The US based film industry, collectively known as Hollywood, is big business. According to PriceWaterhouseCoopers (PWC), in 2013 Hollywood pulled in $31 billion. Yet, there are other geographical hothouses for filmed entertainment. Two particular notables are Bollywood in India and Nollywood in Nigeria. With large and growing populations, the potential of both these markets have long been a topic of discussion. Still, neither has really picked up in terms of revenue. As of 2015, even with a market of 1.3 billion people in India, Bollywood revenue was only $2.32 billion. Nigeria is Africa's most populous country with a population of 182 million. Yet, according to one report, in 2014 Nollywood’s revenue was $3.3 billion, surpassing Bollywood.
Both Bollywood and Nollywood work in markets with lower per-capita income and a media distribution infrastructure that is not as mature when compared to North America. So, it’s not surprising that Bollywood and Nollywood have some catchup to do. However, there are now indications that the mobile revolution can help the content industry in both geographies. Mobile phones have rapidly caught on in both India and Sub-Saharan Africa, allowing them to largely skip building out wired telephone systems. Technology is now coming to the market with the potential to make the mobile device into a lucrative new media distribution platform.
As a bit of background, the film industry generally makes its revenue through a variety of distribution channels. These include theaters, physical media (Blu-ray, DVD, etc.), hospitality (airlines, hotels, etc.), television (broadcast, cable, etc.), streaming/downloads over the Internet plus ancillary markets such as licensing to toy companies. Even in today’s increasingly digital market, theaters are an important market not only for revenue, but also to create that all important “buzz” around a new release. One of the issues facing both Bollywood and Nollywood is the dearth of in-market theaters. Even with a population four times the size of the US population, India only has approximately 13,000 theaters compared to a bit over 40,000 in the US. It’s estimated that less than 4% of the Indian population regularly visits a theater. The situation is even worse for Nollywood with only 10 theaters in all of Nigeria. Nollywood has a DVD market but unfortunately, it’s mainly a pirate market with nine pirated copies sold for every legitimate DVD.
Television is a brighter spot. According to Digital TV Research, for Sub-Saharan Africa in 2013 there were 20 million TV sets, forecasted to rise to 68 million by 2020. Still, even at that rate, TVs will only reach 38.4% of households. In India, according to a Confederation of Indian Industry (CII) report, TV penetration is around 60%. In both geographies, the expectations are that pay-TV subscription rates will grow over the next several years particularly for satellite TV. This would help bring in more revenue for both Bollywood and Nollywood. Even so, it is clear that a significant part of the population will not have access to pay-TV for the foreseeable future.
Enter the Cheap Smartphone
Traditional distribution of Bollywood and Nollywood content will continue, but mobile holds much promise to become a new and valuable distribution platform. Mobile is well on its way to becoming ubiquitous in both Sub-Saharan Africa and India. According to the GSMA, as of mid-2015 there were 386 million unique mobile subscribers in Sub-Saharan Africa for a penetration rate of 41%. This is forecasted to grow to 518 million by 2020, a penetration rate of 49%. Growth in India is expected be even faster, starting with 453 million 2014 and growing to 734 million in 2020.
Most any mobile phone in the market is capable of playing back digital video to some extent. But it is the smartphone, with its larger screen and easy to use interface, which is a better showcase for video. Smartphone manufacturers and technology developers are now competing to capture a part of these growing markets. One result of this competition is a marked decrease in smartphone pricing. The GSMA points out that sub-$100 smartphones were readily available in Sub-Saharan Africa (note that smartphones are typically not subsidized by carriers like in the US market). Google has developed the Android One smartphone aimed at emerging markets. It is already on sale in India and Google is planning on bringing down the cost to under Rs. 3000 (approximately $45) . One thing is certain, competition for the rapidly growing African and Indian markets will continue to drive smartphone pricing down. The upshot will be a continuing increase in market penetration of handsets capable of good quality video playback.
Video Distribution by Wi-Fi
If by now you’re saying, “But the type of high-speed connections needed to stream video to smartphones won’t be prevalent for years,” well, you have a point. This is where a startup called Kiora comes in. Kiora's technology design is premised on the fact that broadband infrastructure needed for OTT (over-the-top) Netflix-like video services won't be mature for some time in many markets. With this in mind, Kiora’s platform helps partners create “OTT-like” services which don’t need broadband connections. One of Kiora’s technologies is the “Content Hotspot” This consists of a appliance that caches video content for distribution at Wi-Fi hotspots. The company also has a cloud-based backend service which manages the content licensing and integrates with various payment systems.
Kiora's Content Hotspot makes it simple for smartphone users (or any other Wi-Fi enabled device) to find and buy their favorite content when they connect to a Wi-Fi hotspot. When a user logs on, they'll see an option to visit an online store stocked with video content cached by at the hotspot. Since the connection between the device and the hotspot is likely to be high-speed, the user can easily download the content to their smartphone from the Kiora device. The backend service allows for a variety of payment methods, from paying cash to the hotspot proprietor to payments made through the carrier.
Kiora's customers are carriers and other network providers who see a video content distribution service as as an additional revenue stream. In September 2014, Kiora announced an agreement with SES Broadband Services, a satellite broadband provider, to roll out their content hotspots in Sub-Saharan Africa.
According to Kiora’s CEO Prasad Sanagavarapu, this is just the beginning. “There is a lot of interest not only amongst African carriers, but also retail outlets. They see this as a way to get into the eco system of content sales and increase their reach to the ever growing number of mobile users..” Beyond Africa, Kiora also plans to bring Wi-Fi Content Hotspot services to India and other areas with less developed broadband infrastructure.
Mobile: A New Revenue Pillar for Local Content
Of course, to create a new video content distribution company, Kiora needs content. Kiora already has contracts with both Nollywood and Hollywood content aggregators for Sub-Saharan Africa and is working on similar relationships in India. One of the results of this is a partnership with a unique company based in Nigeria called SOLO. Launched in 2014, SOLO sells smartphones which also include a free subscription to SOLO Music for unlimited access to music as well as SOLO View, a VOD (video-on-demand) service and app giving access to both Nollywood and Hollywood video content.
Given the promise of the mobile video market, Kiora is unlikely to be the only entry to come up with unique solutions for these markets. As companies compete in mobile video distribution to fit local conditions, chances are high that someone will come up with the right mix to succeed. A successful and stable mobile distribution channel will not just give individuals the ability to enjoy local content whenever and wherever they want. It also holds the promise of increasing revenue for local content industries.
An interesting potential consequence of this is, with a new and hopefully stable and lucrative revenue stream, content creators in Africa and India should be able invest more in their work. One result could be higher production values and more investment in local talent, both in front of and behind the camera. If this comes about, mobile distribution could help bring about a new renaissance in video content, allowing African and Indian content creators to successfully compete on the world stage.