South Africa's pay-TV industry is set for continued growth in terms of both subscriber numbers and pay-TV revenues, despite the risks and threats from increasing online digital piracy and so-called over-the-top (OTT) services.
South Africa's total TV revenue as a fast-growing market will increase tot 4,4% of the total TV revenue within the Europe, Middle East and Africa (EMEA) region by 2017 - up from 3,7% in 2012.
Meanwhile the number of pay-TV subscribers in South Africa is set to rise from 4.5 million in 2012 to 6.3 million by 2017 in a country where 58% of all TV households are already pay-TV subscribers.
So reports and projects PricewaterhouseCoopers South Africa (PwC) which has released its fourth incredibly well-done and comprehensive, annual edition of what it call's PwC's South African Entertainment and Media Outlook Report (known as "The Outlook"), covering the period of 2013 to 2017.
Spanning as usual the internet, film, radio, newspaper publishing, music, video games, sport and books in different sections, the television section once again details vast changes taking place and shaping the South African TV industry, offering a credible 5 year future projection.
While the value of South Africa's TV sector - revenues generated by pay-TV, public licence fees and advertising in the country reached R27,4 billion in 2012, PwC's report estimates that television sector spend in South Africa will pass the massive R30 billion mark next year in 2014, and will continue to grow to a staggering R35 billion by 2017.
The PwC report expects advertising on television to increase as strongly in South Africa between 2013 and 2017, with net television revenues expected to grow at 5,8% to reach a massive R15,1 billion by 2017.
"The regulation of programme and sports rights is becoming a certainty with the new policy on broadcasting expected to be finalised by March 2014," says PwC, also noting that the SABC has been "severely weakened" by the ongoing management and governance crises at South Africa's public broadcaster.
"The roll-out of digital terrestrial television (DTT) will increase competition in the broadcast sector," says PwC, but notes that "indecision over the choice of technology, and more recently a legal challenge by e.tv have delayed the launch of DTT several times".
Still MultiChoice and its DStv pay-TV service is set to remain the dominant pay-TV player, although rival TopTV is now backed by China's StarTimes, and various new entrants are launching satellite television services.
"South Africa is the largest pay-TV market in Africa, with some 4.5 million pay-TV subscribers, representing 58% of all TV households in 2012. This is expected to increase to 6.3 million by the end of 2017," says PwC, noting that "both subscriber numbers and pay-TV revenues will continue to grow at an impressive rate in the next five years".
PwC says this will give South Africa a pay-TV household penetration of 74% - "very high by regional - and indeed by global - standards".
"Subscription revenues totalled R15.2 billion in 2012 and will reach an estimated R19.6 billion in 2017.
PwC says TV advertising in South Africa generated net revenues of R11.4 billion in 2012 which is set to rise to R15.1 billion in 2017.
"Only a fraction of this growth will come from online TV advertising, with most coming from organic growth in the broadcast TV market, fuelled by growing audiences, greater competition among broadcasters and advertisers for their attention and relatively favourable macro-economic conditions," projects PwC.
"In more mature TV markets the increased penetration of pay-TV services has reduced the share of the main broadcaster, so the SABC will need to adapt to this new competitive landscape to retain its TV share of ad spend."
"One development that could help to create new efficiencies in the South African TV market is the development of a new ad-coding system that is being developed by the SABC, DStv, e.tv, the AdvertisingMedia Forum (AMF), Nielsen and the National Association of Broadcasters (NAB)."
"Currently there is no standardised coding system, which for the South African TV industry leads to errors in ad flighting which are expensive for the industry to fix."
PwC says South Africa's TV industry will soon start to feel the impact of the forces which have shaped TV markets in other parts of the world such as rising subscription TV penetration, together with the growing uptake of free-to-air DTT services which will make more TV channels available.
"While this has seen audiences decline for the traditionally leading broadcasters, audience fragmentation has brought the potential for more effective and targeted advertising, with advertisers using niche channels and programming."
PwC says in its latest Outlook Report that "the changing expectations of viewers will increasingly affect the South African television advertising industry over the next five years".
"The sector is faced with a TV audience that is being fragmented by greater programming choice. This gives advertisers additional locations to place their messages, but has also led them to question the rates that they have been paying to the mainstream TV stations."
"Even by 2017 it is expected that in South Africa only 18% of households will have fixed-broadband access. The number with mobile internet access will grow more rapidly, but for most South Africans the best source of video content will continue to be traditional TV providers," projects PwC.
