There is a growing adoption of Video–on-Demand (VoD) service in Nigeria, Africa’s largest economy, especially amongst higher-income individuals and households, in spite of the lack of pervasive broadband infrastructure needed to drive up profitability for content creators and distributors, according to industry analysts.
VoD is a system that allows users to select and watch video content of their choice on television (TVs), personal computers (PCs), tablets and smartphones.
Nigeria has a broadband penetration of about 6 to 8 percent, according to the Ministry of Communications Technology. The Federal Government is, however, targeting 30 percent broadband penetration by 2017.
“VOD is a desired service among high-income households, especially in South Africa and Nigeria, whose citizens account for over 50 percent of consumer spending in SSA,” says Paul Lee, director, global TMT research leader, Deloitte, in an interview with BusinessDay.
The global VOD service market is expected to be valued at $45.25 billion by 2018, according to Markets&Markets, a research company. Deloitte, however, predicts that in 2014 the number of VOD users in sub-Saharan Africa (SSA) will grow by about one million.
Analysts are optimistic that VOD service will become one of Nigeria’s exciting business opportunities in view of the country’s growing mobile telephony market, efforts by government and telecommunications companies to improve internet access, combined with the proliferation of low-cost smart devices.
According to the industry analysts, local and foreign investors can see the tremendous potentials which are consequently driving the number of indigenous companies coming on stream. 9fix, Afrinolly, Dobox, IbakaTV, NextSpeel, and RealNolly are some of the indigenous VOD platforms currently providing content services.
IROKOtv, a Nigerian-owned VoD led by the astute Jason Njoku, is another big player in the provision of VoD services to consumers in the country and Africa, with a library of over 5,000 Nollywood films. The firm started off by gaining prominence from YouTube before setting up an independent portal. Now iROKOtv is making Nollywood movies available to the world with both premium and free content. Only recently, iROKOtv received a further $8 million investment, including from Kinnevik (owners of MTG/Viasat), primarily to secure content licences. Iroko has a viable subscription service, iROKOtv PLUS, which is now generating more revenue than the advertisements (ads) on its basic service.
Seun Agbelusi, an integrated marketing communication professional, says with the advent of smartphones, tablets, and broadband, online film distribution is the way to go, especially for indigenous filmmakers.
“The issue we have right now is that broadband is not widely and sufficiently available. Service providers are not consistent,” he says, noting that there is a prevalence of narrow film genre and stereotyped content which in most cases do not appeal to the online demographic.
“There is also a low level of awareness on how to monetise film content,” Agbelusi says in an industry report.
Sylvain Beletre, principal analyst at Balancing Act, says the potentials of VOD service in Africa are immense. According to him, the population in Africa is expected to double by 2050, with young people constituting the vast majority.
“The number of television households is currently only a fraction of the population, with 24.3 million in Nigeria, 11.5 million in South Africa, 5 million in the DRC and 4.4 million in Kenya. But this statistic is going to grow significantly by 2050 and VoD services will have to supply huge content to this increased viewership in the region. There is no doubt that the market is growing,” Beletre says.
According to the Technology, Media and Telecommunications Prediction 2014 released by Deloitte, VOD is a service that has reached maturity in the hundreds of millions of homes around the world that have sufficiently fast broadband speeds. Delivering high-definition programming is expected to require about two megabits per second of dedicated capacity in 2014, says the reports, adding, however, that “sub-Saharan Africa has not participated in the wave of VOD adoption, in most part due to the lack of broadband infrastructure”, and just one percent of the people have access to fixed broadband in the region.
Ben Uzor Jr
