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From the Africa Broadcast Conference: Business Models, Local Content - and Risk Taking Print E-mail
Thursday, 05 August 2010

AITEC and Balancing Act Africa held the second Africa Broadcast Conference in Nairobi on 27 and 28 July 2010.  

Searching for Business Models


FM stations are well established in most African markets – and an enthusiastic presentation by Patrick Quarcoo of Radio Africa about competing in crowded markets showed exactly how competitive this industry has become. In contrast, the TV market is still in transformation, with enormous catch-up potential compared to emerging markets on other continents. Since AITEC and Balancing Act Africa held the first Africa Broadcast Conference in 2008, GTV has folded, but others have tried to take its place: In Kenya, for example, Wananchi Group launched Zuku, a broadband/phone/pay-TV triple play, and Radio Africa have launched two free-to-air (FTA) TV channels, Kiss TV and Classic TV (Kenya: Kiss TV and Classic TV: Specialisation and Local Content ). 

While many countries in sub-Saharan Africa still look unprepared for the transition from analogue to digital TV by the 2015 deadline, more fibreoptic capacity, liberalised licensing regimes, and a growing middle class have given the TV market a boost. But conference participants were still experimenting with business models: What market is there for themed channels? Should broadcasters pursue pay TV models based on monthly subscriptions, or rely on advertising in free-to-air (FTA) channels? At the moment, the market is fragmenting - the TV offer is getting more customized, but will that break it down to units that become too small?  

The disruptive potential of technology was also a topic of discussion: TV suddenly faces competition from the internet and possibly from mobile phones, too, although the latter have not yet taken hold: DSTV on mobile is still, Russell Southwood’s research shows, in the low thousands. For radio stations, however, social media like Facebook have become competition in e.g. advertising events, as Samuel Attah Mensah from Ghana’s Citi FM observed: Why pay a radio station if you can let everyone know about your event for free on Facebook?  

Content: Beyond Nollywood?

The good news for producers is that the demand for good local content is still strong and growing as technology now offers more platforms, and more companies enter the African broadcast market. Nollywood has become an impressive commercial success, but what else is there beyond Nigerian movies?
  • Local content is king – it just happens to be very popular. However, there are production issues: often the local market is too small, and the revenue models are not yet very refined to provide clear avenues to monetize content. One participant pointed out that that local content is still a lot more expensive to produce than the popular Mexican soaps. NGO productions have funds, but, as Southwood says, the content quality is often very poor. Local content quotas can help, as can the search for alternative revenue models, e.g. using product placement rather than advertising.
  • Kenyan film maker Wanuri Kahiu commented that she was often called a ‘festival film maker’, but remains emphatic about her intention to provide higher quality content than the average Nollywood film. However, she argues keenly that film makers must look for new forms of distribution and engagement with their audiences. For her, a key element in this is, indeed, festival tourism.
  • Digital content in particular transgresses boundaries: It is no longer restricted by geographical borders. Nollywood movies can be watched in the US, and international movies are now just as easily available globally. Finding African audiences can therefore mean looking outside of Africa, to the large diaspora market.
 
In his overview of the broadcast market, Russell Southwood argued that there was still an overall trend towards identikit branding strategies and very little variety in the programming offer. As the market grows, differentiation will become more important. There is, he says, too little risk taking in African broadcasting. 

Broadcast Business in East Africa
Permanent Secretary in the Ministry of Information and Communications, Dr Bitange Ndemo, mentioned in his speech that the Government of Kenya, through his ministry and the Communications Commission of Kenya (CCK), now completed the regulatory work for the broadcast sector and now hoped to attract more investment – a slightly incongruous statement since the CCK’s latest regulations had been emphatically opposed by media houses as they would, if fully implemented, force broadcasters to eventually give up all but one frequency (Kenya: New Broadcast Regulations a Blow to Media Investors ). 

Undeterred by that, however, corporate news out of Kenya’s broadcast industry were positive:
  • Radio Africa Group have announced that they would add a sixth radio station, Relax FM, to their portfolio that also comprises to free-to-air TV stations and a national newspaper.
  • Wananchi Group’s Zuku are opening a programming division and, through it, plan to launch several new themed channels: Zuku Sports, Zuku Life, Zuku Movies, and Zuku Africa. They aim to cover all households in Nairobi and Mombasa by 2011, and are expanding throughout the East African region.
 
Safaricom are known to have aggressively expanded their data business capacity, and are pitching this to media houses:
  • Safaricom are positioning themselves as infrastructure partners for the transition to digital broadcasting through their terrestrial fibreoptic network.
  • For outside broadcasting, they can provide both Wimax and fibre transmission facilities. For event coverage, Safaricom will offer broadcasters plug-and-play facilities, i.e. a single point of exit that will avoid the crowds of broadcast vans and create costs savings as media houses no longer need to maintain expensive satellite links.
  • Beyond transmission facilities, they also offer data storage and replication - regulations require broadcasters to have content back ups -, but also co-location for equipment and media monitoring services.
  • Safaricom’s broadcast capacities are useful not just for media houses, but also for other corporate who are looking e.g. for videoconferencing or disaster recovery services.



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