South African streaming service, Showmax, has surpassed Netflix as Africa’s streaming market leader, taking advantage of Netflix’s recent market percentage decrease to claim the top spot with a 40% market share.
While Netflix controlled over 40% of the African streaming market in 2021, the US-based streaming service share has suffered a market share decrease to 35%, according to recent data from Omdia Research.
Showmax, with 1.8 million subscribers, has experienced a 26% year-on-year growth in paid subscribers over the last four years. The streaming service attributes its success to a primary focus on local content production, with a substantial investment of $1 billion dedicated to content production and acquisition in Africa during the financial year ending in 2023.
As part of its efforts to effectively cater to the needs of its African customer base, Showmax has announced plans to discontinue its streaming services outside Africa by 1st December 2023.
Challenges in the African Streaming Market
Netflix entered Africa in 2016, seeking to tap into the African streaming market, which has steadily grown to 41 million pay-TV subscribers as of 2022. Netflix, has faced challenges in the region, especially in mature markets like South Africa and Nigeria, with the market growing slowly due to challenges such as high broadband costs, unstable internet access, and lower income levels.
South Africa remains Netflix’s largest market, constituting 73.3% of its subscriber base, while Nigeria, despite significant marketing efforts and content acquisition, accounts for only 10.5%.
Research data by Digital TV Research indicates that video streaming accounts for less than 10% of Africa’s subscriber base, and despite growth tactics deployed by streaming players, including price cuts and content splurges, progress has been slow.
In the midst of this evolving landscape, IrokoTV, Africa’s oldest streaming service, has faced challenges, experiencing a 76% decline in active users from the beginning as at the end of 2022. Despite a $30 million investment in Nigeria, IrokoTV has yet to turn a profit in the country.
To counter stagnation in more mature markets like the US and Europe, Netflix has been pursuing international expansion aggressively. However, challenges such as low penetration of credit and debit cards in many regions have affected subscriber growth.
Netflix’s strategy in Africa involves a combination of licensing content from local studios, such as Nigeria’s “Black Book”, and producing original content like “The Origin: Madam Koi-Koi.” This two-pronged approach has cost Netflix $175 million in six years, but the platform’s investment has paid off, generating over $230 million in the last two years.
As competition continues to intensify in Africa’s streaming market, the dynamics of subscriber growth and market share are likely to see further shifts, with local content strategies playing a crucial role in attracting and retaining users.
