The rapid growth of South Africa’s entertainment and media (E&M) companies, that continues to far outstrip the growth of its Western Europe and North America counterparts, is likely to slow in the future.
PwC’s Entertainment and Media Outlook 2016 found E&M companies enjoyed another year of double-digit growth in 2015 but the industry faced a less optimistic prognosis for the future.
It said an increasingly saturated mobile internet penetration, at 44.8% in 2015 from just 14.6% in 2011, and a poorer macroeconomic climate were likely to slow growth to around 6.6% by 2020, when the sector’s annual revenue would be R173.3bn.
However, the country’s E&M market was likely to continue attracting international investors because of strong growth relative to other countries and the large scale of the market, the report said.
Internet revenues in the sector will grow by around 12.2% up to 2020, while video entertainment will grow by around 4.9%, but publishing will struggle with an annual growth of just 0.8%.
South Africa’s consumer spending in the sector was likely to grow at 7.9% annually over the next five years.
Pay TV is likely to confound predictions about the sector’s poor performance by increasing its revenue through to 2020 in South Africa, a growth that will be “fuelled by both organic growth and the upselling of consumers to premium packages”.
TV advertising would continue to dominate the advertising sector, with internet advertising becoming the second largest contributor to revenue by 2020.
“Although ad blocking remains a concern, it is also an opportunity to improve the format, design and content of ads so as to discourage future adoption of ad blocking,” said the report.
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