Increased Internet access will generate more consumer spend than any other media service over the next five years in the South African entertainment and media industry, according to a new report released this week.
Auditing firm PricewaterhouseCoopers (PwC), in its “South African Entertainment and Media Outlook: 2014-2018” report, stated South Africa’s entertainment and media market was expected to grow by 10,2% annually from 2014 to 2018.
The growth, compounded annually, would be to a value of R190,4bn, PwC said in a statement.
Combined revenues from Internet access and advertising would account for an estimated R71,6bn in 2018, 37,6% of total revenues.
PwC South Africa entertainment and media industries leader Vicki Myburgh said: “Growth in the South African entertainment and media industry is largely being driven by the Internet and by consumers’ love of new technology.”
This was especially applicable to mobile technology, such as smartphones and tablets, as well as applications powered by data analytics and cloud services.
“Technology is increasingly being driven by consumers’ needs and expectations,” Myburgh said.
Aside from the Internet, the report predicted the fastest growth would be seen in video games and radio, which would enjoy growth rates of nine and 8,2% respectively.
“Videogames has made the greatest transition to digital, largely due to the popularity of mobile gaming, but also because of the increased potential for digital distribution of console games,” said Myburgh.
A total of 27% of console revenue was expected to be digital in 2018.
The slowest growing segment in the entertainment and media industry would be music. South Africa’s music market was worth R2,1bn in 2013, down from R2,4bn in 2009. Annual revenue, forecast to grow marginally by a compound annual growth rate (CAGR) of 0,5%, would remain relatively flat at R2,2bn in 2018.
“Continued growth in broadband and smartphone penetration is accelerating the shift to digital music,” Myburgh said. Digital music was cheaper, offered instant access and was more portable, which were major advantages.
Television was the second-largest segment, with combined revenues from TV subscriptions and advertising projected to reach R39,6bn in 2018. The number of pay-TV households was expected to rise as the size of the middle class grew.
The report showed advertising accounted for 38% of revenue in the entertainment and music industry in 2013, although this share was expected to fall to 33% in 2018.
This was largely due to Internet access increasing its market share significantly between 2013 and 2018.
Even so, advertising revenue still increased by R18bn between 2013 and 2018.
The fastest-growing segment, Internet advertising, was expected to show a double-digit CAGR as a result of the substantial increase in Internet access over the period.
The strongest drivers of growth in the sports segment would come from sponsorships and media rights.
South Africa was expected to see total sports revenues of an estimated R20,5bn in 2018, up from R14,8bn, and rising at a CAGR of 6,7%.
Ticket gate revenues were predicted to reach R5,1bn in 2018, up from R4,3bn in 2013. — Sapa