP (which remains Sub-Saharan Africa’s main content market) told me:”Other players are not where they should be to challenge these two players (Canal+ and DStv).” Nevertheless there is still momentum in the market. For example, Known Associates is wanting to do a local adaption of international hit series Ugly Betty.

On top of these specific broadcast industry pressures, there are wider macro economic ones:”There’s been the impact of the low Rand and economic problems in Kenya and Nigeria.” Despite these headwinds, the international industry remains interested in Africa because other major markets like China have become much more closed.

 

Film and TV: VoD and streaming begin to threaten Pay TV

In May 2018, Naspers-owned Pay TV company DStv complained that Netflix now had 300-400,000 subscribers but its estimate and it had lost over 100,000 DStv premium subscribers. Its complaint? Netflix was not regulated and taxed as it was. It had launched its own streaming platform Showmax in 2015 but has not released any of its own subscriber figures.

Econet Media’s Kwese TV launched as an all-singing, all dancing Pay TV, streaming and Free-To-Air behemoth, spending large on acquiring channels and content. Asia’s successful platform iFlix entered the Sub-Saharan African market with its then CEO predicting that it would have “a few million subscribers.” The mobile operators would not buy the deal they were being offered by iFlix. So in February 2018 Kwese TV bought iFlix Africa.

But in November 2018, Kwese TV experienced its own moment of failure as it decided to close its Pay TV operation and bet all eggs on its streaming platforms and Free-To-Air TV operations. It might have been a positive sign for all things digital but in truth it was simply the end of the road for an incoherent business plan. Whether a slimmed down Kwese TV will succeed remains an open question.

Local pay-to-play streaming operators like Viusasa in Kenya (backed by Royal Media Group), Forest TV out of Nigeria and Ogle and Pockitt TV in South Africa are all struggling to find a niche for themselves.

Meanwhile Africa’s largest streaming operator You Tube ploughs all before it, attracting a large number of views in major markets and creating new talents like comedian Mark Angel in Nigeria.

 

Mid-term progress with DTT but it’s ever so slow

The ITU’s 17th June 2015 deadline for the switchover from analogue to digital migration has long been passed by the vast majority of African Governments, but, a report by Balancing Act  does paint a much more positive picture for the digital switchover on the continent.

DTT CoverWhilst progress has been slow, indeed for some non-existent, all being well 29 countries and territories out of 56 are expected to have completed their projects, by the end of 2020. That means two-thirds of African households (somewhere around 83 million households) who own a television will have the opportunity to view Free-To-Air broadcasted digital programmes in a few years’ time. This is a massive improvement on the 14 million that currently can.

The impact of DTT has been great for consumers but less good for established broadcasters. In some countries like Kenya and Ghana there have been well over 100 new channels. But the impact on advertising has been that it is now spread between many of these new channels, hitting more established players and leading to 50-60% discount levels on rate card.

Take the example of Ghana. Multi TV has used a satellite platform to become one of the Top 3 broadcasters and DTT has put many more channels into the market. A lot of players in the broadcast TV sector are really in very poor shape. Three of the major broadcasters have laid staff off: Metro TV (50 people), TV3 (25 people) and TV Africa (a sizeable number of people). That’s the visible part but rumors are swirling about other players. One industry player predicted that 40% of the new channels would close over the next 2-3 years.

The shift is from generalist linear TV to focused top channels (eg news, sports, comedy, drama, etc). Michael Gyang has created a health channel called Tumpaani TV and is betting that he will find a niche audience of 0.5-1 million people and that advertisers will want to reach them. In another example, I spoke in September to Plante Kibadhi, C2TVSPORT about a sports channel he’s launching, initially in DRC and then elsewhere in Central Africa.

 

Meet the all-new digital public broadcaster – meeting the digital challenge head-on

You cannot mistake Mr President TV when you see it. The news opens with the Agriculture Show opened by the President or his latest overseas visit. At its worst, this is then followed by a succession of Ministers speaking in declining order of status. For a stubborn minority of African countries, this is the only TV option available.

Progress over ten years has been substantial. In 2008, we analyzed 40 African countries to see whether they had allowed the licensing of private TV channels. In 2008 only 17 or so countries out of 40 had done so. By 2010, this number had risen to 28 out of 46 countries. In 2011 we analyzed 47 countries, 25 of which had liberalized and 3 were partially liberalized. The last category reflected the slow speed of implementation: licences had been announced but not implemented.

By March 2014, the number of partially liberalized countries rose to 15 and not liberalized fell to 8. Even tiny Gambia got two new stations: QTV and Paradise TV. The table below from August 2018 covers 52 countries:

Liberalized                                        38

Partially liberalized                              4

Not liberalized                                   10

 

The number of countries liberalized has gone from 17 in 2008 to 38 in 2018 ten years later. Some countries appear to have gone backwards: for example, both Comoros (in 2008) and Mauritania (2012) announced private TV licences were to be granted but nothing happened. On the plus side of the balance sheet, among the countries liberalized or with clear plans for imminent liberalization are Cote d’Ivoire; Gambia; Mali; and Rwanda.

