Rising media consumption rates in Nigeria indicate bright future for producers

The Nigerian media industry is in the midst of what many local players consider to be a sea change. The rising popularity of ICT across the nation over the past decade and a half has had a major impact on the way Nigerian consumers access media on a daily basis. This has created a range of challenges for the nation’s print and broadcast media entities. However, according to many domestic firms and market observers, the shift to digital will ultimately be a boon to the industry, in that it has the potential to drastically expand the reach of local media producers, both within Nigeria and further afield, with huge implications for revenues. “Nigeria’s media landscape is changing dramatically right now,” Tampiri Irimagha-Akemu, managing director of local public relations firm Sesema, told OBG in mid-2016. “It is growing rapidly in certain key areas, and in the process is shifting towards a digital distribution model, though non-digital business lines remain very important here as well. Indeed, increasingly the firms that are succeeding are the ones that can successfully blend traditional and digital channels.”

A Growing Market

This shift is taking place in the midst of a media market growth spurt. According to data from the global professional services firm PwC, overall spending in Nigeria’s entertainment and media industry expanded by 19.3% in 2014, led by a rapid increase in domestic consumption of internet products, television, film and video games, among other segments. The market is consumer driven, with around four-fifths of total revenue generated by retail end-users, according to PwC.

Spending on advertising in Nigeria has lagged slightly behind consumption trends in recent years, with the bulk of ad spend going towards broadcast media – namely television and radio – and out-of-home advertising, such as billboards. The recent expansion of media consumption in Nigeria can be attributed to both a growing middle class and the steadily improving sophistication of local media producers, distributors and marketers. Perhaps the best example of the latter is the nation’s film industry – colloquially known as Nollywood – which is now the second-largest producer by volume of new movies anywhere in the world after India’s Bollywood.

Oversight & Regulation 

The various segments of Nigeria’s media industry are overseen by a wide range of government entities and semi-independent regulatory authorities. The National Broadcasting Commission (NBC), for instance, has a mandate to “evolve defined standards in all aspects of broadcasting to effectively license, monitor and regulate an environment that encourages the investment and development of quality programming and technology for a viable industry, which competes favourably in the global information society”. Initially launched in the 1950s as both a regulatory and broadcasting agency in its own right, the NBC’s current remit involves overseeing the domestic satellite and terrestrial television and radio segments.

The NBC has been at the forefront of the liberalisation of Nigeria’s media landscape since the early 1990s, at which point the commission underwent a major reorganisation and policy update in an effort to bring it up to date with international best practices. Since then the NBC has undergone a handful of additional restructuring efforts, perhaps most dramatically as a result of the NBC Act of 1994 and, subsequently, a major update in 2012. The NBC maintains and enforces the Nigeria Broadcasting Code, which serves as a rulebook for the broadcasting industry, covering a range of activities, including programming standards, licensing, advertising, technical requirements, sanctions regimes and community broadcasting, among others. The code, which was launched in 1993, has been revised four times since then, most recently in 2015. In recent years, the NBC has worked with the National Communications Commission (NCC), the telecoms sector regulator, to implement the shift from analogue to digital television broadcasting, which is expected to take place by mid-2017.

A range of other federal and state-level entities are involved in regulating other media segments. For instance, in recent years the NCC has become an increasingly important regulatory presence among media players, particularly those that rely on the digital distribution of content. In addition, the Nigerian Press Council was formed in 1992 in order to “ensure the maintenance of high professional standards for Nigerian Press”, while the Advertising Practitioners Council of Nigeria (APCON) provides training and certifications of various kinds for the advertising industry. In late 2015 APCON announced a plan to renew Nigeria’s advertising regulatory framework in order to ensure standards are in line with the rapidly changing industry. “One of the biggest issues right now is regulation,” said Irimagha-Akemu. “There is a lot of work to be done with regard to regulating advertising on social media, for example. As such, we expect to see a new set of regulations in the coming years.”

Print

Nigeria’s oldest media segment has fallen on hard times in recent years. According to PwC data, spending on newspapers has either declined slightly or stayed flat every year since 2012. Printed news media has a long history in Nigeria, and the nation’s first newspaper launched in 1859.

Through the late 19th century and the early years of the 20th century, Nigerian newspapers played a politically progressive role in public life. Indeed, as early as the 1930s, many Lagos-based publications were regularly publishing editorials calling for Nigerian independence. During the era of military leadership in Nigeria, many of the country’s major newspapers continued to speak out regularly, cementing Nigeria’s reputation as home to a powerful free press.

As of late 2015 more than 100 newspapers were published on a daily or weekly basis in Nigeria, as per data from the BBC. These included a handful of major dailies with national distribution, including The Guardian – unrelated to the UK-based newspaper of the same name – The Punch, Leadership and Vanguard, among others. In addition, the nation is home to a handful of tabloids, state-owned publications and newspapers that focus on particular regions, states or ethnic groups. While reliable, up-to-date newspaper circulation data is not publicly available in Nigeria, the country’s largest publications include the four listed above, as well as Premium Times, Daily Independent, Business Day, Daily Trust, This Day, The Daily Sun and Tell, the latter of which is a news weekly.

