In Africa’s competitive streaming landscape, Netflix, once the dominant force with over 40% market share, has yielded its leadership position to Showmax amid escalating competition.
The global streaming giant, Netflix, is witnessing a decline in its African market share due to the increasing rivalry from platforms like Amazon Prime and Showmax. Despite holding a substantial 40% of the African streaming market in 2021, recent industry data indicates a contraction in its dominance. As per Omdia Research, Netflix now commands 35%, relinquishing its market leader status to Showmax, which claims 40% of the continent’s streaming market.
The surge in competitors entering the region and enhancing their strategies has led to a squeeze in market share for existing players like Netflix. Showmax, with 1.8 million subscribers, has experienced a remarkable 26% year-on-year growth in paid subscribers over the last four years, emphasizing its focus on local content production. Allocating $1 billion to content production and acquisition in Africa for the financial year ending in 2023 has further fortified Showmax’s position.
Share of Netflix Customers by Countries in Africa
According to Digital TV Research, Africa had 41 million pay-TV subscribers by the end of 2022, with video streaming constituting less than 10% of the subscriber base. Streaming platforms, including Netflix and MultiChoice’s Showmax, have implemented various growth tactics, such as investing in new content and reducing subscription prices, to attract new customers. However, the market has been progressing at a gradual pace.
In a recent report by TechCabal, it was revealed that IrokoTV, Africa’s oldest streaming service, experienced a significant decline of 76%, with only 46,000 active users in December 2022. Despite investing $30 million in Nigeria, IrokoTV has yet to turn a profit in the country, highlighting the challenges faced by streaming services in the African market.
Netflix entered the African market in 2016, rapidly accumulating a few hundred thousand subscribers and prompting established players like MultiChoice to brace for heightened competition. While the market has seen the expansion of Amazon Prime Video and NBC Universal’s Peacock, slow growth persists due to issues like high broadband costs, unstable internet, and low income in households across the continent.
The streaming video-on-demand industry in Africa is projected to grow by 10.4% annually, with Netflix expected to experience slower growth, allowing other platforms to capture a larger share of its subscriber base. Despite concerns about stagnating subscriber numbers in mature markets, Netflix has been buoyed by international expansion, particularly in Africa, where a 6.8% growth in subscribers contributed to a revenue increase of 13.7%, surpassing $135 million in 2022.
One obstacle to Netflix’s subscriber growth in Africa, according to Omdia, is the limited penetration of credit and debit cards in many regions, affecting payment methods for the platform. Netflix’s strategy in Africa involves a dual approach of licensing local content, such as Nigeria’s Black Book, and producing original content like The Origin: Madam Koi-Koi. This strategy has incurred a cost of $175 million over six years, but the investment has proved successful, with Netflix generating over $230 million in the last two years, surpassing its initial expenditure.