Short-term Trends On the African Video Streaming Market
The African Video Streaming Market is Expected to Grow Significantly in the Coming Years
The African OTT market has been on the rise just like it has been in the rest of the world. The market is still some ways from reaching the maturity level of the markets in North America and Europe. However, that also means plenty more growth opportunities in the upcoming years.
By 2027, Africa will have 13.64 million paying SVOD (Subscription Video On Demand) subscriptions, a significant increase from 4.90 million at the end of 2021. According to the same source, 6.6% of households with a TV set will be paying for at least one subscription by 2027 – up from 3.9% of households at the end of 2021. The African video streaming market itself has been valued at $1.8B in 2022 with an expected revenue annual growth rate of 11.39% throughout the 2022-2027 period, resulting in a forecast market volume of $3,1 B by 2027.
What are the challenges for the African video streaming market?
The African video streaming market is still far from reaching its full potential. While the population of 1 billion people presents a great opportunity for any operator looking to start their OTT streaming business, there are certain challenges that are preventing faster market expansion.
The population in Africa is large, however, 40-45 percent of the population is below 15 years old. Even though this segment is not in the ‘paying subscribers’ group yet in the years to come they will be fueling the growth of the market in Africa. They have been exposed to OTT content from an early age meaning there is no OTT adoption phase like in the other age groups.
One of the biggest challenges causing the slower adoption of OTT services has been insufficient broadband infrastructure. The lack of affordable and reliable broadband access is a major obstacle to many African consumers subscribing to VOD services.
In the US, the OTT adoption process happened over time as the initial expansion of the internet was also a time when Netflix started offering its service. As people accepted the internet they also accepted this new model of consuming content that meant not having to go to the video store anymore. Basically, streaming services evolved together with the Internet.
High levels of piracy
Africa, however, did not have the same path. They mostly skipped the fixed broadband stage and switched directly to 4G/5G mobile broadband network. Also, unlike the US, the movie rental market was not as well structured which gave way to the growth of piracy. Combine that with the fact that having the Internet was a luxury for users in most of the African continent, and you can see why instead of video streaming growing with the market there was a consistent growth of piracy.
Many low-income users
Along with low broadband penetration, the second biggest market challenge has been the low-income challenge for many potential users. Combined low-income and developed markets of pirated movies and operators entering an OTT market have a quite big challenge of attracting subscribers to pay for a VOD (Video On Demand) service. Especially if they have been used to getting the content in other ways. This might be an opportunity for operators using the OTT platform with advertising business models (AVOD and FAST) in their solution, offering subscribers discounted or even free content.
Lack of content
Another challenge that often arises in the African video streaming industry is that operators sometimes do not have enough comprehensive knowledge and experience in operating an OTT service or access to the content itself. That’s why the most suitable vendor for the African market is the one that offers expert OTT consultancy before, during, and after the implementation of a turnkey solution and can also offer content. That way the operator has a single point of contact for all stages of their OTT project. Additionally, such OTT platform needs to include streaming/CDN so operators can build their private CDN to resolve potential connectivity issues while decreasing bandwidth costs.
Highly fragmented market
South Africa has the most developed video streaming market with Nigeria following. Together they account for about 54% of the total subscribers population while the rest is divided among the remaining 33 countries.
It doesn’t help the fact that global streamers like Disney+, Paramount+, or HBO only started in South Africa, while Disney is also present in Nigeria. Again, OTT vendors looking to have success in Africa will need to be able to offer a solution with tailor-made, affordable business models that will cater to the specific needs of the African market. If you are interested in learning more about the business models we offer for the African market you are welcome to contact us.
The Role of Telcos/Mobile Operators
Due to the infrastructure challenges mentioned above consumption of content via mobile phones is by far the most popular in Africa, especially outside South Africa.
That is a challenge for many platforms as users pay not just for the subscription to the OTT service but also for the data plan. Because of the need for mobile data, streaming services in Africa are most directly linked to telcos/mobile operators. Even services like HBO have entered the market as a partner with telcos looking to build a solid user base and then be present on the market independently.
Telecoms enter the video streaming industry
Being aware of this process inclined the local telcos/mobile operators to start offering their own video streaming services to make sure they keep their subscribers in the years to come. To make the content more accessible they have started to combine their mobile data plans with options to consume some content without influencing subscribers' data plans. That means the market is developing further.
To best illustrate the importance of mobile content consumption in Africa is the fact that one of the original OTT platforms in Africa (from Nigeria), iROKOtv, decided to discontinue their service on the desktop in order to shift entirely to a mobile strategy focused on downloads. iROKOtv is the largest African-content distributor in the world.
What are the factors driving the market growth?
While operating in the African market means still smaller ARPU than in the western markets the future is looking bright in the years to come.
Operators can easily be tricked by looking at the population numbers as often the market is much smaller. That is why operators need to understand what it really means to operate and how to start an OTT service and prepare for the project while also working with a vendor that understands the specific needs and challenges of the African market.
First of all, the population mentioned at the beginning of this article, of around 400-500 million people that will be market consumers in the coming years is a great bet for optimism. It is a generation that is more tech-savvy, focused on tech jobs, that has already adopted the OTT for content consumption.
Time for Change: Local is the New Global
The next opportunity, especially for the local operators, is a great amount of localized content that is becoming internationally recognized as well. With both the quantity and the rising quality you have the number one ingredient for a successful OTT services platform, and that is content. That’s why the operators would want to use a platform that can be localized according to specific needs in each local market and still offer premium UX to their subscribers.
Join the B(l)ooming African Streaming Services Market
As already mentioned, regardless of the current challenges, the future of OTT is very bright in Africa.
There is plenty of content and plenty of potential consumers, especially the ones who have adopted OTT consumption from an early age. So, if you are an operator looking to join the booming video streaming service market, then we would highly recommend making sure you understand your local market and the needs of potential subscribers. Besides preparing for the OTT project, make sure you have your sales and marketing strategy set up as well. Finally, find a great OTT vendor with extensive experience in the African video streaming market that can offer you a turnkey solution with streaming and private CDN that provides cost-efficient business models (including advertising) so that you can deliver a premium UX service and get subscribers fast.
Offer your own OTT video streaming service
To learn how to start and what to look for you are welcome to get in touch for free consultations.