Like traditional print media firms around the world, Nigeria’s newspapers have invested heavily in their digital footprint in recent years. “We are generally looking to transition to a multi-faceted model that goes beyond print and is involved in multiple streams of digital media,” Toke Ibru, executive director of The Guardian, told OBG in early November 2015.

“We want to use our print platform to launch new ventures.” Indeed, since then the newspaper has dramatically expanded its web presence with regard to print content. This effort aside, monetising digital news remains a major hurdle in Nigeria. As such, most newspapers, The Guardian included, continue to print and distribute hard copies, which, given the high cost of electricity and logistical hurdles involved in distribution, is a major draw on resources (see analysis).

Wireless Transmission 

Radio is perhaps Nigeria’s most popular broadcast medium. According to BBC data, as of late 2015 the country was home to hundreds of radio stations, including nearly 40 state-operated national stations and a growing number of region- and language-specific broadcasters. The government also operates a significant number of short-wave stations, which act as a vital source of news and information across Nigeria and Africa. International broadcasts air in Nigeria as well.

The state’s participation in the radio market dates back to the early 1950s, when the government launched the National Broadcasting Service. In the late 1970s the service underwent a major restructuring effort, which involved renaming it the Federal Radio Corporation of Nigeria (FRCN). Over the course of the following decade, the FRCN was the monopoly radio broadcaster throughout the country, and the legacy of the its dominance during this period is evident in the operator’s continued popularity today, with an audience of more than 100m people to which it broadcasts in 15 languages.

However, since the state liberalised the broadcast sector as a whole (including television) in the early 1990s, the state-run radio broadcaster has faced rising levels of competition from a steadily increasing number of private players. Major private radio broadcasters include the Daar Communications Group, which operates a handful of popular FM stations based out of Lagos; the Kano-state based Freedom Radio; Rhythm FM, an Abuja-based station; Beat 99.9 FM; Cool FM; and Naija FM, among others.

In mid-May 2015 the NBC granted 17 provisional community radio broadcast licences to community organisations across the country. This followed more than five years of lobbying from community groups and local radio advocates, on the basis that community-run stations are common in many developed countries and can serve as a key means of disseminating information. Before the 2015 announcement, there were also a series of licence issuances to university-affiliated broadcasts, of which there are around 30. The Nigeria Community Radio Coalition serves as an umbrella industry group for community radio enthusiasts and has more than 500 members, including organisations and individuals within the country, as well as among the Nigerian diaspora.

Television 

Penetration rates for television have risen rapidly over the past decade, though the medium continues to lag well behind radio in terms of overall popularity. According to the most recent data available, as of the end of 2014 around 17.85m Nigerian households had a television, a penetration of just under 57%, according to Irish company Research and Markets. This figure was up by around 10 percentage points from 2011, when the National Bureau of Statistics reported penetration of around 45%. As per Research and Markets data, the majority (around 85%) of households with television only access terrestrial free-to-air services, with around 15% of viewers subscribed to paid satellite and cable services.

As in the radio segment, the state-controlled television broadcaster, the Nigerian Television Authority (NTA) is the nation’s largest broadcaster. Established by Nigeria’s military government in the mid-1970s, NTA claims it reaches more than 90m viewers. Some 14 private broadcasters compete with NTA, including South African firm Multichoice’s Digital Satellite Television, Galaxy TV, Silverbird TV and African Independent Television, among others. Despite the issue of cost – which is a key hindrance to future growth in the TV sector – pay TV has gained ground in recent years, primarily due to the uptake of services by relatively wealthy segments of society.

For more than a decade the NBC has been working to facilitate a shift from analogue to digital broadcasting. Initially launched in 2006, the regulator’s plan to mandate all broadcasters to implement digital-only broadcasting by a certain date has been pushed back multiple times, largely due to issues surrounding the cost of the set-top boxes consumers would be required to purchase for older television sets. The most recent missed implementation deadline was June 2015, and as of mid-2016 the NBC was planning to carry out the transition by June 2017.

Completing this digital migration has implications for the continued expansion of the telecoms sector, as clearing up the analogue spectrum bandwidth currently used by television broadcasters will allow the NCC to auction it to the country’s mobile operators, which will boost their spectrum capacity and in turn lead to improved 4G LTE network coverage and data capacity (see Telecoms chapter).

Film 

Over the last 15 years Nollywood films have become both a major cultural presence across Africa and a rising economic contributor. According to a 2014 report on Nigeria’s film industry published by the US International Trade Commission, the sector generated around $600m, up from just $45m in 2002, for instance. IMF data from 2015 puts the industry’s total contribution to GDP at N853.9bn ($2.7bn at the time of printing), or 1.4%. The industry now produces around 2500 films annually but dates back to the 1990s, when a number of local directors and producers started making movies using off-the-shelf equipment. The resulting movies were made quickly and cheaply, and were distributed primarily via videocassette. The industry received a major boost in the mid-2000s with the spread of satellite television in Africa, and rising demand for African video content since then has driven its ongoing expansion.

