The TV market – representing revenues for broadcasters and media companies – is expected to grow significantly between 2016 and 2021, mostly driven by Sub-Saharan Africa, which is set to be the world’s fastest growing TV market in the next five years, according to a regional report by IABM. This comes as a positive news especially since the dynamics of oil prices have had quite an impact on majority of the economies in the MEA region. Some broadcasters backed by state aid saw their budgets cut following the decline in oil prices, says Lorenzo Zanni, lead research analyst, IABM.
The transition to digital broadcasting represents the most important driver of broadcast and media technology spending in Sub-Saharan Africa with other transitions (HDTV, 4K/ UHD, OTT) still at early stages. The transition to digital broadcasting in the Middle East and Africa is still underway. In the Middle East, only Israel, Saudi Arabia and the UAE have completed the transition, while in Africa only Morocco, Malawi, Mozambique, Rwanda and Tanzania have done so.
In terms of the constraints on the way to make a move into digital broadcasting, Zanni says that the low disposable incomes reported in most countries in this region which make the replacement of old analogue equipment with digital set-top boxes or converters difficult to implement unless governments decide to intervene. The governments don't intervene much due to the lack of revenue generation from such investments. Some broadcasters don't go digital fearing they would lose the viewers who can't afford the new equipment. "Exchange rate volatility has caused numerous African currencies (notably the Nigerian Naira and the South African Rand) to depreciate against the US Dollar in both 2016 and 2017, making the purchase of digital equipment from foreign suppliers even more costly."
Zanni further adds: "Growth over the next few years will be largely fueled by the GCC countries, where pay-TV penetration is currently at about 60%. North Africa lags behind the Middle East due to the economic and business climate, with pay-TV penetration in countries such as Egypt at 3%, but remains an attractive prospect for growth. Sub-Saharan Africa also continues to see growth in pay-TV subscribers, primarily driven by South Africa and Nigeria."
The primary delivery method in the region is satellite with IPTV on the rise, particularly in the MENA. SVOD is not widespread as low broadband penetration and quality as well as poor payment infrastructure still challenge its development. "Advertising is currently the most successful business model in the Middle East and North Africa, however SVOD is predicted to gain ground over the coming years – eventually overtaking advertising," adds Zanni.
OTT hadn't gained much ground in Sub-Saharan Africa before recently Iflix, an-Asia based VOD service, launched in Nigeria, Zimbabwe, Tanzania and Kenya. Iflix wants to position itself as an alternative to pirated content, offering a subscription at $2.50 a month – the price to purchase a single pirated DVD.