Issue No.125 / December 2018

Seasons Greeting to Digital Content Africa Readers and a Review of Everything  Digital from streaming music and video to media and digital advertising in 2018

Dear readers, viewers, contributors and advertisers

It’s been a roller coaster year that has seen digital content and services in Sub-Saharan African begin to be acknowledged as a growth industry.

Four mobile operators now have a digital playbook

After several years of not being clear about what they wanted to do about digital content and services, at least three of Africa’s major mobile operators – MTN, Orange and Vodacom  - now have a clearly articulated digital playbook. MTN has set itself a target of getting 100 million digital subscribers.

A fourth operator – Airtel – now has new investor in Singtel. Its CEO International Arthur Lang was quoted as saying in another context:” ”Even taxi-sharing companies can get you a pizza…If Singtel today only provides communication service, we need to rethink.”

Part of that digital playbook is the understanding that currently data prices are too high to allow mass markets to develop. So this year there has been a steady flow of content + data bundles: for example, you buy a music streaming service and it’s “all you can eat” with no data charges. Mobile operators have been slower to offer similar content + data bundles for video streaming services.

Another part of the digital playbook is rolling back the rotten deals that came out of SMS VAS services, where the content owner gets only 20-30% of the gross revenues. If you’re not getting at least 50/50, you’re being stiffed.

For better of for worse, Africa’s mobile operators are still key to the development of digital content and service markets. They are either players – like MTN buying Simfy  - or they are channels of distribution.

Big international players come out to play

The continent now has a lengthening line of international players coming to see whether they can do digital business on the continent.  These include: Airbnb, Amazon, Apple Music, Deezer, Facebook, Google, Netflix, Ringier, Spotify and You Tube. A number of these like Apple Music are (in income terms) clinging to the safe ledge that South Africa provides but others have been more adventurous and rolled out more widely.

Homegrown international, South Africa’s Naspers has had a tough year of it. Currency troubles in both Nigeria and South Africa saw it try and sell off its Sub-Saharan Pay TV operation before deciding to spin it off as a separately listed company. Its investment in Tencent has somewhat distorted its balance sheet. But most of its digital investments in Sub-Saharan Africa – most recently classifieds site OLX – have shown less than dazzling performance.

Punish the threatening voices and tax the rest

Now at least some of the mobile operators are least moving ahead of the digital curve, predictably African Governments and regulators are firmly stuck at the starting gate. Instead of seeing a new digital service and content industry that is already delivering jobs and new skills, all they can see are upstart voices that challenge their status quo.

Most notoriously, Uganda’s President Museveni showed how little he understood by describing social media as a luxury: “Social media chatting is a luxury by those who are enjoying themselves or those who are malicious.” He has put taxes on a long list of digital services and mobile money payments.

Tanzania’s regulator now insists on a licence fee for bloggers of just under a US$1,000. The founder of Jamii Forum has been in and out of court fighting this attempt to narrow freedom of expression.

Meanwhile without much encouragement from the usual Government and regulatory suspects Dairy Farming Kenya Facebook page has 264,000 users. Is this a terrible luxury for farmers?

Film and TV: VoD and streaming begin to threaten Pay TV

In May 2018, Naspers-owned Pay TV company DStv complained that Netflix now had 300-400,000 subscribers but its estimate and it had lost over 100,000 DStv premium subscribers. Its complaint? Netflix was not regulated and taxed as  it was. It had launched its own streaming platform Showmax in 2015 but has not released any of its own subscriber figures.

Econet Media’s Kwese TV launched as an all-singing, all dancing Pay TV, streaming and Free-To-Air behemoth, spending large on acquiring channels and content. Asia’s successful platform iFlix entered the Sub-Saharan African market with its then CEO predicting that it would have “a few million subscribers.” The mobile operators would not buy the deal they were being offered by iFlix.  So in February 2018 Kwese  TV bought iFlix Africa.

But in November 2018, Kwese TV experienced its own moment of failure as it decided to close its Pay TV operation and bet all eggs on its streaming platforms and Free-To-Air TV operations.  It might have been a positive sign for all things digital but in truth it was simply the end of the road for an incoherent business plan. Whether a slimmed down Kwese TV will succeed remains an open question.

