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PwC Entertainment, Media Outlook indicates radio losing market share
South African radio market
![PwC Entertainment, Media Outlook indicates radio losing market share](https://biz-file.com/c/1702/377811.jpg)
South Africa’s radio market is on the decline, losing some of its market share to online streaming services. South Africans are also spending less time on average listening to the radio daily. Total radio revenue grew by just 0.6% in 2015, reaching R4.3bn.
Streaming services create competition for broadcasters as they attract music fans away from the radio listening base. However, contrary to music streaming services, radio offers the ‘human touch’ through curated entertainment, news, talk shows and popular radio personalities. South Africa’s radio market saw another year of slower growth in 2015 but this is expected to recover over the period 2016 to 2020.
The market is expected to pick up and grow by a CAGR of 4.0% over the forecast period and is estimated to be worth R5.3bn by 2020.
Vicki Myburgh, entertainment and media industry leader for PwC Southern Africa, says, “2015 marks the second year with lower growth which may indicate some of the pressure that traditional advertising mediums are experiencing, as advertising budgets increasingly move towards the Internet. However, radio still plays an important role in the South African advertising market, accounting for around one-tenth of total advertising expenditure in the country.”
The popularity of radio as a medium is reflected in the fact that almost nine out of ten (87.7%) South Africans tune into the radio on a weekly basis and the number of radio stations continues to grow. Another 38 stations were created in 2015 and, by March 2016, South Africa’s radio landscape consisted of 296 stations: 40 commercial/public broadcast stations and 256 community stations. Moreover, while radio listening at home dominates, in-car listening has seen the biggest increase between February 2014 and March 2016.
Radio broadcasters need to respond to smart phone uptake
In terms of general trends over the five-year forecast period, with smartphone and tablet uptake set to increase dramatically, radio broadcasters will need to respond quickly to smartphone proliferation, and harness the opportunities offered by mobile Internet devices to create new services to lure in listeners and advertisers alike as a means of driving long-term growth. However, these broadcasters will have to move quickly because what presents itself as an opportunity will also pose a threat, as online streaming services compete in the same space. Music streaming providers could in fact prove to be the next radio broadcasters.
When it comes to key growth drivers, the digital shift could boost both listening hours and audience size. Markets with an active digital strategy could increase usage within this segment. Growth in car ownership in emerging markets will create further demand for radio services. In-car radio listenership will also increase in line with the growing urbanisation, especially in emerging markets, as car owners will spend more time in their vehicles.
South Africans spent less time listening to the radio daily than in 2011, but the percentage of listeners (15+) who tune into the radio every week was the same in 2015 as it was in 2011, at 87.7%. “This is a positive sign for the industry, indicating a loyal and stable audience base.”
In-car listening has seen the biggest increase between February 2014 and March 2016, while the biggest drop has been ‘at home’. Increasing urbanisation and increasing car ownership is driving growth in car radio listening. The downward trend in at-home listening will likely continue, with in-car listening raising and radio listening over cellphones trending upwards, making it easier to tune into stations on the go.
Furthermore, radio listening via mobile devices is expected to increase along with greater smartphone ownership over the forecast period. This can be positive for stations with a strong online presence, as more listening is done on the go via radio apps. This can also give rise to new advertising opportunities that would not initially have been possible on traditional FM/AM channels.
Growing demand for news and information in developing markets will provide a near-term opportunity for radio, which remains a cheaper and more reliable platform for consumers than services delivered via the Internet, smartphones or TV.
Nigeria
In 2015, radio was Nigeria’s third-largest advertising medium, after out-of-home (OOH) and TV. With total revenues of US $78 million, radio comprised around 12% of total advertising spending in 2015.
However, broadcasters will face greater competition to secure their share of the advertising dollar from the Internet over the forecast period. Growing at a 25.1% CAGR, Internet advertising revenue will surpass radio in 2018 to become the third-largest advertising platform. Radio, on the other hand, will grow by a CAGR of 3.2% to reach US $91m in 2020.
Kenya expands
Kenya’s strong radio advertising sector continues to expand. Radio is the largest advertising medium in Kenya, just ahead of TV, with revenues of US $319m in 2015. The market will grow by a strong CAGR of 6.8%, benefitting from an overall strong economy, greater audience reach and increased urbanisation. Kenya saw a real GDP growth of 6.5% in 2015, and the healthy economic outlook will continue to boost the radio market over the forecast period.
About Vicki Myburgh
Entertainment & Media Industry leader for PwC Southern Africa![](/res/img/s.gif)