Why Netflix invested more in South Africa than Nigeria

Netflix recently released a report showing its impact on the African market from 2016 to 2022, looking closely at three of its biggest markets South Africa, Nigeria, and Kenya.

The report showed that Netflix invested a total of $125 million in South Africa and $23.6 million in Nigeria, despite the latter, the most populous nation on the continent, having more titles (286) than South Africa (186).

The huge gap between the amount of money invested in the two movie industries raised concerns as some people have questioned why the streaming giants invested more in South Africa than Nigeria since the latter had more titles on the platform. Here are some of the reasons why Netflix invested more into South Africa than Nigeria.

Internet penetration

Netflix entered the African market in 2016, initially launching in South Africa and expanding to other African countries in subsequent years. The socio-economic market for Netflix in Africa has been steadily growing over the past few years, with an increasing number of households gaining access to the internet and streaming services.

Netflix’s towering investment numbers in South Africa can be attributed to several factors. Firstly, South Africa has a more developed internet infrastructure compared to other African countries, with a higher percentage of households having access to the internet.

As of 2022, the share of the total population of South Africa using the internet was nearly 80 percent, which is estimated to grow up to 90 percent by 2027. In Nigeria however, according to the Nigerian Communications Commission (NCC), broadband usage was at 44.5 percent as of July 2022, with a target of 70 percent in 2025.

According to the NCC, in February 2023, broadband penetration rose to 48.5 percent, with over 92.5 million internet subscribers.

SA’s number of commissioned titles

One of the key elements to take note of from the report is that South Africa had more commissioned titles than Nigeria. Within the period of 2016-2022, Netflix commissioned 16 titles in SA while Nigeria had just three commissioned titles.

Commissioned titles are a key part of Netflix’s strategy to keep its subscribers engaged and interested in its platform. By creating original content that can’t be found anywhere else, Netflix is able to offer something unique to its viewers and build a loyal fan base.

Netflix has been known to pay anywhere from a few hundred thousand dollars to millions of dollars for the rights to stream an existing film. The amount varies widely and depends on a number of factors, such as the film’s budget, production value, star power, and distribution rights.

In the reports, Netflix had 173 licensed films from South Africa and 283 licensed films from Nigeria. The Nigerian numbers are bigger but it’s cheaper to acquire a licence to stream a film than commissioning a film from scratch.

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Commissioning a film is more expensive and commands a higher budget. This could run from tens to hundreds of millions of dollars as the company is usually responsible for financing the production of the series or movie, as well as providing the platform for distribution.

It’s been reported that Netflix spends an average of $7.5 million per episode on its original series with the likes of ‘The Crown’ costing at least $13 million per episode while ‘Stranger Things’, which is one of the most successful original titles, cost $30 million per episode.

South Africa’s Netflix series ‘Blood and Water’ is the streamer’s biggest TV series yet in Africa spanning three seasons and a combined 19 episodes. Going with the numbers from titles from the United States, the average cost of the ‘Blood and Water’ series so far will be over $140 million.

The Nollywood industry in Nigeria may be on a trajectory of growth, thanks to commissioned works like ‘Blood Sisters’, ‘Anikulapo’, and the ‘Far From Home’ miniseries, but the South African film industry is more developed.

SA’s movie industry more developed

From 2016 to 2022, Netflix has experienced significant growth in Africa, with a particular focus on South Africa. In 2018, Netflix announced that it had surpassed the one million subscriber mark in the country, and in 2021, it was reported that South Africa accounted for approximately 55 percent of all Netflix subscribers in Africa.

South Africa has a more developed entertainment industry, with a thriving film and television sector that has produced a number of successful international productions. The combination of a rich history, strong infrastructure, diverse stories and characters, government support, and international recognition make the South African movie industry the best in Africa.

This has provided a strong foundation for Netflix to build on and has made it easier for the company to establish partnerships with local content creators and distributors.

In contrast, Nigeria, which has a larger population than South Africa, has a less developed and less established entertainment industry. This has made it more challenging for Netflix to gain the right amount of foothold needed in the country to establish partnerships with more local content creators and distributors.

However, Netflix has still invested in Nigeria, and since 2021, the company has signed multi-title deals with Nigerian production companies like Kunle Afolayan’s Production and Mo Abudu’s EbonyLife Studios to create and distribute original content in the country.

Local priorities higher in SA than in Nigeria

The priorities listed in the Netflix report for the South African movie industry include improving access to finance and investment, increasing South African shares of the local and global creative industry market, and enabling access to infrastructure with the latest digital technology.

It also includes the company developing an effective and efficient Intellectual Property (IP) rights management that enables investment, IP monetisation and protection, and equipping the creative industry in SA with leadership and skilled talent to increase competitiveness.

Whereas the priorities for the Nigerian movie industry are organising training focused on institutionalising international best practices in film production, expanding Nigeria influence through its licensed films and investing in local productions and uplifting the industry by developing skills and capacity building.

Overall, Netflix’s investment in South Africa can be attributed to the country’s more developed internet infrastructure and entertainment industry, which have provided a strong foundation for the company to build on.

However, Netflix’s investment in Nigeria and other African countries is expected to grow in the coming years as the internet infrastructure and entertainment industry continue to develop.