It’s now clear that SA’s media industry is firmly on an accelerated digital trajectory, as expansion in the sector in coming years will far outstrip that of more traditional offerings like TV, newspapers and magazines.
PwC’s new "Entertainment and Media Outlook: 2018-2022: An African perspective" says there is a striking difference in growth between digital and nondigital revenue. They have a compound annual growth rate (CAGR) of 11.4% and 1.8% respectively.
Put another way, "digital revenue will add R41.3bn and nondigital revenue R6.7bn in absolute terms to 2022", says Vicki Myburgh, the report’s project leader. "The nondigital elements of five different segments — books, magazines, newspapers, out-of-home and video games — will all decline until 2022."
PwC’s report is an authoritative source of analyses and five-year forecasts of consumer and advertising spending in SA, Nigeria, Kenya, Ghana and Tanzania. It covers 14 segments: internet, data consumption, TV, cinema, video games, e-sports, virtual reality, newspaper publishing, magazine publishing, book publishing, business-to-business, music, out-of-home and radio.
Myburgh says: "SA’s entertainment and media industry faced a challenging year in 2017 amid economic and sociopolitical uncertainty. Total revenue rose at a comparatively low 6.8% year on year to R129.2bn.
"A bounce-back in 2018 is foreseen to show 7.6% year-on-year growth, while the CAGR to 2022 is forecast at 6.5%."
The fastest revenue growth is expected in the digital-driven segments. "Virtual reality will lead the way, albeit from a low base, at a five-year CAGR of 55% to reach R671bn in 2022, from R75bn in 2017.
"[Virtual reality is emerging] as a viable long-term platform for unique, immersive experiences, attracting major investment from media and technology companies eager to seize a share of this fast-growing market." Print’s decline
Traditional media will continue to sweat. Says Myburgh: "The revenues of newspapers and magazines will decline over the next five years. In 2017, total newspaper revenue fell by 2.9% to R8.6bn. The forecast for the years ahead is for decline at 4% CAGR.
"By 2022, SA’s total newspaper revenue is expected to drop to R7bn."
Radio continues to have a solid listener base in SA, and a weekly reach of 91%. Radio revenue is projected to rise 3.9% CAGR and surpass R5bn in 2022.
TV will also feel pain, as internet advertising will exceed TV advertising in terms of growth, leading the way with a 13% CAGR over the forecast period to reach R9.4bn and overtake TV advertising spend in 2022.
However, TV as a broad-appeal medium should not be written off. "TV and video will continue to be a major driver of consumer spend. Following growth at 4.8% CAGR over the five-year forecast period, the total TV market will be worth R40.8bn by 2022."
Advertising in the entertainment and media industry was mostly affected by SA’s economic environment, with growth of just 1.9% year on year. An improvement is expected to 2022, with a 3.3% CAGR bringing total ad revenue to R41.5bn, from R35.3bn in 2017.
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