Entertainment and media outlook 2015-2019 South Africa, Nigeria, Kenya

www.pwc.co.za/outlook

Beyond digital: empowered consumers demand choice and convenience that transcend platforms

Charles Stuart

Internet

Television

Filmed entertainment

Video games

Newspaper publishing

Magazine publishing

Book publishing

Business-to-business

Music

Out-of-home advertising

Radio

www.pwc.co.za/outlook Consumer/end-

user & advertising spending

5 year historic & 5 year forecast data

3 countries

11 segments

$

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bigger faster

Mature Next wave

Slow growing

Up & comers

11 5

18 20

countries

3.4%

8.8% 8.9%

3.4% aggregate

market size (2019)

average CAGR (2014 – 19)

Analyzing the Global overall 5.1% CAGR …

Slow growing (3.4%)

Our quadrant view in detail Next wave

(8.8%) Mature (3.4%)

Up & comers (8.9%)

US

Japan

Spain

Belgium

Greece

Romania

Singapore

South Africa (9.4%) $10.6bn à $16.7bn

Indonesia

Vietnam Kenya (12.9%) $1.8bn à $3.3bn

Nigeria (15.1%)

$4bn à $8.1bn

China

Brazil

India Russia Mexico

UK

UAE (7.5%) $3.3bn à $4.8bn

Saudi Arabia (7.4%)

$6.9bn à $10bn

MENA (9.3%)

$9.3bn à $14.5bn

Growth in Internet will drive advertiser and consumer spending

Broadband access CAGR (2015 – 2019)

12.7% 19.6%

20.4%

5.1% 9.4%

12.9% 15.1%

3.7% 10.8%

20.2% 17.9%

Mobile Internet access CAGR (2015 – 2019)

E&M CAGR (2015 – 2019)

22.9%

Global

Kenya

Nigeria

South Africa

Global South Africa

Nigeria

Kenya

Kenya

South Africa Global

Nigeria

Mobile Internet subscriber penetration (% of population) 2010 2014 2019

Growth in Internet will drive advertiser and consumer spending

Nigeria

Kenya

10%

1%

1%

37%

7%

7%

69%

31%

35%

14% 35% 59% Global

1.3%

0.8%

-0.3%

0.4%

4.6%

3.1%

3.7%

4.1%

2.5%

4.1%

5.7%

5.1%

8.8%

12.1%

0.7%

1.3%

1.9%

2.9%

3.5%

3.6%

5.5%

5.6%

5.9%

6.2%

6.6%

9.4%

18.6%

21.7%

Book publishing

Music

Newspaper publishing

Magazine publishing

Out-of-home advertising

TV subscriptions

Business-to-business

Filmed entertainment

Radio

TV advertising

Video games

Total

Internet access

Internet advertising South Africa Global

Global vs South Africa segment CAGR … Growth in aggregate spending (2015 – 2019 CAGR)

Total Global

Total South Africa

5.1%

9.4%

Magazine publishing

871 901

930 961

984 1005

2014 2015 2016 2017 2018 2019

CAGR (%)

•  Market will see slowing but steady growth with trade magazine growth outpacing consumer magazines.

•  Digital is on the rise, but print remains king.

•  Smartphones will be key to digital growth.

•  All-you-can-read subscription services and interactive ads are yet to take off but could prove transformational. 2.9 Total

Non-digital

Digital

1.8

28.1

South Africa aggregate spending (US$m) Insights at a glance

Digital revenue—share of total (%)

2.5%

2014

7.7%

2019

$77m $22m

-0.3%

0.4%

2.5%

1.3%

3.1%

3.7%

4.1%

4.6%

4.1%

0.8%

5.7%

5.1%

8.8%

12.1%

-0.2%

1.3%

3.4%

5.0%

5.3%

6.7%

6.8%

7.2%

10.1%

11.3%

14.3%

15.1%

21.2%

31.6%

Newspaper publishing

Magazine publishing

Radio

Book publishing

TV subscriptions

Business-to-business

TV advertising

Out-of-home advertising

Filmed entertainment

Music

Video games

Total

Internet access

Internet advertising Nigeria Global

Global vs Nigeria segment CAGR … Growth in aggregate spending (2015 – 2019 CAGR)

Total Global

Total Nigeria

5.1%

15.1% Nigeria

Magazine publishing

221 225

229 231 234 236

2014 2015 2016 2017 2018 2019

CAGR (%)

•  Consumer magazines continue to dominate the market.

•  Heavily print focused with no real digital impact over the forecast period.

•  Print advertising revenues declining.

•  Infrastructure challenges hinder growth.

1.3 Total

Non-digital

Digital

1.0

21.2

Nigeria aggregate spending (US$m) Insights at a glance

Digital revenue—share of total (%)

1.4%

2014

3.0%

2019

$7m $3m Nigeria

1.3%

4.1%

0.4%

-0.3%

2.5%

4.6%

0.8%

3.7%

5.1%

3.1%

4.1%

5.7%

12.1%

8.8%

2.6%

3.4%

3.5%

3.9%

7.5%

7.7%

7.8%

9.6%

12.9%

13.6%

14.1%

14.5%

16.8%

20.4%

Book publishing

Filmed entertainment

Magazine publishing

Newspaper publishing

Radio

Out-of-home advertising

Music

Business-to-business

Total

TV subscriptions

TV advertising

Video games

Internet advertising

Internet access Kenya Global

Global vs Kenya segment CAGR … Growth in aggregate spending (2015 – 2019 CAGR)

Total Global

Total Kenya

5.1%

12.9% Kenya

Magazine publishing

76 78 81 83

86 90

2014 2015 2016 2017 2018 2019

CAGR (%)

•  Consumer magazine revenues account for almost 95% of the market.

•  Heavily print focused with no real digital impact over the forecast period.

•  Growing middle class will drive consumer magazine revenue as they look to lifestyle magazines for advice.

•  Distribution can be a problem. 3.5 Total

Non-digital

Digital

3.0

19.3

Kenya aggregate spending (US$m) Insights at a glance

Digital revenue—share of total (%)

2.6%

2014

4.4%

2019

$4m $2m Kenya

Looking forward

Successful entertainment and media companies should focus on three imperatives

Audience measurement

Continue innovating, particularly around the product and the overall user experience

Put mobile (and increasingly video) at the center of their consumer offerings

Stop compartmentalizing consumer relationships by distribution channel

OTT disruption

Reaching the next five billion consumers

Maximizing the value of content

Addressable advertising

Contextual awareness and data responsibility

Four forces reshaping the advertising landscape

We continue to be in an environment in which consumers call the shots!

Many thanks! Questions?

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