Africa Rising

This article originally appeared in the MIPTV 2013 issue of TV Middle East & Africa.

 

Africa is poised for significant growth, and a number of social and economic factors support the optimism many in the media business have for this vast territory.

 

There is no doubt that this diverse continent is undergoing rapid transformation. Aside from the encouraging improvements on the human level—infant mortality and AIDS transmission rates are declining, while secondary school enrollment is up—the economies in several countries are improving. GDP is expected to grow by an average of 6 percent a year, and foreign investment in the region has increased from $15 billion in 2002 to $46 billion in 2012, according to data released by The Economist.

 

The reality of Africa’s boom was reflected in the attendance numbers at DISCOP Africa 2012. The seventh edition of the only content market to service the sub-Saharan region attracted 1,248 delegates, from 80-plus countries and 672 companies, representing a 150-percent increase in attendance year-on-year.

 

And that’s not all. Patrick Zuchowicki, the general manager of The DISCOP Organization, predicts that the eighth edition of the event, which will be held from November 6 to 8, 2013, “will see a 50-percent increase in the number of content buyers at the market. It is clear that after China, Africa has now become the world’s fastest-growing digital marketplace.”

 

Indeed, digital households across sub-Saharan Africa are expected to rise to 49 million by 2018. There are also indicators that are of particular interest to media companies that want to do business in the region. Over the past ten years, real income per person has gone up by more than 30 percent. Consumer spending will double in the next decade, which will help boost the nascent advertising industries in many countries, and, more importantly for the pay-TV and on-demand businesses, the percentage of households that can afford some sort of discretionary spending is set to grow: from 35 percent in 2000 to 52 percent in 2020.

 

A statistic of particular note—there are three mobile phones for every four people, the same ratio as in India. The general consensus is that as this extremely young population, of which the average age is in the mid-20s, starts to have money to spend, it will reach for smartphones and tablets in the same ways its counterparts in other countries have. For international programming distributors active in the region, this opens up several interesting, if not out-of-the-box, business possibilities.

 

“There is increasing opportunity and growth in the African TV market,” says Jamie Lynn, the executive VP of sales and distribution for Europe, the Middle East and Africa at FremantleMedia International.

 

“Pay TV still has the biggest appetite for finished programming, while the myriad free-to-air broadcasters are increasingly interested in acquiring formats which are already proven successes elsewhere,” continues Lynn. “We believe mobile to be a very interesting space in the African content market, as the take-up of smartphones explodes there. In some cases, the phone is a primary viewing device, not a supplementary one, as phones can be cheaper to use and run than a traditional TV set. To this point, we are beginning to offer our buyers more content which has the flexibility to run either as traditional half hours or as ‘bite-size’ episodes of six or seven minutes.”

 

Any profile of Africa must take into account the enormous disparity that marks the continent, in particular in sub-Saharan Africa. Countries run the gamut, from severely impoverished and underdeveloped with little if any media outlets, to the continent’s most mature market, South Africa, which boasts a healthy free-TV business, divided between state-run SABC and commercial stations, as well as one of the leading pay-TV companies in the world, MultiChoice, which operates DStv and M-Net.

 

Of the countries in between these two extremes, the ones with the most developed media markets are Kenya, Nigeria, the Republic of Ghana and Angola.

 

Kenya, where Swahili and English are the major languages, has not only the public broadcaster Kenya Broadcasting Corporation (KBC) but also several free-TV channels, among them Kenya Tele­vision Network (KTN), NTV, Citizen Television and the news channel K24. Wananchi operates the pay-TV platform Zuku TV.

 

Nigeria, where English is the official language, has one of the most vibrant media industries on the continent. The state-run Nigerian Television Authority operates numerous national and regional stations. The commercial stations include AIT Television, Silverbird TV and Galaxy TV. Nigeria is also home to Nollywood, a highly prolific feature-film-production hub.

 

In the Republic of Ghana, English is one of the major languages, and private press and broadcast stations enjoy significant freedom. While radio has long been the dominant medium, television is expanding its reach. State-run Ghana Broadcasting Corporation (GBC) operates Ghana TV (GTV) and a bouquet of digital networks, including the news channel GBC 24. In addition, there is Metro TV, plus TV3 and Viasat 1, which is part of Sweden’s Modern Times Group.

