The challenges to launching a successful media businesses are many, writes Niall Hunt, but African entertainment entrepreneur Joseph Hundah says they are not insurmountable
If anyone understands the challenges of operating a successful media business in Africa its Joseph Hundah.
A seasoned executive with more than 20 years’ experience working various roles on the continent and around the globe, the ex-managing director of Multichoice Nigeria is now taking on the challenge of launching what he describes as “a multi-faceted media business that has not only direct to home but also has mobile service, IPTV service as well as free to air. It's kind of all-encompassing business that we are trying to launch across the English speaking part of Africa.”
For Hundah, one of the major hurdles in launching on the African content is in gaining useful data, from “population sizes, number of TV sets, growth of new media, as well as accurate advertising revenues around all different platforms”.
“Those kinds of things are really tricky,” says Hundah. “And one often has to use three or four different sources.”
He adds that you need to keep a careful eye on margins, because “Quite often revenues include non-cash elements, so you need to understand how to differentiate and how to separate that from your actual revenues”.
How to do business in Africa
However, the most important challenge “in Africa is to conduct your business in such a way that you keep your costs really low because is only when you actually start implementing and launching do you actually get full visibility on the economics around any particular industry”.
Drawing on his 20-plus years’ experience, Hundah offers four pieces of advice for media companies looking to launch in Africa:
- Don't over invest at the beginning.
- Seek to understand your markets
- Build slowly
- Try to include a level of customisation, but in a way that the content that you create is able to travel.
Operating across boarders, even with a common language, brings with it different regulation and different infrastructures. Hundah explains: “It is a huge challenge, because every country is different, they have different challenges, different laws, different regulation, and you need a pretty strong regulatory team to navigate all those territories. That being said, what is important is also a focus on the major countries and getting those countries right because, invariably, 4 or 5 territories will give you 80 per cent of your revenues.”
Localisation is key
For Hundah, these territories include Nigeria, Kenya, Uganda, Ghana, Tanzania, and the Gambia. And while Netflix has been pursuing a one-size-fits-all approach to its global expansion, rival Amazon has looked to partner with local media over content. In Africa, Hundah says “localisaiton is absolutely critical”.
He adds: “The most successful businesses in Africa have been built on localised content. But the problem with that is sometimes over-localisation can be too expensive so the economics don't make sense. Unfortunately language is not homogeneous in Africa. Every country has its own language and over and above that we have the situation where some countries have multiple languages. So one has to be able to cater for all of that. The best thing to do is to localise content in such a way that the content can travel to other territories, so that the economies of scale for creation of that content makes sense.”
Hundah points to dramas produced in South Africa in English, but that include characters from other countries to gain interest from those territories. He adds: “Nigeria ad Kenya are some of the biggest economies in sub-Saharan Africa. By including a Nigerian character and a Kenyan character you automatically have some level of travel for each piece of content.”
Getting the balance between localised content and the global big hitters, such as West World and Game of Thrones is also crucial, according to Hundah. “Any content that is popular in the US or Europe also works in Africa. So our content offering is a combination of a bit of international and a bit of local,” he explains.
In the US and Europe particularly, the impact of the millennial generation is changing consumer habits. In Africa, there is a slightly different story: “We are seeing that millennials in Africa will consume a lot of content on mobile if they are on their own, but for certain types of content that isn't readily available on mobile they gravitate towards traditional television with the family. It is really a question of is the sufficient content currently available on mobile to appeal towards millennials. The answer is not yet.”
For Hundah, the African market is one of growth over the next few years. “We are seeing massive growth. The growth of the number of TVs sets in the home is faster than mobile handsets. That being said, smartphone growth is at 20% per annum. So the growth of media in Africa is absolutely fantastic. Not only from a traditional TV perspective, which frankly I don't think will ever die, and the potential of distributed content over mobile,” he explains.
Once launched, one aspect of scaling up your business is simple: “Be quite aggressive”.
Hundah explains: “Africa has leapfrogged a number of steps in the development of the media space that has happened internationally. So, quite often, we know what works in the US or Europe, so we can leapfrog steps. Mobile, for example, is the focus for everything now. If one wants to be successful you go straight to mobile, which is certainly not the case in Europe. For us what is important is to keep your costs low, launch your business, understand the consumer appreciation for different kinds of content and different delivery mechanisms. Once you have understood that, then go out aggressively acquiring customers.”
The mobile continent
While mobile-based OTT video services are still too often seen as an add-on by traditional cable or satellite broadcasters, it is crucial in Africa.
Hundah says: “Mobile-centric is what Africa is. That's just the way it is. I think it will be quite difficult to gain massive traction in mobile without the mobile network operators. They are playing a critical role in how successful a business is going to be. And, in particular, because the cost of data is just so high in Africa right now, any business you launch without a mobile element is dead in the water. So the MNOs have to play a significant role in whether a business is going to standalone or not. Some of them are very receptive and some of them are still very hard headed and are too focused on making their money from calls. I think there is a bit of a way to go to begin getting mobile operators to start playing ball.”
Looking towards TV Connect in London, Hundah says: “I visit conferences to understand the views of executives from around the world and what they do in their businesses. I also use them to send a certain message. I spoke at TV Connect in Cape Town last year on audience measurement. For me that's very important, because lack of information makes business people such as myself have a pretty tough time launching new business.
“The message at TV Connect was if we as an industry don't come together to sort out this audience measurement conundrum, we will never see actual growth in our business. From that perspective you kind of get different reasons for attending different conferences. In this case, I'm interested to know more about my colleagues from around the world are monetising on mobile.
“This is something we are venturing into for the first time of coming here. And we want to share our experiences and how we are doing it and to understand how everyone else around the world is doing it, because I'm sure the differ quite significantly. And it will also be the same in some circumstances.”