PwC Africa has released the latest industry insights from the Africa Entertainment and Media Outlook 2022-2026. The report shows that Kenya has seen continued growth since 2017, with E&M revenue reaching new heights in 2021 (12.6% annual growth rate).

The Entertainment and Media (E&M) industry is a considerable economic driver in many African countries, and just like the rest of the world, large sectors within the industry were adversely impacted by COVID-19. However, the latest analysis of the industry’s performance in key African economies reveals that a more positive trajectory is finally in sight.

The industry is becoming more digital, more mobile, more pitched at media that attract the young, more evenly distributed around the globe and more dependent on advertising in all its forms. This year, the focus of the report is on the fault lines and fractures that are opening up between entertainment and media industries and companies, and within different media segments.

The Outlook assesses evolving consumer behaviours — and the advertising spend that follows those behaviours. As business models shift to meet consumers where they spend their time (and money), several fault lines are opening up.

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In 2021, Kenya, South Africa and Nigeria saw strong growth in entertainment and media revenue. Industries that were more severely impacted in 2020, such as cinema, live music and B2B trade shows, made strong comebacks, although revenues remained below pre-pandemic levels.

Segments such as video games and OTT (streaming TV) video rose to new heights after thriving under lockdown conditions, while other sectors proved to be largely ‘pandemic-proof’, with podcast advertising, albeit off a low base, showing resilient revenue growth of 12.6% in Kenya.

Alinah Motaung, PwC Africa Entertainment and Media Leader, says what is clear from PwC’s latest Outlook is that the pandemic accelerated changes in consumer behaviour and digital adoption in ways that will affect future growth trajectories.

“Some of the sectors that saw immense gains during COVID-19 might not be able to sustain that growth, while others are set to continue to build from their higher bases. Some formerly niche sectors, such as gaming, will barrel their way into prominence, as other formerly dominant sectors such as traditional TV, newspapers and consumer magazines are at risk of seeing their positions erode.”

Advertising, internet connectivity and consumption

Advertising, which was harder hit by the pandemic, experienced the largest rebound in 2021. From an advertising perspective, it is the internet advertising segment that we expect to see the largest gains in advertising revenue terms across the five-year forecast period to 2026. This is a trend seen across Kenya, South Africa, and Nigeria and at a global level, and is due to consumers and advertisers prioritising digital.

Connectivity in all markets is constrained by underdeveloped infrastructure, meaning that the speed and quality of fixed broadband is less reliable, and consumers have instead turned to cheaper mobile packages.

OTT video streaming revenue is set to rise rapidly over the next five years, with revenue growth to 2026 expected to outpace increases in TV subscription revenue across all three markets. But this is from a relatively small base, meaning that revenue itself will remain comparatively low.

The next new thing

Looking ahead, we expect future E&M growth to be seen in the development of the metaverse and the use of non-fungible tokens (NFTs). Meta stated that the metaverse could contribute around US$40bn to the economies of Sub-Saharan markets like Nigeria and Kenya.

The overall growth path is both clear and strong. The vast E&M complex is growing more rapidly than the global economy as a whole, and with each passing year, more people are spending more of their time, attention and money on the complex and increasingly immersive E&M experiences that are available to them.