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African SVOD Is Growing but Analysts Foresee Challenges

SVOD services are gaining ground in sub-Saharan Africa but the market, which is dominated by South Africa, faces a range of structural challenges according to industry experts.

Paid-for streaming services are rapidly becoming the norm in the West. SVOD subs have overtaken traditional pay-TV customers in the U.S. and the U.K. and many international markets are expected to follow suit. Estimates for OTT subs in Sub-Saharan Africa, meanwhile, range between 500,000 and 1.5 million at end-2017. GDP is rising, which bodes well for paid-for TV services, but a range of issues are holding back the kind of growth seen elsewhere.

“Online video in Sub-Saharan Africa has had a delayed and sluggish start compared to the rest of the world, and its impact continues to be minimal despite several service launches and expansions in recent years,” IHS Markit said in its Africa TV and OTT report earlier this month. It cited a lack of infrastructure, regulation, and the number of languages spoken as impediments to SVOD and wider pay-TV growth.

Ovum reports that SVOD revenue in the region was $153 million in 2017, a 33% increase on the previous year. Its 2018 forecast is for revenues of $188 million, a 23% uptick year-on-year.

The SVOD activity remains focused on South Africa. “South Africa is by far the largest market in Africa; outside of SA, premium paid-for OTT is totally a niche activity,” said Tony Gunnarsson, principal analyst at Ovum. “Netflix dominates the paid market already and is likely to continue to do so for foreseeable future. Other services from Showmax to Kwese Play (iFlix) are battling out for whatever is left of a tiny market.”

Simon Murray is principal analyst at Digital TV Research and said last year served as a “reality check” for SVOD growth in the region. Netflix does not break out specific subs numbers but Murray estimates it had 681,000 customers last year and that total will rise to 4 million in 2023. The other SVOD providers that will top a million by that point are Showmax and iRoko. Digital TV Research said Showmax will see its subs base rise from 334,000 in 2017 to 1.7 million in 2023, and iRoko will go from 308,000 to 1.5 million across the same period.

There will be 9.99 million SVOD subs in Sub Saharan Africa by 2023 the analyst house forecasts. South Africa will account for 3.4 million of that total and Nigeria 2.6 million, together about 60% of the total.

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