Consumer spending on Internet access in South Africa will reach approximately R59.6 billion by 2017, up from R19.8 billion in 2012 – a compound annual growth rate (CAGR) of 24.7%.
This is according to the Fourth South African edition of PwC’s South African entertainment and media outlook: 2013 – 2017, published on Thursday (19 September).
The report noted that South African Internet market is dominated by the mobile segment due to increased investment in cellular coverage by mobile operators and decreasing tariffs.
According to PwC, Internet access via mobile devices comprised 89% of the Internet access market (mobile Internet subscribers plus fixed broadband households) and 81% of its revenues in 2012.
The South African broadband Internet market is forecast to grow by a third in 2013 from 12 million subscriptions at the end of 2012, to 16 million at the end of 2013.
There are forecast to be 32.3 million mobile Internet subscribers in South Africa by 2017.
Within the home broadband market, which will grow its subscriber base by a CAGR of 8.6% over the next five years, asymmetric digital subscriber line (ADSL) will be the dominant technology due to demand for higher speeds and its relatively wide coverage.
PwC noted that Vodacom and MTN launched launched Long-Term Evolution (LTE) during the latter part of 2012, “setting the trend with the primary focus on business and wealthy residential areas before making the technology available to the mass market and expanding the coverage area”.
However, the financial services firm said that coverage remains limited.
It said that adoption of LTE services across all segments will help to ensure the continued growth of mobile broadband adoption in South Africa.
Vicki Myburgh, Entertainment & Media Industries Leader for PwC Southern Africa, said: “In South Africa, as in other markets worldwide, consumers’ access to entertainment and media content and experiences are being democratised by the expansion of access to the Internet and the explosive growth in smart devices.
“Even though traditional, non-digital media will continue to dominate overall E&M spending in South Africa over the next five years, much of the growth will come from digital.”
PwC said that the South African Internet advertising market is forecast to generate revenues of R3.7 billion in 2017 – up from R1.2 billion in 2012; a CAGR of 25.4%.
Search is set to remain the primary online advertising format in South Africa, although its share of online advertising will decline slightly over the forecast period, from 44% to 41%.
PwC said that online display advertising is being driven on by the ever-increasing number of Internet, and in particular Facebook, users in South Africa.
The group forecasts that despite the fact that mobile will cut into display’s share, it will still remain the second-largest Internet advertising segment throughout the forecast period, with the segment set to grow at a CAGR of 22.6%, reaching R1 billion in 2017.
Classifieds will continue to increase over the forecast period, growing from R112 million to an estimated R209 million between 2012 and 2017.
Interestingly, mobile advertising is set to grow at a notable CAGR of 37.8% over the forecast period, growing from R189 million in 2012, to R938 million in 2017.