South African entertainment and media outlook: 2011-2015

In 2010, R98 billion was spent in the South Africa entertainment and media sector. R24 billion of this was from advertising, and R74 billion came from end users. This was a huge 21% increase over 2009, but we have to give credit to the enormous impact of the 2010 FIFA World Cup. Coming off this high base, we expect total spend in 2011 to remain flat – and then to recover by around 10% each year thereafter up to 2015. And at that time, total spend will be R140 billion, with the mix of advertising and end user spend remaining roughly the same.

• Television broadcasting is moving to becoming all digital.
• New competition has emerged in the pay-television subscription sector.
• Mobile television services have been launched.
• Quality local content is becoming increasingly important for pay-television market.
• High-definition viewing is continuing to attract high-end consumers.
• Providers of pay-television services are providing various add-on services to attract subscribers.
• The availability of tablets and cheaper wireless Internet access is expected to fuel growth in the mobile television market.
• Broadcast advertising is expected to accelerate with faster economic growth over the next five years.

• The box office market benefited from a large increase in the number of digital and 3D screens, as consumers will pay a premium to enjoy the 3D experience.
• Local films showed a strong performance in 2010, with "Schuks Tshabalala's Guide to South Africa" being the highest grossing film in South Africa in 2010.
• Local film production is benefiting from increased assistance from government, co-production treaties with various countries and the extraordinary success of local films.
• The sell-through and in-store rental market is facing increasing competition with the introduction of videoon-demand and online streaming services.
• A key challenge for the sell-through and rental market is to find the optimal theatrical-to-home-video window release period.
• The emergence of tablets will further drive the electronic film market.

• Radio advertising was boosted by the 2010 FIFA World Cup.
• The goal of the Department of Communications is to have a community radio station in each of the country's municipalities.
• ICASA is in the process of announcing the successful bidders for three new commercial radio broadcasting licences.
• Ukhozi FM, a Zulu-language station, is the country's most popular station with over six million listeners per week, while 94.7 Highveld Stereo attracted the most advertising in 2010.
• Digital broadcasting is not expected to take-off in South Africa although Internet radio has taken off and is embraced by radio listeners.
• Radio stations are increasingly using social networks as communication platforms with their listeners.
• Needletime royalties are expected to have a significant impact on the radio broadcasting industry.

• The digital music market in South Africa is becoming more significant and steeper declines in the physical market are expected in the coming years.
• Increased broadband access and the increasing penetration of smartphones and tablets are driving growth in the digital market.
• Digital piracy is an increasing concern in the recorded music market.
• Suppliers have to determine the optimal revenue model, whether it be single unit sales, live streaming or another approach.
• Digital lockers will transform the way in which consumers store music.
• Local artists account for nearly half of all music sales in South Africa and sustain interest in both the physical and digital market.
• The live music market in South Africa is dominated by local artists and music festivals, but is also benefitting greatly from the increasing number of international acts playing in South Africa.

• The growing popularity of tablet devices is stimulating the digital market.
• The circulation market will be adversely affected by the availability of free content on the Internet, while publishers are faced with the challenge of monetising digital consumers.
• Special interest titles will be less vulnerable to online competition.
• Publishers are expected to continue to increase their presence in the online environment. However, print is not only here to stay for the next five years it is expected to show steady growth too.
• The improving economic climate is inducing publishers to launch new titles.
• In order to retain readership, publishers are investigating innovative ways to increase interaction with their readers and build brand loyalty.

• South Africa is currently experiencing parallel markets in newspaper publishing. The more mature publications are experiencing declining circulations and the younger publications aimed at a more populous, lessaffluent segment of the market are remaining stable or experiencing increased circulation.
• With increased broadband penetration, the Internet is expected to become a more formidable competitor to print newspapers.
• The Protection of Information Bill is a new piece of legislation currently being deliberated by parliament, and if promulgated, is expected to have a significant impact on the industry.
• Smartphones, the iPad and other tablets are emerging as popular platforms for online newspapers.
• Consumers still view digital content as inferior to theirtraditional physical formats and publishers are faced with the challenge to monetise their digital migration.

• Significant growth is expected in electronic consumer books.
• The increasing popularity of tablets and e-readers has stimulated the electronic consumer book market.
• It is important for publishers to establish a presence with content on all platforms: in bookstores, online and as apps.
• Consumers in the electronic educational book market benefit from additional features not available in the traditional format.
• The South African Government is planning to launch various campaigns to increase the literacy rate, which is expected to fuel growth in the books market.

• Improved economic conditions will stimulate the business-to-business publishing market.
• Print directories are declining as the market is shifting towards more digital formats.
• Smartphones with GPS capabilities and tablets are gaining penetration and are providing an additional platform for digital directories and digital books.
• The online formats in the business-to-business sector provide significant additional benefits compared to the print format, which is stimulating the digital migration of users.
• Publishers are starting to introduce pay walls for specialised online content.

• The 2010 FIFA World Cup significantly boosted advertising in South Africa and provided opportunities for the installation of advanced out-of-home media technologies.
• Out-of-home players are offering increasingly innovative and customised solutions to advertisers for specific target audiences.
• Out-of-home advertising reaches approximately 85% of the adult population in South Africa.
• A major challenge facing the out-of-home industry in South Africa is the need to establish an effective audience measurement mechanism. Until this has been achieved, advertisers will hold back on increasing their spend in this media category.
• Digital out-of-home is expected to grow exponentially in the forecast period, although this will be from a small base.

• A number of 3D games are being developed for various gaming consoles.
• The next generation consoles are only anticipated to start emerging at the end of the forecast period.
• Digital distribution of content is emerging as an important segment of the online market.
• Players are evolving ways to handle micro-transactions for online and social network gaming.
• Online gaming on social network sites like Facebook is growing exponentially.
• The increased penetration of tablets and smartphones is expected to cut into the popularity of handheld gaming devices.
• Developments in the market challenge advertisers to find innovative ways to build their brand.

• Revenues for the total sports market was fuelled by the 2010 FIFA World Cup.
• Due to significant improvements in infrastructure in preparation for the 2010 Soccer World Cup, South Africa is well positioned to host other sporting events.
• The South African sponsorship market is dynamic with new players continually trying to harness value.
• The largest sponsorship for 2010 was Absa’s sponsorship of Springbok Rugby.
• Counterfeit merchandising is a big threat to this market.
• A stronger TV advertising market is reinvigorating the demand for sports rights.

• Rapid growth is expected in the limited payout machines industry, as new licences are issued.
• Slow growth is expected in the casino gaming market as it reaches saturation.
• It appears that online casino gaming will not be legalised in South Africa in the near future.
• Gaming is sensitive to economic conditions and an improving economic environment is expected to have a positive impact on the market.
• Gambling tax has provisionally been scheduled to be introduced in 2012. This is expected to lead to reduced casino revenues.