Why entertainment and media hold high GDP growth potential

Over 12.4 million folks watched the sixty fifth Annual Grammy Awards ceremony held in Los Angeles on February 5, 2023.

Nonetheless, because the most interesting of musicians have been feted that evening, The Grammy’s skilled what was the third smallest TV viewers of the ceremony within the historical past of the published.

And but 12.4 million shouldn’t be a essentially small quantity.

Whereas it’s dwarfed by the over 1.5 billion that watched the (FIFA) World Cup finals almost two months in the past or the billions that reportedly watched Cristiano Ronaldo’s presentation at Saudi aspect Al Nasr final month, it nonetheless signifies the massive attraction to arts and leisure in a world whose economists barely look in that route.

Based on information agency Statista, the market dimension of the humanities, leisure and recreation business in the USA (US) grew by roughly 11.5 per cent in 2021 over the earlier 12 months to $300 billion (Sh37.5 trillion). “Total, this business’s market dimension was valued at round $299.98 billion (Sh37.08 trillion) in 2021. This determine was forecast to achieve round $399 billion (Sh49.48 trillion) in 2022,” it stated.

Different sources put the determine significantly greater.

The projected determine of $399 billion (Sh49.8 trillion) is sort of 4 instances Kenya’s 2021 gross home product (GDP) which was estimated at $110.3 billion (Sh13.7 trillion).

The US introduced that in 2018, the entire core copyright industries added $2.2 trillion (Sh275 trillion) to the economic system and employed over 11.6 million staff. “These industries grew on common 5.23 per cent a 12 months, whereas the US economic system as a complete averaged 2.21 per cent yearly,” it stated.

Regionally, artwork and leisure appear to typically take a again seat, with stakeholders solely just lately seeming eager to rally an business that has been within the background for a few years.

Boomplay, Spotify, YouTube and Shazam lists for Africa’s prime streamed – and Shazamed – music is top-heavy on Western Africa (nations reminiscent of Nigeria and Ghana), Tanzania, Congo and South Africa artistes.

Music service Mdundo’s report for the first half of the monetary 12 months that ended December 31, 2022, reveals that its income for this era was over Sh115 million, a rise of 161 per cent in comparison with the identical interval within the earlier monetary 12 months. 

The web music platform reached 23.4 million distinctive month-to-month customers, representing a 15 per cent enhance since June 2022.

“The rise in distinctive month-to-month has been majorly pushed by means of smartphones, web penetration, premium merchandise, and partnerships with telecommunication corporations. 3.5 million month-to-month customers have been from Kenya, up from 2.7 million in December 2021,” it stated.

It expects the variety of month-to-month energetic customers to extend to roughly 25 million on the finish of the monetary 12 months 2022-23. 

Native music

Questions have up to now abounded on the consumption of leisure and media in Kenya. How a lot native music do folks take heed to or play on radio stations? How many individuals watch native TV channels for information?

Do they learn newspapers?

Are they neglecting an leisure sector which, for a lot of different nations, generates billions of {dollars} yearly and employs a whole lot of hundreds, and in some circumstances hundreds of thousands?

In gross home product (GDP) by exercise, the efficiency of the humanities, leisure and recreation sector lags behind many others which are considered as tier-one industries.

Some, reminiscent of building, actual property, transportation and storage, public administration and schooling have output tens of instances greater than arts, leisure and recreation.

Based on the Financial Survey report of 2022, the worth of the leisure and humanities sector was Sh22.4 billion in 2017, Sh24.5 billion in 2018, Sh27. 1 billion in 2019, Sh19.9 billion in 2020 and Sh23.4 billion in 2021.

Its proportion contribution to nominal GDP has for the previous 5 years oscillated between 0.2 and 0.3 per cent. And within the GDP by exercise progress, the humanities, leisure and recreation sector recorded 16.5 per cent in 2017, 3.7 per cent in 2018, and eight per cent in 2019, earlier than crashing to -28.3 per cent in 2020 amid the Covid-19 pandemic.

This, nonetheless, set the bottom for brand new innovation and rethinking, recording a bounce of 13.7 per cent in 2021.  The earnings, thus, elevated by 31 per cent in 2021 in comparison with 2016, and 1.5 per cent in comparison with 2020 when, through the pandemic, the web supplied a brand new avenue for a lot of within the business.

The variety of Kenyans employed within the business in 2021 elevated by 10.9 per cent from 2016 and 15.9 per cent from 2020. As web penetration will increase within the nation, leisure and media consumption behaviours are shifting radically, with revenues darting from one platform to the opposite. DataReportal’s Digital 2022 report confirmed that Kenya’s web penetration fee was 42 per cent as of January 2022.

Native web service suppliers have been working to attach the remotest elements of the nation to quick, dependable web, with extra Kenyans affording internet-enabled gadgets.

As such, there was a proliferation of beforehand comparatively unknown actions reminiscent of gaming, which is now using some in a youthful inhabitants grappling with excessive ranges of unemployment.

Based on the PWC Africa Leisure and Media Outlook for 2022-2026, 22 per cent of Kenya’s inhabitants performs these video games.

It’s a little greater in Nigeria at 23 per cent, and even greater in South Africa at 40 per cent. The gaming business has been one of many elements driving leisure and media improvement in Kenya, with sustained progress since 2017.

Income reached new heights in 2021 with a 12.6 per cent annual progress fee, in keeping with PWC.

The report additionally notes that the web, which has pushed up the consumption of varied media, has a compound annual progress fee of 24.4 per cent within the forecast interval, and OTT video (over-the-top is a media service supplied on to viewers through the web) a progress fee of 15.6 per cent.

The consumption of varied types of leisure determines the manufacturing of the identical.

Usually, in a reversal of roles, the standard of content material proven on varied media platforms – alongside the consistency and different options that enhance its attractiveness to audiences – determines its consumption.

Social gatherings

Throughout the pandemic, stand-up comedians who have been compelled off the stage as a result of restrictions imposed on social gatherings took their craft to social media, in essence growing the consumption of media by means of the web. On this interval, platforms reminiscent of TikTok gained extensive utilization and acceptance, and quick video clips on different social media platforms elevated.

Advertisers adopted content material creators there. Conferences have been taken to on-line platforms and commerce additionally shifted to e-platforms that have been rapidly gaining traction.

PWC notes that such shifts have led to a rise in web promoting on the expense of extra conventional types of promoting. “Whereas conventional TV and residential video will keep its place because the second-largest section in Kenya’s leisure and media market over the forecast interval, fast positive aspects in web promoting will imply that, by 2026, the previous can be simply $1.2 million bigger than the latter, paving the way in which for web promoting to overhaul this section in later years,” it says.

OTT income can also be set to rise quickly over the following 5 years, with income progress to 2026 anticipated to outpace will increase in TV subscription income throughout all three markets- South Africa, Nigeria and Kenya, the report indicated. “However that is from a small base, which means that income itself will stay low. In Kenya, OTT income will complete $8.9 million (Sh1.12 billion) in 2026, whereas TV subscription income will complete $420 million (Sh52.5 billion).”

Publish-pandemic, a deal with leisure and media have revealed enormous alternatives, beforehand hiding in plain sight.

 Web utilization had revolutionised operations in almost each sector, largely in leisure and media. Mounted broadband take-up in Nigeria and Kenya is low, with family penetration at 6.5 per cent and 7 per cent in 2021 respectively, in contrast with a world common of 72.7 per cent.