Africa’s rapidly growing population offers an attractive market for broadcasters and advertisers, but the growth of mobile technology, the slow switch from analogue to digital and muted economic growth all pose challenges for the industry, as David Thomas reports.
In a homely, brightly lit Nigerian studio of the sort familiar to daytime TV viewers the world over, enthusiastic, coffee-clutching TV presenters usher the audience through cookery classes, weather updates and brief celebrity interviews.
“There are three things you should do every morning,” says a beaming, smartly dressed host. “One, get out of bed. Two, turn on your television. And three, watch Wake Up Nigeria!”
Some 1.3m viewers a day take his advice, tuning in to a slickly produced three-hour show that replicates the morning format first pioneered by the NBC’s Today Show in the 1950s. It may not be revolutionary entertainment, but a rigid focus on professional production values, international-level picture quality and engaging local content is helping to move Nigerian TV away from low-budget beginnings, drawing in mass audiences and attracting advertisers keen to reach them.
“[Audiences love] homegrown, home-produced content telling stories about themselves – it’s the same the world over. There’s no great science to it – give them what they want, do it well and you can succeed,” says Andrew Hanlon, the Irish chief executive of TV and radio station owner TVC Communications, which broadcasts Wake Up Nigeria.
With a population set to double to 2.5bn over the next 30 years, Africa offers a vast and growing youth demographic for broadcasters and content producers, and an irresistible market for advertisers who wish to target audiences with homegrown and international products, brands and services.
In Nigeria, where the population has grown from 95m in 1990 to 201m today, the TV market grew 17.1% year-on-year in 2017 to $800m, and is expected to expand to $1.2bn in 2022, according to PwC. The market in Kenya is predicted to rise by 6.1% a year to $385m in 2022, while Tanzania is expected to grow to $183m in 2022 from just $56m in 2013. Even South Africa, already the continent’s most developed broadcasting market, is expected to see the TV market increase to R40.8bn ($2.8bn) in 2022 from R32.2bn today, according to the survey. As economic growth leads to increased smartphone ownership and internet penetration ticks up, broadcasters are increasingly reaching new audiences via online distribution platforms such as YouTube.
“Mobile technology is growing rapidly, data is being consumed at a very high level and DTT [digital terrestrial television] is being launched in phases,” says John Momoh, chief executive of Nigerian news and entertainment broadcaster Channels TV. “We’re all experiencing disruption and trying to adjust to see how we can move content to the consumer to satisfy their demands.”
Yet the industry faces significant hurdles if it is to thrive amid the disruption. The switchover from analogue to digital broadcasting has been delayed in many countries, slowing advertising, product and audience growth. Low internet penetration rates, limited wifi and the high cost of data hold back the potential of online broadcasting. And muted economic growth in major markets has resulted in broadcasters chasing limited revenue in a capital-intensive industry.
“There’s a voracious appetite for entertainment services, there’s no question about it. The market may be expanding with a lot of people starting up TV and radio services but the reality is that the advertising market is very slow,” says Hanlon of the Nigerian market. “It’s a very challenging market, albeit one that has around 500 TV stations around the country and probably 2,000 radio stations, most of which are highly unprofitable. Many of them close down, new ones start up – it’s cyclical. In reality there’s a handful of operators making serious revenues in the market.”
Entertaining the masses
First launched back in 1995, Channels TV has long been attuned to the rough and tumble of the Nigerian broadcasting market. As competition ramps up and sluggish economic growth continues – the IMF projects that Nigeria will grow by just 2.1% this year – Momoh says that the news broadcaster will shift some of its focus towards entertainment content in order to draw in young audiences and attract vital new revenue sources.
“Entertainment is big in Nigeria now – our next plan is for us to go into it. We’ve just completed our studios in Lagos and we have one of the studios dedicated to entertainment. Nollywood and the music industry are big, so we think the content there is well sought after. We think branching out and launching an entertainment channel and doing it properly will attract more revenues for us.”