It is therefore refreshing to see a public broadcaster take on the new digital challenge with success. I’m not arguing that Cote d’Ivoire’s RTI is perfect but it is acting energetically in a way that you don’t often see with Africa’s public broadcasters. RTI’s Digital Director Sahifoulaye Kone told me in August:” Today, we find that the 15-35 age group spends more time on their phones than in front of TV screens. We can also see from our stats that 86% of our content is viewed on a mobile phone”. RTI also runs the leading You Tube channel by views and subscribers in Cote d’Ivoire.

 

Content that challenges the boundaries can be successful

Hats off to Channels TV in Nigeria for running a success news satire and comedy show called The Other News. The first series did incredibly well and got 1-1.5 million viewers in its time slot. The biggest competition was from football and by the end of season 3 it was pulling up to 2 million viewers except when there were major football matches.

In audience terms, it was doing two things for Channels TV. Firstly, it was bringing in people who were not politically engaged or who watched the news: this was extremely helpful as Channels TV is a news channel. Secondly, there was also a female bias in the new audience, again something that was helpful as news watching tends to have a male skew.

Another example is "Welcome to Gondwana" is the first feature film directed by Mamane, a comedian of Nigerienne descent who has made his way on to RFI radio and performed at the Jamel Comedy Club. The feature film tells the adventures of a team of electoral observers sent to a French-speaking African country, Gondwana, to monitor the organization of a presidential election. Between corruption and abuse of power, these slightly naive delegates discover the beauty of a country and how the wheels of a perverted electoral system go round. The story uses satire and humor to denounce the evils which bedevil African policy (nepotism, cheating, corruption, etc). The film’s premiere in Brazzaville was so popular that the cinema had to lay on an impromptu second screening for all those who were unable to get into then first.

According to Gondwana City producer Catherine Guérin who I spoke to in May:” Movie theaters are slowly emerging again in Africa, thanks to the Olympia Canal and other private initiatives. The film was released in Benin, Togo, Mali, Niger, Chad, Congo, Ivory Coast, Burkina Faso, Cameroon, Gabon and Senegal”.

 

 Rural TV and media coverage - why it matters for African broadcasters

Coverage by both TV and radio for the first category of people is almost universal as is coverage with Africa’s capital cities. For example, from a Mediametrie survey carried out in two key urban areas in Cote d’Ivoire, Abidjan and Bouake7 in early 2016, 90.5% watched television at least one day a week and 58.7% listened to the radio between 1 hour and 1 hour 59 minutes a week. In other words, almost everybody reported having access to TV and more than half those interviewed had access to the radio.

By contrast, only 34% of those surveyed in the province of Northern Bahr el Ghazal in South Sudan had ever listened to the radio and just 10% had watched TV. Only 1% had used the internet on a weekly basis. In other words, this province is the polar opposite of Abidjan and Bouake in terms of media access.

Why should this matter to TV and radio broadcasters? Because whilst most audience share in existing coverage areas is a tussle over existing viewers and listeners, no-one has paid much attention to expanding the coverage area and getting new viewers.

According to a new report (Africa’s Media Deficit and Access to Knowledge.) that I’ve written, this “media deficit” is somewhere between 10-50% of the population depending on the country you’re looking at. As ever, the data is not always the best but it’s hard to deny the circumstances exist. Even radio and mobile coverage do not reach everyone in most countries. And whilst many of the people in these communities are poor, they still buy soap, beer and basic foods.

In November I spoke to Simon Bransfield-Garth, CEO, Azuri Technologies about the potential for solar TVs. Its main competitor for solar powered TVs announced in January this year that it had connected 100,000 households in Kenya and said that 80% of its customers had solar TVs. So between them, Azuri Technologies (who was later into the market) and M-KOPA have probably added around 600,000 new TV viewers.

“Television has turned out to be really important thing for low-income, off-grid households. It means you get relatively low cost access to both information and news and entertainment.”

In terms of our own news, Balancing Act said goodbye to Sylvain Beletre and hallo to Matthew Dawes as our new Head of Research.

In November we published a completely rewritten and updated version of Analogue to Digital Broadcasting Migration in Africa. We have been tracking this migration since 2013 and at last we are beginning to see some progress.

In Q1, 2019, we will publish a report of direct interest to Innovation in Africa’s readers: Sub-Saharan Africa’s Digital Landscape and its Top Ten Markets – data prices, smartphones, digital content and services and e-commerce. We will also be updating and rewriting 4G/LTE in Africa: number of subscribers, launches, trends and projects with a new section on data prices. If you would like details on any of these reports, simply drop me an email on: info@balancingact-africa.com

This year we have carried out many different research and consultancy projects - both large and small - for a range of clients including operators, equipment vendors, investors and policy bodies. 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. In what will be a year of great change, we will have both data and ideas to help you change your circumstances. Just email me on: info@balancingact-africa.com

News Update will return in the New Year with issue 305 on 4 January 2019.

 

All the best

 

Russell Southwood
CEO
Balancing Act

Matthew Dawes
Head of Research
Balancing Act

Alice Saywood
Marketing
Balancing Act