 

In Angola, the television market has been dominated by the state-run broadcaster TPA, Televisão Pública de Angola, but the first privately owned TV station, TV Zimbo, launched in 2008. Portuguese is the national language.

 

The leading pan-regional pay-TV platforms include DStv/M-Net, based in South Africa, Kenya’s Wananchi and StarTimes, which is run by a Chinese company. China is, in fact, investing heavily in Africa. France’s CanalSat/Canal+ Afrique is the other major regional pay DTH service.

 

Given the differing levels of maturity of the various African TV markets, broadcasters have divergent needs and acquisition budgets, but buyers in the region want quality shows, and like their acquisition brethren in other territories, they are looking for hits.

 

“Our biggest brands are globally recognized and their appeal in Africa is as strong as anywhere,” says Fremantle­Media’s Lynn. “As the region’s commercial channel offerings expand, there is increasing demand for more varied content.

 

“We sell a full range of drama, lifestyle, entertainment, comedy and kids’ programming across the continent,” he continues. “All of our best-known entertainment shows, such as Idol, The X Factor and Got Talent, have sold both as formats and finished shows to both pay-TV and terrestrial channels. Other programming, as diverse in style as Project Runway, the Jamie Oliver franchise and Merlin, has also sold into the region. DStv/M-Net remains the leading pay-TV platform across Africa, but there is increasing competition from regionally focused pay platforms in a range of sub-Saharan markets.”

 

One imported genre that has been performing exceptionally well in Africa has been the telenovela. Leading Latin American distributors have been doing brisk business across the region, including Televisa, the world’s leading producer of Spanish-language programming.

 

“Televisa’s overall business in Africa has been great!” says Ricardo Ehrsam, the general director for Europe, Asia and Africa at Televisa Internacional. “Thanks to the high quality of our content, and excellent dubbing, we have been able to solidify and grow partnerships with market leaders throughout English-, French- and Portuguese-speaking Africa.

 

“Due to the many similarities in cultural sensitivities, African viewers are naturally drawn to Televisa’s content,” continues Ehrsam. “They empathize with downtrodden heroines struggling against social inequities in order to persevere. Moreover, the universal themes of love, fighting for justice and the other positive moral messages conveyed in our novelas lend themselves well to the African market.”

 

Adela Velasco, who is in charge of sales to Europe and Africa for Comarex, agrees. “African audiences are totally fascinated by the concept and attracted to teleno­vela stories and formats,” she says. “Business in Africa has been actively moving forward over the past few years, and we believe this is as a result of the expertise the African players have been acquiring. [Africa is] an emerging territory with great growth potential, [and] we have been in constant touch with all the channels in the region and have made inroads there by offering quality programming and great story lines.”

 

Brazil’s Globo is finding an equally enthusiastic reception to its product. “The region as a whole offers good business opportunities, and the economic growth has increased the demand for our products across the board, whether teleno­velas, series, documentaries or one-off specials,” explains Raphael Corrêa Netto, the company’s head of international sales.

 

Netto reports that several of Globo’s titles are successfully playing in prime time in a number of African countries, including Kenya, Zambia and Namibia.

Traditional licensing of programming is not the only business Globo has in the sub-Saharan region. Brazil’s leading commercial broadcaster also operates a digital channel, TV Globo Internacional, available worldwide on satellite, cable and IPTV. Of the total global subscriber base of 620,000, about a third are located in sub-Saharan Africa.

 

There are a total of 47 countries in the sub-Saharan region of Africa. While opportunity is spreading everywhere in the region, some of the countries are developing at a faster pace and offer great potential. Micheline Azoury, the head of international sales and brand manager for Mondo TV, opines, “while it is fair to say that, right now, the entire sub-Saharan region is boiling and moving ever faster in media, South Africa and Kenya really stand out: South Africa because it is the biggest economy in the region, and Kenya because the building of digital infrastructure there will see many new channels launching in 2013.”

