TV Market Outlook for Africa & the Middle East
The TV market in Africa/the Middle East will grow by 30% between 2016 and 2021, going from 10.3 billion to 13.3 billion EUR
Montpellier, July the 3rd 2017 – This momentum, which is driven largely by sub-Saharan Africa, represents the world’s fastest-growing TV market, not only today but also for the five years to come. These figures (excepting Turkey and Israël) indicate average annual growth of 5.1%, with sub-Saharan Africa turning in the strongest performance: an average of 5.7% growth per annum, to reach 9 billion EUR in 2021.
With a young and fast-growing population, a growing middle class in Africa, a solid medium-term economic outlook, despite the turbulence caused by falling oil prices in the Gulf States, the socioeconomic variables point to positive future development in the region, including in the audiovisual sectors. This positive outlook is manifesting itself in increased TV ownership levels, especially in sub-Saharan Africa, and progress in cellular network rollouts, with the added bonus of creating a massive new base of screens for watching videos.
Satellite expected to consolidate its central role as purveyor of TV programming
More than 80% of households in North Africa/the Middle East (MENA) receive their television programmes via satellite and more than 40% (and rising) in sub-Saharan Africa. Alternative networks are progressing at a much slower pace. The digitisation of terrestrial broadcasting (DTTV) networks is proving a hard slog, even if DTTV still has a sunny future in sub-Saharan Africa. IPTV and cable networks will remain secondary broadcasting systems, except in a small number of countries. So cable & MMDS networks will continue to be used (despite a sometimes uncertain legal situation) in Central and West Africa, and IPTV remains an alternative solution in the Gulf States. The optical fibre rollouts that are being planned should help increase IPTV adoption levels, albeit to an only limited extent. But it is another revolution that is underway. Buoyed by the development of 3G and now 4G mobile access, OTT video products will be able to capitalise on a major new distribution channel, especially when targeting younger viewers.
These typically low-cost OTT services are contributing, along with still massive levels of piracy in the region, to driving down the price of pay-TV plans. Another element furthering the trend is the fact of targeting the new middle classes with less high-end and more localised products, both in terms of service platforms as programming. So we expect to see steady progress for pay-TV services (whose adoption rates are very low) – although with a proportionately greater increase in customers numbers than in market value. Contrary to what we are seeing in leading TV markets, this trend will play out parallel to the rise of the still only nascent (S)VOD market. With the arrival of market heavyweights, Netflix and Amazon, coupled with the strides being made by local leaders such as StarzPlay, there are now more than 20 platforms in the region vying for market share, which means we are likely to see a degree of consolidation over time.
Free-to-air television still the most watched in Africa/the Middle East, with only 14% of households subscribing to pay-TV services in 2016
Free-to-air TV is nevertheless having to contend with two structural issues. In addition to the handful of powerful broadcasters that earn 70% of the region’s advertising revenue, with their pan-Arab networks that overshadow local markets and players, this is not a terribly structured market. Public broadcasting services getting by on meagre resources are still very present, and private sector players are dealing with an unstable financial situation. Plus the weakness of the advertising market, which is due in large part to the lack of a homogeneous audience measurement system, is a persistent issue. We nonetheless believe that this untapped advertising revenue represents a real source of potential future growth for these markets, especially in sub-Saharan Africa.