Local pay-to-play streaming operators like Viusasa in Kenya (backed by Royal Media Group), Forest TV out of Nigeria and Ogle and Pockitt TV in South Africa are all struggling to find a niche for themselves.

Meanwhile Africa’s largest streaming operator You Tube ploughs all before it, attracting a large number of views in major markets and creating new talents like comedian Mark Angel in Nigeria.

MTN ups its music game by buying Simfy

At industry talkfest AfricaCom in Cape Town in November, MTN proudly announced its purchase of South African-based music streaming start-up Simfy, with its presence in Angola and South Africa.

The announcement has a dual significance. Firstly, Simfy will remain a separate company and it will sell its service to other mobile operators. If this works as advertised, this makes it a genuine digital content company rather than a digital services department of a particular mobile operator.  Safaricom’s Songa is on the same road. Secondly, Simfy has persuaded all the “majors” but Sony to allow it to target the prepaid market of less than US$1 per month and still get a premier catalogue and apps experience. The loser in this process is Huawei, which will no longer be running many of MTN’s music streaming services.

Less successfully, Naspers’ music streaming service Joox - which had been launched to take on the likes of Apple Music, Deezer and Spotify - decided in October 2018 to offer its service for free to DStv Premium, Compact and Compact Plus. This might well turn out to be a costly defensive move in this fast-moving market.

Elsewhere local music streaming services have struggled to stay alive commercially, although the more established operators like 5ive Music, Mdundo and Mkito are still in the game.

On a broader front, the majors seem to be throwing money at African markets. Universal has opened an office in Lagos and over the year there have been a steady string of signings from the international labels. The question is whether these artists can be broken out internationally to recoup some of that money or whether this is just another boom in the boom and bust cycle?

Africa’s rulers wage guerrilla war against social media

2018 was the year that social media in Africa began to mean something more than just Facebook and Twitter. WhatsApp increasingly dominates conversations and is popular as a means of families keeping in touch among other things. Instagram has begun to carve a space out for itself in more African countries.

Other regionally significant platforms include: the BMM platform which has been licensed to an Indonesian; the perennially popular Eskimi; and Moya Messaging, a reverse billing app that has 150,000 users in South Africa.

Finally there are a number of local social media platforms seeking to compete with the international giants whose presence is mainly in one country. These include: Senegal’s Ginger; South Africa’s Chomi and Mali’s Lenali.

As I described in the opening section of this e-letter, African Governments and social media companies are now in a regular battle to control these new channels of communication. To illustrate this I have chosen to randomly open a back issue of Digital Content Africa. It turned out to be an August 2018 report in which Cyprian Nyankundi had his Twitter account closed down after he posted ‘compromising’ pictures of a prominent public figure. He has since opened a new account and urged his followers to keep up with his updates on another platform.

Media fighting to get its voice heard and survive new business models

Social media has been the most visible end of the struggles over freedom of expression but African media has been fighting on two fronts. Firstly, Government has sought to control what can and can’t be published: there have been internet  shut-downs,  threats, regressive regulation and sometimes laws. Secondly, the old print media companies have struggled to adapt to adapt to the new online models.

Take Nigeria as an example. The blog site Nairaland was 11th most popular site by visits this month, followed by Punch at 34th position, Linda Ikeja’s gossip blog at 39th position, Vanguard at 41st position and the UK’s Daily Mail at 42nd position. And this does not include Ringier’s Overall Ringier’s news and info platform Pulse was getting 170 million video views per month with short-form content in June 2018.

The Nigerian example shows there is more competition in the online space. Nairaland and the Linda Ikeja blogs did not exist in the print era.  In East Africa, Ghafla (out of Kenya) has become the tabloid success. The UK’s Daily Mail is now as accessible in Nigeria as it is in the UK, offering Nigerian readers a steady diet of celebrity and football news. Whilst old media takes on new competition, the value of its advertising – as elsewhere globally – has been devalued by that global intermediator Google.

On the news distribution front, companies like APO (which recently appointed a new CEO) have made the distribution of corporate and Government news flow more easily.

