Is Kenya's media industry profitable? (Video)

Is the Kenyan media business profitable?
In the 1990s, Kenya opened up the media space and issued more broadcast licenses. This liberalization led to numerous investors buying into magazines and newspapers, or launching TV and radio stations. A media revolution followed, that today sees more than 20 television stations and over 370 radio stations now operating in Kenya.

News is big business in Kenya. Newspapers and magazines sell out quickly on Nairobi’s streets.

Kenyans have also become critical consumers of the media, using various platforms to challenge their politicians and the status quo.

The Standard Group

“The Kenyan society itself is changing quite a bit, in terms of lifestyles, people’s expectations, information needs. They are all changing. And also the fact that about 60% of Kenya’s population is young people. They are so dynamic, they are so globalized, and they are so savvy and creative in the manner in which they use social media. So a lot of the new upcoming media institutions are looking at how they can use social media platforms to build their audience profiles,” says Dr. Wilson Ugangu of the Multimedia University of Kenya.

In Kenya, like anywhere else in the world, media ownership is often about controlling the news agenda though profits remain a key incentive. Research shows that of all the foreign investments that came to Africa over the past year, 20% were media acquisitions.

“There is still growth in the newspaper industry. I have seen growth in advertising volumes. Where the real growth exists is in television broadcasting. Radio broadcasting does give you a large audience but it doesn’t make you a lot of money,” Sam Shollei, Chief Executive Officer of Kenya’s Standard Group.

According to Sam Shollei, investment returns in the media space are anywhere between 10 and 20 percent.

Headquartered in Nairobi, the Standard Group owns The Standard, one of the largest newspapers in Kenya with a 30% market share and the oldest newspaper in Kenya. The Standard Group also runs the Kenya Television Network (KTN), Radio Maisha, the County Weekly (a bi-weekly county-focused newspaper), and Standard Digital World (The Standard Group’s online platform).

Redhouse Advertising

Advertisers do not want to be left out of the rapid growth in Kenya’s media industry and are moving to capitalize on Kenya’s diverse media environment. For example, Redhouse Advertising was established just 3 years ago and already it has experienced a 70% growth in revenues.

“If you look at the marketing spend in Kenya, between 2010 and now, on average, the marketing spend per year is growing at between 15 and 20 percent,” says Kenneth Kyaka, Redhouse Advertising’s Strategy Director.

Recommended: South Africa Entertainment and Media Outlook including Nigeria & Kenya (2013 – 2017): PwC (Report)

According to a PwC report on Kenya’s media industry, the industry is expected to grow by 17.8% to a $2.3B industry in 2015. Kenya’s media industry is expected to grow at a compound annual growth rate (CAGR) of 16.3% from 2013 through 2017. The industry will reach a size of $3.1B by 2017.

“Kenya is one of the most vibrant markets in sub-Saharan Africa. A growing middle class, rising rates of literacy, a large urban population, and the growing importance of the mobile phone as a platform for communication and content are all helping to create significant new opportunities for the entertainment and media market,” says the PwC report.

“By far the fastest growth area in consumer spend will be Internet access and driving this surge will be the visibility and the dominance of Kenya’s largest mobile operators,” the PwC report says.

The Internet area of Kenya’s media industry will grow at a CAGR of 48.3% (2013-2017). Kenya’s Internet space is expected to grow from $220M in 2013 to reach a size of $961M by 2017.

“Internet access in Kenya will be dominated by mobile Internet access,” the PwC report says.

Watch more videos from African Business Central.