High season for sector as local content demand surges

In an upmarket apartment block in Kilimani, Nairobi, a long queue of men and women is making the curtains of neighbouring flats flutter.

It’s casting day for one of Kenya’s most popular television shows, and the actors are lining up to become a part of Kenya’s local content industry.
The scene is an indicator of the growing local content industry, which according to industry figures raked in Sh3 billion in revenues last year.

That figure is projected to grow to Sh40 billion in the next couple of years, carrying with it the potential to create 250,000 new jobs on an annual basis.

It’s no wonder, then, that analysing exactly how to tap into this growth area is an issue being examined closely by strategic thinkers at some Kenyan companies.

This year, according to research group Ovum, will be a year of “creative destruction” for media, as traditional sectors attempt to relocate, retain and monetise their audiences online.

“Technology will continue to be at the heart of the media landscape. Vendors, enterprises and entrepreneurs will continue to innovate to develop proprietary technologies to deliver strategic and operational advantage,” said the firm in its Media Trends 2010 report.

In Kenya, the corporate scramble is for content that will entertain or educate viewers in a variety of formats ranging from the more traditional television broadcasts to the emerging social websites such as YouTube, and is set to change the local media landscape in ways previously unseen.

From the traditional broadcasting houses to the fringe players such as the internet service providers and the upstarts – mobile companies – the business case is compelling.
Kenyan investors are mostly eying new developments in the theatre, culture, visual arts, film, music and new media circles.

Kenyan viewers appear to be more appreciative of locally produced content today than they were 10 or even two years ago.

Recent research by Synnovate reveals that Kenyan sitcoms and dramas are already the most popular amongst the country’s three million television viewers.

This has driven the programming strategy of media houses such as Citizen TV, KBC and NTV, which have actively included local content in their programming.

But the convergence of technologies is also making the non-traditional players to challenge traditional broadcasters for a share of the content pie.

Already, Safaricom and Kenya Data Networks allow subscribers to access video content, and internet service provider Wananchi is set to launch a local content division that will supply ready-made programming to the market.

Wednesday evening, industry stakeholders met to discuss the opportunities in the budding film and content industry.

“There were a lot of incentives in the last budget that have driven investors to this field, for example the tax waivers on film equipment is spurring more people to enter the field,” said John Matogo of Strathmore University who is organising the forum.

The objective of the meeting – aptly titled ‘the business of film’ – was to create more awareness of the creative arts industry as a viable investment area.

The Kenya Film Commission says that the surge in investment in film is mostly due to the government setting up policy aimed at boosting the domestic media and film industry.

While the costs of becoming a part of the content food-chain were prohibitively high five years ago, the entry of more players into the field and new innovative partnerships are contributing to drive the price of local productions down.

“Before, people would go the traditional route of getting a single sponsor for each show, but now that restricts options. It makes more sense to create such compelling content that advertisers naturally flock to be associated with it,” said Kimaita Magiri, managing director of KenTV, a local content developer.

Media sources indicate that one broadcaster is getting revenues of around Sh10 million from advertisers keen to associate themselves with a single one-hour block that corresponds with a certain show.

For producers of content, this means that the entry barriers have reduced significantly as broadcasters do not tie shows to the sponsorship they may get.

“Film professionals have also shifted the direction from competition on costs to competition in quality.

Instead of getting money from just making an animation, the producers have to consider the market response, which will force them to pay more attention to the film’s quality,” said Lizzie Chongoti, CEO of the Kenya Film Commission.

As the market grows, local producers will have more space to focus on creativity, distribution and marketing aspects of their films.

Globally, the television broadcast market is set to hit $326.2 billion by this year, according to industry research firm Datamonitor.

Datamonitor says going forward, the industry challenge will be to tackle continued threats of piracy, declining advertising effectiveness, the entrance of non-traditional competitors and audience fragmentation.

“Advertising has been a steadfast revenue generator for the broadcast sector,” said Mr Khouri.

“However, as consumption habits transform and consumers utilize multi-platform channels as well as on-demand and time-shifted viewing, traditional revenue generation models are losing their effectiveness to bring returns. Broadcasters therefore will need to look to a variety of diversified revenue streams to bolster income.”