Digital advertising is the new frontier in the media and entertainment industry as companies slash budgets, follow audiences online and pick lessons from Covid-19.
The Entertainment and Media (E&M) industry report by PricewaterhouseCoopers (PwC) shows the segment will account for 79.7 per cent of the industry's total revenue by 2026 in Kenya, Nigeria and South Africa.
"The pandemic accelerated the uptake of e-commerce, advertising spends followed by and by 2026, internet advertising will become the second largest segment in Africa's top economies,'' says the the report released on Wednesday.
In Kenya, the rapid gain in internet advertising will mean that, by 2026, this segment will be just $1.2 million behind the traditional TV and home video, paving way for internet advertising to take over the sector.
This growth is also attributed to high internet connectivity in the three regions, with South Africa leading. The Southern African economic giant had an internet penetration of 78.6 per cent in March and is targeting a 90 per cent by 2026.
According to the Nigerian Communication Commission (NCC), the country's broadband penetration as of June stood at 44.30 per cent with more than eighty-four million internet subscriptions in the Country.
There were 23.35 million internet users in Kenya in January 2022. This puts the country's internet penetration at 42 per cent as of May this year.
Generally, the report shows that Kenya's entertainment and media industries have seen continued growth since 2017, with revenue reaching new heights in 2021 (12.6 per cent annual growth rate).
According to the report, industries that were more severely impacted in 2020, such as cinema, live music and B2B trade shows, made strong comebacks, although revenues remained below pre-pandemic levels.
Segments such as video games and OTT (streaming TV) video rose to new heights after thriving under lockdown conditions, while other sectors proved to be large ‘pandemic-proof’, with podcast advertising, albeit off a low base, showing resilient revenue growth of 12.6 per cent in Kenya.
Alinah Motaung, PwC Africa Entertainment and Media leader, says what is clear from PwC’s latest Outlook is that the pandemic accelerated changes in consumer behaviour and digital adoption in ways that will affect future growth trajectories.
“Some of the sectors that saw immense gains during Covid-19 might not be able to sustain that growth, while others are set to continue to build from their higher bases.
He adds that some formerly niche sectors, such as gaming, will barrel their way into prominence, as other formerly dominant sectors such as traditional TV, newspapers and consumer magazines are at risk of seeing their positions erode.
Analysts expect future E &M growth to be seen in the development of the metaverse and the use of non-fungible tokens (NFTs).
For instance, Meta stated that the metaverse could contribute around $40 billion to the economies of Sub-Saharan markets like Nigeria and Kenya.
''The overall growth path is both clear and strong. The vast E&M complex is growing more rapidly than the global economy as a whole,'' the report reads in part.
This is because more people are spending more of their time, attention and money on the complex and increasingly immersive E&M experiences that are available to them.