 

Africa is a focus for Passion Distribution, which specializes in factual entertainment, reality, documentaries, lifestyle and game shows. Rebecca Thomas, a sales manager at Passion, points to “Ghana, Kenya and, of course, the jewel in the crown, South Africa, with its strong pay sector,” as three of the most promising countries in the region. “There are countries such as Zimbabwe from which we could have hoped for more, but the region as a whole is definitely opening up.”

 

One of the key features of the sub-Saharan market has been the divide between regional and pan-regional channels. “Currently we work primarily with three major pan-regional channels that buy several Globo programs annually,” Netto says. He does acknowledge, however, that, “local channels do have greater traction with the audience, which does mean that, ultimately, our programs get watched by a larger audience.”

 

To a kids’ company such as Mondo TV, this is clearly of great significance. “While the pan-regionals have the advantage of being able to offer you a single contract at a much higher price than any of the individual terrestrial stations,” says Azoury, “they are much more selective, and they do also require a window of exclusivity, which can often be a very long one.” But for Azoury, the real advantage is the ability to work closely with the terrestrial channels. “The terrestrials all have different strategies and ad sponsorships they have to stick with, and this is a plus for us as a producer and program supplier as it enables us to work very closely with each channel to help them meet their needs.”

 

Besides telenovelas, sports programming is at the top of buyers’ lists. This is, of course, a very specialized area in which football, in particular the English Premier League, where so many Africans play, and the UEFA Champions League, dominates. While football is universally popular, there are regional variations where it has serious competition—rugby and cricket in South Africa of course, and, to a lesser extent, cricket in Kenya. Distance running and motor sport are also very popular across East Africa as a whole, while wrestling is massively popular in Senegal.

 

While finished product, notably American dramas and comedies, are very popular across the region, followed by documentaries and children’s programming from Western distributors, African broadcasters are starting to explore format and co-production deals.

“There is a lot of interest in collaboration on scripted formats and we are currently in contact with a Nigerian production company that wants to adapt some of our telenovelas for the African market, which is a completely new development for us,” says Berta Orozco, the sales executive for Western Europe, Africa and the Middle East at Colombian distributor Caracol Television.

 

It is a sign of just how significantly the market in sub-Saharan Africa has developed, that co-productions and production deals are now increasingly common. Netto reports that “Globo has received many requests for co-production and exchange of expertise from many important players in the region.”

 

Africa has set a date of 2015 for a full switch from analogue to digital signals. While nobody thinks that many, if any, countries will make that date, it is likely that some, in particular South Africa, Kenya and Ghana, will be close. Indeed, while describing her talks as “early stage negotiations,” Mondo’s Azoury reveals that, during DISCOP Africa last year, she “began talks for IPTV and OTT deals in South Africa and Nigeria.”

 

While cautioning that “digital television still faces structural limits in many African countries,” Netto believes that “the trend is that digital television will become increasingly common in the coming year, and we believe that consumers everywhere increasingly want access to content that is nonlinear and available on multiple screens. VOD is a natural extension of this desire.” For this reason, Globo sees VOD as important for business in this region.

 

According to a report published by Digital TV Research, about 35 percent of TV households in sub-Saharan Africa—14 million households—subscribed to digital services in 2012. By 2018, the number of households is expected to jump to 95.5 percent, or 49 million households. Kenya, Tanzania, Uganda and Zambia are expected to complete their digital switchover by the end of 2015.

 

On the digital terrestrial television (DTT) front, two-thirds of African television homes will take both pay- and free-TV DTT by 2018, up from only 11.7 percent at the end of 2012. Sub-Saharan Africa will have 33.8 million DTT homes by 2018, along with 25.7 million free-to-air homes and 8 million pay-TV homes, up from 4.6 million in total at the end of 2012.

 

The most prominent DTT players are the China-based StarTimes, available in 10 countries with some 1.5 million sub-Saharan subscribers, and MultiChoice’s GOtv, which is present in five countries.

 

As media markets in the sub-Saharan region continue to expand, international production and distribution companies will see ever-greater potential for business in the region.