ANALYSIS: The Unstreamed Potential: Challenges facing Nigeria’s streaming market

With its large user base and thriving entertainment sector, Nigeria appears to be the ideal market for streaming services.

Recent conversations, however, have focused on the withdrawal of certain foreign companies that are reducing their activities or leaving the market entirely.

Nigeria’s economic reality and infrastructure constraints are the main causes of these issues, which make the present streaming business model essentially unsustainable.

Key Challenges for Streaming Businesses in Nigeria

Economic Pressures and Market Realities: Nigeria’s economic difficulties are not unique to the streaming platforms; they are part of the larger media sector. Inflation has reduced the purchasing power of consumers, while ongoing currency devaluation has raised business expenses. International businesses frequently discover that their financial forecasts don’t match the harsh reality of the Nigerian market. A $3 Netflix Mobile subscription, for instance, was worth ₦1,200 in 2020. Currency devaluation has caused that same $3 subscription to only yield $1.3 today, but the Naira equivalent has increased to ₦2,200.

High Data Costs: Although streaming requires a cheap and easily accessible internet connection, data is still pricey in Nigeria. Many people cannot afford streaming video since they mostly use pay-as-you-go mobile data plans.

Restricted Payment Options: The majority of streaming services involve card payments, which are not very common in Nigeria. As with e-commerce platforms, the infrastructure for card payments has had difficulty becoming widely used. Cash-on-delivery has been used by certain companies to solve this problem, but streaming platforms don’t offer similar solutions, so many potential customers are left unmet.

Unsustainable Revenue Models: Comparing Local Reality with Global Content When compared to the expense of creating and disseminating excellent local content, streaming is not economically viable in Nigeria. Despite the fact that certain African programming has done well internationally, streaming services gauge performance by comparing local investment to local subscriber counts.

This metric makes sense – content produced for a local market must generate sufficient local revenue to justify its cost. Unfortunately, Nigeria’s economic constraints often make this equation unworkable.

Think about the price of putting a major production into production: Even with services like Netflix or Showmax, the local subscriber base is too small to afford the costs of producing and promoting (advertising) an A-list film or television series, which can cost up to $0.5 million (₦0.8 billion). Furthermore, platforms’ finances are further strained by the need to invest extensively in promoting local content in order to achieve momentum.

Even while some African titles are becoming well-known worldwide, striking a balance between local relevance and financial viability remains a struggle.

What’s Next for Streaming in Nigeria?

Notwithstanding the difficulties, the Nigerian market is still feasible. A model for getting around regional obstacles is provided by the fintech sector. USSD technology is widely used in Africa, and platforms like Kenya’s M-Pesa show that customized solutions may be successful there.

Among the solutions suggested are:

Telco Collaborations for Zero-Rated Content: MTN and other telcos can play a key role in increasing the availability of streaming services. A significantly wider audience may be able to access streaming if material were zero-rated, which would mean users wouldn’t have to pay for bandwidth. Additionally, platforms might get beyond the restrictions of card payments by incorporating subscription fees into mobile wallets or telecom billing systems.

Platforms should concentrate on creating content that appeals to Nigerian viewers at a price that is in line with the reality of the market by using localized content strategies. These shows might not be popular worldwide, but they might bring in a steady income in their local communities.

Content creators might strive for internationally competitive productions that draw in subscribers from other countries in order to scale for global audiences. On the other hand, this strategy is riskier and demands a large investment.Solutions that have been proposed include: