Nigeria's media landcape undergoes rapid change

 

Nigeria’s first news outlet was established in 1859, and the country’s media sector has since grown into a prosperous industry that comprises newspapers, radio broadcasters and television stations, and caters to an audience of over 180m in a variety of languages.

As is the case for many media industries around the world, the shift to digital has resulted in changes in Nigeria. Some alterations have been simple to navigate, while others, such as the rise in online content, have proven more difficult. With a young population and a high rate of connectivity in regional terms, Nigeria is well placed to embrace the new media revolution. Providing a cost-competitive and diverse offering is within reach, though the country’s media and entertainment industry is currently experiencing some growing pains.

Size & Scope

Nigeria has traditionally had an extensive and diverse media landscape, and the medium-term potential for growth and development in the sector remains strong. In 2015 the media and entertainment industry in Nigeria achieved total revenues of $4.8bn, according to data from the London-based global professional services firm PwC. This is expected to reach $8.1bn by 2019, with PwC marking it as “the fastest-expanding major market globally”.

In terms of outlets, there is a range of public and private broadcasters that cover both local and national content. The National Broadcasting Commission (NBC) estimates that there are 700 TV and radio stations across the country, including both public and private broadcasters. Moreover, there is at least one TV station and radio network based in each of the 36 states, with the federal government operating almost 70 national and regional TV stations. In terms of print, there are over 100 national and local newspapers, some of which are under public ownership.

Comprehensive data on viewing, reading and listening habits are not currently available in Nigeria. Nevertheless, the general trends of the market are well established. Taken as a whole, publicly owned TV stations have the largest audience. The BBC, citing government figures, estimates a reach of 90m for the state broadcaster. However, this figure is disputed. “There is an assumption that approximately 50m people are watching free TV, but we constantly have new players coming into the market,” Armstrong Idachaba, director of the Director-General’s Office at the NBC, told OBG.

Public TV

According to Idachaba, free TV is the preferred option of the majority of Nigerians, as free TV channels often have more than 10 times the viewership figures of their pay TV rivals.

At the federal and state levels, free-to-air public TV networks are funded directly by public budgets rather than a dedicated viewer licence fee. These networks are also allowed partial commercialisation by generating advertising revenue. However, the government limits the volume of advertorial content in order to maintain a positive viewing experience. For example, a TV channel cannot have more than nine minutes of advertising in an hour-long programme, and individual advertisements cannot exceed 60 seconds. While this has the potential to constrain advertising revenue for broadcasters, it is likely to attract higher viewing figures and ensure that TV channels maintain a focus on their core mission of content provision. Local governments are responsible for collecting radio and TV fees from broadcasters. These revenues are supposed to be used for broadcasting purposes, but they are often directed to for spending programmes that are not media related. The sector has also been affected by non-payment of broadcasting licence fees, a situation that the government is in the process of addressing.

Private Broadcasters

While public TV and radio has the most extensive reach, there is strong growth in the private sector. As of late 2015 private broadcasters – such as Galaxy TV and Silverbird TV – had the highest market share in some urban areas. Nigeria currently has the second-largest pay TV market on the continent after South Africa, with the segment poised for substantial growth. According to PwC, the number of pay TV households is expected to more than triple from 1m in 2010 to 3.2m by 2019. This figure is at odds with the NBC, which claimed in September 2015 that the country already had 4m pay TV subscribers. Much of this growth has come from satellite demand. “Direct-to-home TV has increased penetration significantly,” Pradipta Mitra, director of consumer insights at Nielsen West Africa, told OBG. As a result continental broadcasters have seen steady growth in the Nigerian market. For example, South Africa’s DSTV now has 1.5m subscribers in Nigeria, which is over 10% of their continental total.

Both the pay and free-to-air markets are likely to be bolstered by the country’s migration to digital. The government is looking to implement a freeview model similar to that in the UK, whereby customers can buy a subsidised digital box and pay a small annual licence fee to receive the service. There will be 30 channels of free content, which will include public broadcasts, delivered to approximately 20m homes.

Nollywood

One key demand driver for local content is the country’s sprawling entertainment industry. Nigeria’s film industry, known colloquially as Nollywood, is the second-largest source of jobs in the country, according to the IMF, and its rapid growth is set to continue. IMF data from 2015 puts the industry’s total contribution to GDP at N853.9bn ($3bn).

The industry dates back to the 1990s, when a number of local directors and producers started making movies using off-the-shelf equipment. The resulting films were made quickly and cheaply, and were distributed primarily via video. The industry received a major boost in the mid-2000s with the spread of satellite TV in Africa, and rising demand for African video content since then has driven its ongoing expansion. Now Nollywood produces around 2500 films annually.

Music

Nigeria’s music industry is also performing well and is adapting to the changing media landscape. Music sales in the country reached $56m in 2015 and are expected to hit $88m by 2019, according to PwC. Streaming services will take an increasingly large share of the wider market, replacing downloads and hard sales. MTN Music Plus, the streaming service of Nigeria’s largest telecoms operator, already has 3.5m subscribers. As data prices continue to fall, this figure is likely to grow rapidly (see ICT chapter).

There are also opportunities to sell content on new platforms. For instance, there is an emerging market for caller ringtones that use music, with potential for $100m in annual sales, Michael Ugwu, general manager for Sony Music West Africa, told international media.

Print Media

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, many of the country’s major newspapers continued to speak out regularly, cementing the reputation of Nigeria’s powerful free press. As of 2017 more than 100 newspapers were published on a daily or weekly basis, include-dig a handful of major dailies with national distribution, such as The Guardian (unrelated to the UK-based newspaper of the same name), The Punch, Leadership and Vanguard, among others. In addition, there are 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, 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 last of which is a news weekly.

However, as is the case in other major print media markets around the world, the fate of newspapers and magazines has become more uncertain, a result of declining sales and rising costs, as well as increased competition. “In the last five years the circulation of newspapers in Nigeria has dropped by as much as 60%. Only two newspapers will survive the next five years if these trends continue,” Marcel Mbamalu, news editor at The Guardian, told OBG. Currently, there is no newspaper in Nigeria that has a daily circulation figure above 300,000, which compares poorly to key international markets. For example, in the UK there are five newspapers that have a daily circulation in excess of 1m copies, despite having a population onethird as large as Nigeria’s. In October 2016 two of the country’s leading papers, Leadership and The Punch, laid off more than 100 members of journalism staff between them, pointing to rising operating costs in the sector. One month later Emeka Ejide, publisher of the national newspaper Market Voices, called for the federal government to bail out Nigeria’s domestic print media.

Advertising

Part of the print segment’s challenges stem from its continued reliance on traditional revenue streams. The payment and revenue-generation models in Nigeria have not shifted in line with many developed markets. This is a problem given that, amid the broader economic slowdown, advertising budgets have fallen 30% on average – a result of depreciation and slow consumer spending growth. Beyond this basic decline, there is also a shift in how and where companies are willing to deploy their marketing budgets and resources. “Most brands in Nigeria allocate more budget for advertising than other elements of marketing communications. However, discerning brands also deploy public relations to ensure that they have a strong marketing mix,” Abiola Akinyemi, account executive at Sesema Public Relations, told OBG. “They also pay more attention to social media and digital marketing because it helps them to reach a wider audience.”

There is a lot of scepticism around advertising in general, especially as a recent report by Marketing Edge, a local online publication, found that there was no evidence that N13.4bn ($47.4m) worth of advertising spend deployed in the local market had actually resulted in the agreed upon advertisements being published. Traditional forms of advertising, which are facing the strongest headwinds are also those with the highest rates: print advertising rates are well ahead of those for many other forms of media and have yet to see significant erosion in the face of new advertising models. For example, a web advertisement provides metrics on conversion and click-through rates, and costs as little as one-fifth of what a one-page advertisement in a newspaper does. By comparison, a full-page colour advert in a national newspaper costs as much as N800,000 ($2830) and does not allow advertisers to track the impact of the ad.

While newspapers seek to raise revenues, the increased competition for advertising spend has led prices for premium placements to remain static, meaning rates are falling in real terms. There are still statutory requirements for placing certain advertisements in print publications, such as banking regulations and commercial bank annual report summaries. However, these alone are unlikely to provide sufficient advertising revenue to keep print operations afloat.

Free Models

Given these challenges, Nigeria is beginning to move in line with more developed print media markets, where business models have shifted from supplying paid content to free. This allows publications to build readership as a means of attracting advertisers, moving away from a revenue model dependent on subscribers towards one built on advertisements. Looking to established practices in international arenas, the UK’s Metro and London Evening Standard achieve high circulation figures as free newspapers. Metro has the fifth-highest circulation in the UK, with an average daily figure of 1.4m, followed by the London Evening Standard, which has the sixth-highest circulation and a daily readership figure of over 910,000.

Similar strategies are beginning to penetrate Nigeria. For example, City Info magazines are distributed for free and completely rely on advertising to generate income. According to Tonye Ekine, assistant editor at Lagos City Info, advertisers are increasingly conscious of ensuring reach and return from their marketing budget, and therefore see the value of free publications. “In terms of Abuja and Lagos, we’ve found free publication to be a more effective use of marketing budget for multinationals,” Ekine told OBG.

Diversification

Newspapers are also looking at other ways of retaining and building readership and revenue. The Guardian, for example, has established an online TV platform as a means of complementing its print product. “We’re developing an online platform in order to draw readership back to the traditional newspaper,” Mbamalu told OBG. However, the rollout of new content related products will take time, particularly for people outside the main urban centres, where internet connectivity is more limited. “There is visible growth in broadcasting in Nigeria. Convergence is extending the market, but access to new media is still limited. There’s still room for traditional broadcasting to grow and fully optimise until it converges,” Idachaba told OBG.

Going Digital

Much of the pressure on the print segment in particular is coming from a rise in online content. Over half of the population is now connected to the internet, with the country adding more than 60m users since 2011. Social media content is also gaining traction, with more than 16m Nigerians now accessing Facebook every month. Greater use of online media presents outlets with a variety of challenges. Beyond the bottom line, these new media channels pose an existential threat to traditional publications and broadcasters in other ways, with conventional outlets losing control of information dissemination. “Facebook is a major source of unverified information for young people,” Mbamalu told OBG.

This is not unique to Nigeria, but it causes problems nonetheless. For instance, two of the most popular blogs in the country, Bella Naija and Linda Ikeji, have visitor numbers of approximately 5m and 3m per month, respectively. These figures put them well above the circulation rates of the nation’s largest newspapers, but they have faced allegations of publishing false stories.“Technology is becoming the new norm, but it is only widely used in urban areas like Lagos, Abuja and Port Harcourt,” Ekine told OBG. “Most people are still tied down to print. Right now we are in a transition phase.”

Headwinds

While the entertainment industry has proven adaptable to new technology, traditional media outlets are having a harder time. Segments of Nigeria’s media industry are struggling in the face of economic headwinds. The recent depreciation of the naira and shortage of foreign exchange in the country is not only causing general economic uncertainty and hardship, but also directly impacting media players. Tunde Aina, COO of the pay TV network Star Times Nigeria, told local press, “Broadcasting infrastructure is almost 100% imported into Nigeria, and the current economic policies have made it difficult to meet our foreign monetary obligations and it’s been very challenging to continue to provide our services at the same cost to our customers.”

In May 2017 Multichoice Nigeria, the owner of DSTV and GoTV, announced that subscription rates would go up by 5% due to economic conditions. John Ugbe, managing director of Multichoice Nigeria, a South Africa-based internet company, told local media, “We announced in 2016 that we would do everything possible to hold the price, barring any extreme factors. However, all our content is purchased in dollars and although we have done everything possible to hold the prices even with the price of everything else going up, we are now left with no choice but to adjust our subscription prices.” Given these difficulties, broadcasters have also called for the government to support inexpensive long-term financing for the industry.

Regulatory Oversight

In response to the changing circumstances of the media sector, including the rise of unverified online content, the federal government is currently revisiting content regulations. “We are attempting to codify some of the regulations regarding hate speech. To do this we have commissioned a study on hate speech, and we are reviewing the broadcasting code,” Idachaba told OBG.

In many ways, there are already rigorous regulations around content and advertising in Nigeria. The promotion of certain products, such as tobacco and alcohol, is banned or highly proscribed. Political advertising is also limited. In fact, international monitors have sometimes concluded that the Nigerian authorities go too far in terms of media oversight and regulation. Freedom House, a US NGO concerned with political freedom and human rights, stated that Nigerian authorities “regularly harass, intimidate and attack journalists in the field”. In 2016 Nigeria was ranked 116th out of 181 countries in the Reporters Without Borders’ World Press Freedom Index, compared to Ghana, South Africa and Kenya, which ranked 26th, 39th and 95th, respectively.

However, the government is working on other regulations that should help to professionalise the media industry. For example, the NBC has sought to crackdown on licence fee evasion by new TV and radio stations. In March 2017 the NBC stated that 120 broadcasters face closure for outstanding debts that total N5bn ($17.7m). As part of this crackdown, the regulator has already revoked 54 licences for non-payment, freeing up frequency for new applicants. Ish’aq Modibo Kawu, director-general of the NBC, told local press, “This is a new era. All outstanding sums owed to the NBC must be collected. The practice of using political connections to seek black market endorsement will not work.”

Outlook

It is both an exciting and challenging time for the media and entertainment sector. As online and social media become more popular, traditional outlets are having to reassess a business model that has served them well for many years. This is happening at a time when macroeconomic factors are dampening demand for services and sponsorship, while also increasing costs. Nevertheless, the new landscape does offer opportunities. As internet access improves for more Nigerians, more opportunities to deliver a wider variety of content to new markets will arise. The country’s entertainment and telecoms industries are already taking advantage of these possibilities. If they are to survive, traditional media operators will have to follow.

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The Report: Nigeria 2017

Media & Entertainment chapter from The Report: Nigeria 2017

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