In August 2018, I interviewed Jose Gama of diaspora online news site Club-K. For eight years, this small, self-funded online newspaper has both chronicled and fought the corruption and human rights abuses of the Government. The online newspaper operates from outside of Angola so “we can be more independent. We don’t have to worry about the red lines”. There are others like it on the continent and we salute them all.

Personal video recorders and streaming services have disrupted linear TV viewing but radio listening has until recently remained unperturbed. As podcasting becomes “a thing” in more developed markets, it will inevitably catch the attention of creative entrepreneurs in African markets.

At the moment, South Africa is leading the way. Its local streaming platform Iono. Fm had 20 million listening sessions from more than 3.6 million listeners over a 12 month period to September 2018. A lot of these listening sessions were people shifting their listening to times they found more convenient.

Podcasts are also very good at niche audiences. In May 2018 I interviewed Duncan McLeod, Founder, TechCentral who has gone “all-in” on podcasts. Podcasting is less expensive to do than radio but McLeod stresses the importance of investing in good equipment and facilities:”The Zoom H6 is a very good high-end audio recorder and we have a mixing desk and computers. We’re also equipping a studio with noise cancellation screens.” The biggest barrier to podcast growth in his view? Data cost.

Digital Advertising - Investment and social influencers

Africa’s digital agencies are beginning to get the attention they deserve:  almost every Sub-Saharan African country of any scale has an independent digital agency that is not tied to an existing ad agency. Digital advertising budgets may be growing very slowly but they are growing year on year.

In April 2018, venture capital investor TLCom made a US$5 million investment in Nigerian digital  agency Terragon.  It currently operates in Nigeria, Ghana, Kenya, Cameroon, and India — and has over the years grown to generate US$4 million in revenues annually.  The investment is for growth and in particular to grow its  proprietary marketing technology platform Adrenaline

In October 2018 I interviewed Kenyan digital agency Odipo Dev and talked to its co-founder Odanga Madung about influencer marketing: paying  celebrities and media figures to promote products and services.

“Influencers of the future are people who have effectively become their own media. So we’re trying to create our own ways of measuring the reach and engagement of influencers. This market is currently quite small but we’re an Internet savvy generation. It’s about the rise of the digital celebrity or offline celebrities who have gone digital”. It has a tool called Kingmaker to plot both reach and engagement in this area.

Games, ride sharing, online reading and so much more

The range of other digital content and services is almost too much to put your arms around. Highlights include:

* In August 2018 I interviewed Paradise Game’s Sidick Bakayoko on Cote d’Ivoire’s 1 million gamers  and promoting Africa’s games developers internationally at Gamescon and Paris Games Week. The African games sector struggles to find a business model but is beginning to make a mark.

* There is a fierce fight going on between the various ride sharing companies like Uber, Taxify, Little and Yego Moto. These companies have had to adapt to Africa’s more cash-based economy but are beginning to change the experience of getting from A to B. Notwithstanding the levels of traffic in African cities which seems immune to innovation.

* In May 2018 I interviewed Colin McElwee – Co-founder and Senior Director, Strategic Partnerships, Worldreader, which has access to a potential audience of 40 million people through its partnership with the mobile browser company Opera. Of these, 500,000 of these read at least 800 characters a month up from 200,000 who read for at least an hour three years ago. The countries with the largest numbers of readers are Nigeria, Ethiopia, Kenya, South Africa and Ghana.

Lastly, a special mention goes to the Tshimologong Digital Innovation Precinct in Johannesburg.  Firstly, it runs the media innovation programme Jamlab, which is seeking to provide new ideas for how media can get to grips the impact of digitial. Secondly, in partnership with Agence Française de Développement it has launched a programme to innovate in the areas of digital music, web creation, virtual reality, animation and games (see:

In terms of our own news, Balancing Act said goodbye to Sylvain Beletre and hallo to Matthew Dawes as our new Head of Research.

In Q1, 2019, we will publish a report of direct interest to Digital Content Africa’s readers: Sub-Saharan Africa’s Digital Landscape and its Top Ten Markets – data prices, smartphones, digital content and services and e-commerce. We will also be updating and rewriting VoD and Africa - A review of existing VoD services, drivers, challenges and opportunities. If you would like details on either of these reports, simply drop me an email on:

Yours sincerely

Russell Southwood and all the team
Digital Content Africa

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