Entertainment, media revenue to hit Sh329bn in next 5 years

Pupils at Arap Moi Primary School in a computer class. High-speed mobile Internet connections are projected to rise at 84.9pc compound annual growth rate. PHOTO | CHARLES KAMANU 

In Summary

• Internet access identified as the most established industry in Kenya, boasting one of the largest and highest growth rates to 2021, with revenues rising to Sh103bn ($1bn) by 2020.

By JAMES NGUNJIRI
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The revenue of Kenya’s entertainment and media sector is estimated to grow by 8.5 per cent over the next five years to hit Sh329 billion ($3.2 billion).

A PricewaterhouseCoopers (PwC) report on the sector and media outlook 2017 – 2021, released last week, indicates that in 2016 the industry was worth Sh216 billion ($2.1 billion), up 13.6 per cent in 2015.

Internet access was identified as the most established industry in Kenya, boasting one of the largest and highest growth rates to 2021.

It will also be the first sub-segment in which revenues hit Sh103 billion ($1 billion) by 2020, as mobile internet access remains the main revenue driver, given the increase in smartphone adoption and popularity.

The report — an in-depth analysis of the trends shaping the entertainment and the media in South Africa, Nigeria, Kenya, Ghana and Tanzania — revealed that over the forecast period, high-speed mobile internet connections will rise at 84.9 per cent compound annual growth rate (CAGR).
The number of mobile internet subscribers is set to more than double over the next five years, reaching 33 million in 2021.

“Companies that wish to capture value amid shifting consumer preferences and business model disruptions must focus on an increasingly prominent source of competitive advantage: the user experience. They must harness technology and data to attract, retain and engage users; and convert them into devoted fans,” said Vicki Myburgh, entertainment and media industry leader for PwC Southern Africa.

Already, a number of multinationals have shown interest in Kenya. Malaysian video streaming service iFlix announced in June that it plans to make an entry.

Giants such as Netflix and Amazon are already in the market, with iFlix hoping to capture a slice of the sector, offering both local and international content at a significant lower price.

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iFlix will charge between Sh200 and Sh400 a month and will allow consumers to download content in low, medium or HD format.

Increased use of smartphones has also contributed to growth across other media sectors. PwC said a company such as Nation Media Group has developed a mobile-friendly app to encourage digital readership of its news content.

Also, the social/casual gaming market is expected to rise by 22.4 per cent CAGR to 2021, as access to mobile app stores rise amid falling costs of mobile data.

Total advertising revenue reached Sh103 billion ($1 billion) in 2016 and is set to grow at eight per cent CAGR over the next five years, fuelled by internet advertising’s CAGR of 13.6 per cent over the forecast period.

Prior to 2016, the report said, Kenya’s largest advertising market was radio. “Considering its small economy, Kenya has the largest radio advertising market in the Middle East and Africa regions, and the 14th largest in the world. By 2021, it will generate more radio advertising revenue than Italy, a country with a bigger population and an economy more than 20 times larger,” the report said.

According to analysts at Bizna Kenya, low costs and robust listenership are key pull factors to businesses looking to advertise in Kenya.

Due to the range of radio stations in the country, advertisers can reach key demographics, meaning targeted and more effective ad campaigns.

Internet advertising is one of the fastest-growing sectors. By 2021, revenue is expected to hit Sh23.38 billion ($227 million), making it the third largest advertising category in Kenya.

Already, international players have started trekking in, with Swedish phone-call filtering firm Truecaller announcing in May that it would offer advertisement opportunities to Kenyan firms on its mobile app.

The advertising revenue is set to increase as the country’s media industry continues to expand.

The report says there are several small but growing untapped areas, such as cinema, which could rise quickly, while the emergence of global corporations could help propel revenues.