Such heavy upfront investment and diversification is becoming common across the Nigerian industry as stations strive to differentiate themselves in a highly competitive market. The 2016 recession had a detrimental impact on TV advertising in the country, with revenues plummeting by 16.4% and recovering just 0.9% in 2017, according to PwC. Professionally produced entertainment and a shift to digital and HD technology are seen as crucial fightback strategies.
“You’ve got to make sure the services are of international standard, have really good picture and sound quality and really good on-air talent,” says Hanlon. “TV is a very capital-intensive business. At the moment we’re upgrading all our facilities to full HD, which is a very costly exercise – millions of dollars of investment. You have to do that to stand out in a very crowded market.”
Yet attempts to boost quality are held back by a dearth of broadcasting talent, leading to higher staffing costs and a static market for specialised labour.
“The biggest barrier to implementing standards is the level of candidates you can bring into the business,” says Hanlon. “There’s very little movement in the market by people gaining experience internationally and then coming back here. We have to plough a lot into training our people ourselves… It’s difficult and costly.”
In a bid to overcome the talent deficit and improve production standards, Nigerian TV stations are boosting collaboration with international broadcasters. In April, Channels TV and the BBC announced the launch of Gist Nigeria, a weekly current affairs show for viewers in Nigeria, Sierra Leone and Liberia, which will be produced at Channels TV’s new Lagos studio.
But wider moves towards broad-based collaboration have been held back by the slow switchover to DTT. The Nigerian government first approved the switch from analogue terrestrial to DTT in 2007, setting an initial switchover date of 2012, according to S&P Global. The analogue switch-off deadline was missed, however, as were 2015 and 2017 deadlines. According to the International Telecommunication Union, as of 2018, analogue services were switched off in just six Nigerian states. The situation was similarly bleak across the continent – less than 20 African countries had completed the switchover, with major holdouts including South Africa and Ethiopia.
According to consultancy GSMA, DTT will allow broadcasters to target consumers with a wider choice of programming and services, with better quality, interactivity and convenience likely to boost commercial opportunities. Hanlon says that DTT will provide international broadcasters with new opportunities to enter the market and says that he has already fielded approaches from broadcasters keen to partner on the launch of DTT channels.
“The benefits are huge – good programming, better content, better quality, better types of revenue. The future is good but personally I believe things are slow and will take a while for us to achieve our objectives,” says Momoh.
Until DTT arrives, frequency restrictions mean governments are forced to ration broadcast licences, constraining growth and forcing up prices.
“In Nigeria to get a network licence to open your radio and TV stations around the country you pay $1.4m in five years. In the UK where we also operate, we pay £5,000 in five years,” says Momoh.
Pay-TV vs free-to-air
Where government has failed, pay-TV operators are stepping up. By end-2017, research firm Kagan estimated that 4.2m Nigerian homes had subscribed to pay DTT services. Nigeria’s overall multichannel market grew to more than 6.9m subscribers as of year-end 2017, up 9.1% year on year. But household penetration remained low, only reaching 25.7% in 2017 compared to 52.5% in South Africa. Multichannel revenues totalled $835m compared to $1.9bn in South Africa. As in many African countries, pay-TV remains well beyond the spending capabilities of large swathes of the population. For Hanlon, free-to-air offers African broadcasters and advertisers a much better chance of reaching mass audiences than pay services.
“Subscription services in Africa are like hen’s teeth, at least the ones that succeed… They’re trying to launch paid-for subscription services that very few on the continent can afford. Free-to-air is where we want to stay… It leads to large-scale consumption, and once you’ve got the mass audience, the advertisers want to be with you, particularly if you’re offering a high-quality product. We have just shy of 6m who watch and listen to our various services every day and that’s of immense attraction to big international brands who want to advertise in the Nigerian market.”
Hanlon says that relations with local banks, consumer goods companies and telcos are key to commercial success, as are ties to the international agencies that handle accounts for major brands such as Coca-Cola, MTN and Unilever. Yet broadcasters are crying out for more sophisticated ways to measure audience engagement, advertiser reach and the success of their content. The internet looms ever larger in these plans.
