High bandwidth costs, low access to e-readers and choking e-commerce legislation will keep South Africa’s adoption of e-book technology “limited” for the next five years, while the hard-copy book market continues to struggle.
This is according to PwC’s entertainment and media outlook 2013 – 2017, which notes a decline in both physical entertainment and educational book sales – as well as a slow uptage of digital content in the country.
In the report, PwC said that, while a number of local e-commerce services have become established in South Africa that sell both physical and e-books online, the cost of e-readers and bandwidth constraints make the downloading of books difficult in some areas.
The firm also highlighted proposed legistlation by National Treasury, which would require non-South African suppliers of e-commerce services (for example, electronic books, music and programmes) to register as VAT vendors in the country for output tax on its supplies.
“This has resulted in e-book and e-reader penetration being lower in South Africa compared with many other markets in Europe, the Middle East and Africa (EMEA),” PwC said.
“For publishers, there are also concerns about the lack of clear policy around digital copyrights. Currently South African legislation is not in line with the World Intellectual Property Organisation’s Copyright Treaty (WCT), which protects investments in digital media,” PwC said.
A nation of illiteracy
According to PwC, the South African book market “continues to face a number of limitations in the wake of the high illiteracy rate and low incomes, coupled with the challenge of publishing books in multiple languages which effectively excludes large segments of the population from reading”.
“Illiteracy continues to be relatively high in South Africa,” said Vicki Myburgh, Entertainment & Media Industries Leader for PwC Southern Africa.
“[However], the government is taking steps to address this as part of its Industrial Policy Action Plan, with the goal of eliminating illiteracy by the end of the decade.”
PwC noted that books in South Africa are subject to Value-Added Tax (VAT) at 14%, which is higher than in most countries and has contributed to the high retail prices that tend to make books out of the reach of the majority of consumers.
“As a result, consumers are more likely to read newspapers and magazines,” PwC said.
According to data collected in the report, South Africa’s consumer book market is smaller than the educational book market, though both markets are expected to pick up by 2017.
The consumer and educational book market as a whole has fallen from R4.1 billion in 2008 to R3.6 billion in 2012 – however, this is expected to increase slightly to R3.7 billion by 2017.
“With a rise in the sale of consumer books, assisted by a general increase in living standards, the decline will not continue,” PwC said.
The consumer book market is forecast to grow at a compound annual growth rate (CAGR) of 2.5% to reach R1.6 billion in 2017, up from R1.4 billion in 2012.
However, the educational book market is expected to fall by a negative CAGR of 1.1% to R2.1 billion in 2017 – down from R2.8 billion in 2008.