Entertainment and media industry recovering – report

2010-10-14 13:22

South Africa’s entertainment and media (E&M) industry is recovering from the economic downturn, according to a report released today.

The PriceWaterhouseCoopers’ entertainment and media report says total South African E&M spending grew by 1.8% last year, in contrast to the 1.8% decline globally, but this was down from the 8.5% growth seen in 2008.

“Globally, the speed at which consumers have transitioned to digital has accelerated beyond expectations.

“While spending on digital media in South Africa is expected to grow, it is unlikely that it will dominate in the forecast period,” the report said.

Non-digital revenue streams were expected to be much higher and would still account for 69.1% of total South African spending in 2014.

“Appropriately, forward-thinking E&M companies will use digital technologies to generate revenue while still supporting their non-digital offerings in set markets,” the report said.

Advertising fell 14.3% as the full effect of the recession hit last year.

However, consumer/end-user spending countered this effect with a booming box office market, continued growth in TV subscription spending and a jump in broadband spending.

“Even with a surge in the number of households using broadband, the internet market in South Africa is still in its developmental stage.”

Less than 10% of households had a broadband connection last year but this was expected to quadruple over the next five years.

There were more than 1.3 million mobile broadband users last year in South Africa, compared to 800 000 fixed broadband users.

When including the 3.2 million dial-up users, the total number of internet users was only 5.3 million, the report said.

“Mobile broadband will be the fastest-growing technology over the next five years, with an expected increase of 50.7% or 10.1 million users by 2014.”

The report showed that by 2014, 72% of broadband users would access the internet through mobile devices and 63% of all internet users would access it through mobile devices.

Video games enjoyed a 13.4% growth last year, second only to the internet which witnessed a 29.8% increase in the same period.

Sports revenue increased 5.8% last year, aided by new tournaments, merchandising and growing interest in the sponsorship market.

According to the report, new technology such as mobile broadcasting would see new competitors enter the market which would generate an additional advertising stream, projected to reach R15 million by 2014.

Broadcasting in South Africa was highly regulated and outlets were limited, the report found.

“There are four free-to-air channels and two pay television providers that operate a terrestrial pay channel and a digital satellite network.

“The three SABC channels account for more than two-thirds of the television audience, and free-to-air broadcasting generates 90% of total viewing.”

The report predicted that public TV licence fees would increase by 0.9% compounded yearly from R1.02 billion last year to R1.07 billion in 2014.

Broadcast advertising would expand at a 9.6% compound annual rate during the next five years to R11.9 billion in 2014, from R7.5 billion last year.

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