Amid the chandeliers and shag carpets of a South African mansion, two dozen women compete for the attentions of a suited male singleton, offering outlandish praise and gifts in return for his favour. Having taken audiences by storm elsewhere in the world, the first series of South Africa’s The Bachelor has arrived. While the format was adapted by local broadcaster M-Net, the first episode was also broadcast live on Google’s online video platform YouTube on Valentine’s Day – a clear signal that the continent’s leading content producers see online broadcasting as a crucial medium to reach young audiences.
The shift to online video content is being driven by the increasing uptake of smartphones, which reached 250m connections at the end of 2017, according to GSMA. The adoption rate is expected to double by 2025 to reach around 690m, or two thirds of total mobile phone connections.
Still, mobile internet penetration was just 21% in 2017 compared to 50% in Latin America and the Caribbean, amounting to some 211m subscribers. For many, the cost of handsets and data remains prohibitive. Africans have to spend 8.76% of their average monthly income on 1GB of mobile data, compared to 3.58% in Latin America and the Caribbean and 1.54% in Asia, according to the Alliance for Affordable Internet.
Google itself is attempting to boost these numbers, investing in its Next Billion Users initiative, which aims to offer better access to consumers in markets with low internet penetration.
“The third leg of running the YouTube business in Africa is thinking about access, thinking about user experiences, mobile data, and being conscious that we build our reach by building products for Africa… With the current realities around access we wouldn’t be fulfilling our mission if we didn’t focus on trying to solve some of those challenges,” says Olopade.
Nevertheless, brands are encouraged by future projections of internet availability and see online platforms as a key way to reach a younger demographic. In March, the NBA launched a YouTube channel for African fans of basketball. UEFA has partnered with local broadcasters to show football highlights, while music labels and reality producers are queuing up to sign deals.
From professional broadcasters to DIY vloggers and tutorials, YouTube’s Africa ecosystem is developing much as it has elsewhere in the world, and advertisers are taking notice.
“We are seeing the broader digital media ecosystem for advertising mature. You’re seeing growth and a slight rebalancing in advertising marketing budgets going to TV versus those going to digital. On the whole it’s still very much a collaborative ecosystem-wide change… You don’t have to choose between social media and TV,” says Olopade.
Traditional broadcasting still key
Broadcasters agree that the tectonic shift to online has begun, but believe that until data costs and affordability issues are sorted out, traditional transmission will continue to play a key role in attracting audiences.
“YouTube has great potential for us and we’re engaging actively. But I see the model as complementary rather than core. Core TV and radio is our bread and butter. Online offers ancillary aspects and is important to advertisers as well. It’s short clips of content to make available to a wider audience. We can monetise that so it’s of real interest, but it’s not core – main consumption is through FM and UHF transmission,” says Hanlon.
“Even when you have a lot of people consuming content via mobile you still find they watch TV for sport, reality programmes and news,” agrees Momoh. “The future is still bright, it’s not a death knell for traditional TV… Our research shows you still have a lot watching linear TV and this will stay for a while to come. The thing is to have different strategies to get content onto many platforms.”
For now, Nigeria’s traditional broadcasters remain engaged in the dogfight for audience share. With the economy largely stagnant, competing aggressively and taking advertising revenues from other broadcasters remains crucial, as does the switch to new markets – TVC Communications is considering expansion in Kenya, South Africa and elsewhere.
Yet Olopade provides an optimistic view of an industry where traditional and internet broadcasting thrive together.
“We see ourselves as enablers, part of the key infrastructure of the next generation of television in Africa. We may see new formats entirely born from this incredibly robust global video ecosystem, but also taking the best lessons of professional broadcast production. We’ve had some successful YouTube channels in Africa make the transition to TV, and we’ll only see more convergence, collaboration and partnership as the whole pie grows in Africa.”