The cost of producing a film in Nigeria ranges from $25,000 to $70,000 on average, and they continue to be released straight to DVD or, increasingly, to digital distributors like Iroko Partners, a local firm that operates a digital media subscription programme (see analysis). As such, by some international standards, the quality of Nollywood film production is relatively low, which poses a key challenge in terms of widening distribution further. Funding is also an issue because it remains relatively hard to come by. As the reputation of Nollywood continues to rise, however, both international investors and the domestic banking sector have begun to participate more in the financing of Nigerian films. Meanwhile, digital piracy prevents the industry realising its potential revenues, with World Bank estimates suggesting that nine pirated copies of films are sold for every legitimate one. The act of filming itself is also made difficult by Nigeria’s low-quality power and transport infrastructure networks.

In 2006 the government introduced a draft Motion Picture Practitioners Council Bill, which was touted as the nation’s first formal legislative framework for Nollywood. The bill, which has been stuck in review for the past decade, was revived in late March 2016, when the state announced that it would form a ministerial committee to shepherd the bill into law. Since then a draft version of the law has attracted considerable criticism from filmmakers and other industry players, on the basis that it would prove too restrictive to the future growth of the sector.

Advertising

The advertising industry has developed rapidly over the past decade, driven by the fast growth of many of the nation’s media segments. In 2014 total advertising spending was around $735m, up 8.3% from $679m in 2013, according to data from PwC. The bulk of expenditure went towards television ads, which brought in $331m, followed by out-of-home ads, which were worth $203m. These segments were followed by radio, at around $90m, newspapers ($68m), online and other digital advertising ($36m), magazines ($8m), business-to-business advertising ($5m), and film and music, each of which totalled around $1m. According to PwC forecasts, digital ad spending is expected to grow rapidly over the course of the coming five years, more than quadrupling in value to reach $141m by 2019, for instance. Other growth areas in terms of future ad spend include the television and radio broadcast segments, while newspapers are expected to attract lower ad revenues over the coming half-decade.

Major & Local Players 

Nigeria’s advertising sector is made up of more than 100 firms, including a handful of global agencies, such as DDB, Saatchi & Saatchi, Ogilvy and STB-McCann, while Domestic firms, such as AfroMedia, Insight Communications and iNoveMedia, have become major players in their own right. In addition to the APCON-licensed formal sector, a large number of informal smaller ad agencies cater to smaller firms. While recent data as to the country’s largest advertisers is hard to come by, reports from local players indicate that Nigeria’s four mobile operators – local player Globacom, South Africa’s MTN, India’s Bharti Airtel and the UAE-based Etisalat – account for a significant percentage of annual ad spending. Other key advertisers include retail-focused entertainment and leisure companies and, in 2015, political advertisers, which play a major role in industry revenues during election years. “Fast-moving consumer goods firms are by far the largest players in terms of advertising campaigns in Nigeria,” Irimagha-Akemu told OBG. “They run ads year-round, unlike some other producers, and, as such, they are big business for the advertising industry.”

Outlook 

Despite the sector’s rapidly rising reputation, Nigeria’s advertisers, media producers and financiers currently face a range of major challenges. The print industry, for instance, faces high levels of competition and falling revenues, as a steadily increasing percentage of its output shifts online, where sufficient marketing and advertising models have yet to be fully developed or implemented. Furthermore, while broadcasters in particular are increasingly looking to the internet to help them reach new customers and larger markets, many Nigerian media consumers lack access to basic ICT services. Indeed, though the country’s mobile and fixed-line digital infrastructure has improved markedly in recent years – both in terms of geographical reach and service quality – large swathes of the population remain either completely or partly disconnected. 4G LTE high-speed mobile data services, for instance, have yet to be rolled out en masse, so most mobile data users – of which there are more than 90m in Nigeria – rely on slower 3G connections. Similarly, while Nigeria is well connected to the international internet backbone, boasting five submarine fibre-optic cable links as of early 2016, last-mile connectivity is sorely lacking in most places, particularly in rural and remote areas.

Both the state and a range of private sector players are currently working to address these and a number of additional challenges. Under the federal-level National Broadband Plan, for instance, which runs through to 2018, the government aims to overcome the country’s so-called digital deficit. Similarly, Nigeria’s four mobile telecommunications operators have invested heavily in infrastructure expansion in recent years. Ironically, the demographic pressures currently inhibiting the nationwide deployment of high-quality digital services – including the nation’s enormous population and huge land mass – are some of the same factors that many media firms consider to be among Nigeria’s most promising characteristics in terms of future growth potential.

Indeed, while smartphone use remains relatively limited across the country, with total penetration of just 28% according to the US-based Pew Research Centre’s spring 2015 Global Attitudes Survey, smart-phone ownership is considerably higher among young Nigerians. Smartphone ownership among 18-34 year olds, for instance, was at 39%, according to the Pew survey, while just 13% of Nigerians aged 35 and up reported owning one. As these figures demonstrate, digital media consumption in particular is expected to increase rapidly in the coming years, largely as a result of the steady growth in internet access nationwide.