South Africa's Entertainment and Media (E&M) sector is showing resilience and is expected to grow at a compound annual growth rate (CAGR) of 4.2% through 2028. With revenue projected to reach R363.2 billion (US$19.8 billion), this presents numerous opportunities for those ready to adapt and innovate.
South Africa's digital streaming landscape is marked by significant growth and unique characteristics, according to the "Africa Entertainment and Media Outlook 2024–2028." The Over-The-Top (OTT) market in South Africa is expanding, with projections indicating a substantial increase in both revenue and subscriptions.
Growth and Projections
The OTT market in South Africa is set to grow at a compound annual growth rate (CAGR) of 8.5%, with revenues expected to reach R6.8 billion (US$370 million) in 2028, a notable increase from R4.5 billion (US$246 million) in 2023. This growth is underpinned by increasing internet penetration and the adoption of 5G technology, which enhances the stability of connectivity. By the end of 2028, South Africa is projected to add nearly 1.6 million additional OTT subscribers, underscoring the rising demand for digital streaming services in the region.
Growth is expected across all segments other than print media. OTT and internet advertising will see some of the highest growth rates, supported by stable internet connectivity and 5G adoption. Programmatic advertising continues to gain momentum, accounting for 82.4% of spend in 2024. Video games and esports remain a segment to watch, promising strong future growth.
Key Factors Influencing Streaming
Mobile-First Approach: South Africa's E&M growth is primarily driven by mobile services due to the relatively low penetration of fixed broadband. The transition from 3G to 4G networks is a critical factor, with 4G subscriptions expected to surpass 3G subscriptions by the end of 2024. This shift improves the accessibility and quality of streaming services on mobile devices.
Data Consumption: Video content dominates data consumption in South Africa, accounting for 82.2% of all data used. Social video platforms like TikTok and Instagram are significant drivers within the video sector, reflecting changing consumer preferences toward short-form and social media-integrated video content.
Market Concentration: The pay-TV landscape in Africa, including South Africa, is concentrated, with potential for further consolidation. Canal+'s acquisition of MultiChoice is awaiting approval, highlighting the market's dynamics, shaped by regulatory costs, infrastructure challenges, and premium content availability.
Consumer Challenges: Economic factors, such as power blackouts (load shedding) and inflationary pressures, impact consumer behaviour. MultiChoice has noted that load shedding discourages customers without backup power from renewing their subscriptions. Netflix increased prices in response to inflationary pressures, demonstrating how economic headwinds influence the streaming market.
Investment and Innovation: Despite challenges, significant investments are being made in infrastructure and service offerings. StarTimes has been developing digital terrestrial television (DTT) infrastructure, and MultiChoice relaunched Showmax with enhanced content and technology. Showmax’s deal with NBCUniversal's Peacock, valued at R6.9 billion (US$380 million), will provide content, software, and services.
Strategic Initiatives
Service Bundling: Operators are bundling services to reduce churn and enhance user value. Disney+ launched a mobile-only tier in South Africa in 2023 in partnership with MTN, offering subscribers access to a 2GB subsidised data bundle.
Content Localisation: A focus on local content and cultural representation is crucial for engaging African consumers and reaching global audiences. The core Showmax service will prioritise African markets, indicating confidence in the commercial viability of the African streaming opportunity.
Password-Sharing Crackdowns: To increase subscription bases, streaming services are implementing measures against password sharing. Netflix introduced an account-sharing crackdown policy in South Africa in July 2023.
Advertising and Monetisation
The rise of digital streaming also creates new avenues for advertising. Connected TV (CTV) advertising is expected to see substantial growth, more than doubling from R237 million (US$13 million) in 2023 to R682 million (US$37 million) in 2028. CTV advertising offers addressable and measurable ads on TV screens, benefiting streamers and local broadcasters looking to enhance the growth of their online video services
Factors for Consideration
The "Africa Entertainment and Media Outlook 2024–2028" emphasises that resilience and reinvention are key for navigating challenges and unlocking opportunities in the dynamic E&M industry. As internet access expands, centre business models around digital transformation. Leverage social media and mobile platforms to engage Africa’s young demographic through personalised and data-driven advertising.
Source: PwC’s Africa Entertainment and Media Outlook 2024–2028 provides a compass for entertainment and media (E&M) leaders as they navigate the coming years.