In Africa’s streaming market, Showmax has emerged as the new leader, dethroning Netflix, which had previously held over 40% of the market share.
As competition from Amazon Prime and Showmax intensifies, Netflix, the world’s largest paid video streaming service, is witnessing a decline in its dominance in Africa.
Recent industry data reveals that Netflix now accounts for 35% of the African streaming market, while Showmax has claimed the top spot with a 40% share, according to Omdia Research.
The entry of more competitors into the region and their aggressive strategies are squeezing market share for established players like Netflix.
Showmax, with 1.8 million subscribers, experienced a significant 26% year-on-year growth in paid subscribers over the last four years by focusing on local content production. With a commitment of $1 billion for content production and acquisition in Africa, Showmax has successfully positioned itself as a strong contender.
Africa’s pay-TV subscriber base stood at 41 million at the end of 2022, with video streaming accounting for less than 10% of the market, as per Digital TV Research.
To win new customers, streaming players like Netflix and Showmax have adopted various growth tactics, including investing in new content and reducing subscription prices. However, the market has been progressing slowly.
In contrast, IrokoTV, Africa’s oldest streaming service, has faced challenges, with only 46,000 active users in December 2022, a significant 76% decline from the beginning of the year. Despite investing $30 million in Nigeria, IrokoTV is yet to turn a profit in the country.
Netflix entered Africa in 2016, quickly amassing hundreds of thousands of subscribers and putting pressure on existing players like MultiChoice, the market leader.
However, the market’s growth has been hindered by factors such as high broadband costs, unstable internet connectivity, and low income levels in many households.
While Africa’s streaming video-on-demand industry is projected to grow by 10.4% annually, Netflix’s growth is expected to be half that rate as other platforms capture a larger share of its slowing subscriber base.
Netflix has experienced stagnation in subscriber numbers in mature markets like the US and Europe, leading to a focus on international expansion to offset the decline. In Africa, Netflix has reduced prices in some markets, resulting in a 6.8% increase in subscribers and a revenue growth of 13.7%, surpassing $135 million in 2022.
Netflix’s strategy in Africa involves licensing content from local studios, such as Nigeria’s Black Book, while also producing original content like The Origin: Madam Koi-Koi.
This two-pronged approach has cost Netflix $175 million over six years, with South Africa receiving the largest share of $125 million. However, Netflix has more than recovered its investment, generating over $230 million in the past two years.
Despite the challenges and evolving competition, Africa remains a promising market for streaming services, and companies like Netflix are actively pursuing strategies to tap into its potential.
Source: Techcabal
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