Netflix was the first global streamer to enter Africa in 2016. Since then, the streaming industry in Africa has been transformed by local players, global competitors, and new entrants. Yet, by the end of 2022, Africa had only 41 million pay-TV subscribers, and video streaming made up less than 10% of them. To stay ahead, these streamers had to transform themselves into revenue-driving machines to stay ahead in a very competitive environment. Netflix cut prices in more than 30 countries, excluding Nigeria in an attempt to attract more subscribers. The streamer also acquired local theatrical releases and collaborated with established filmmakers, to produce high-budget local productions. Amazon Prime Video implemented marketing techniques such as affordable subscription plans, a free seven-day trial, and increased investments in local content production. 

However, as the competition intensified in Africa’s streaming market, Netflix experienced the first decline in its history, losing some 200,000 subscribers globally. This is after the streaming giant had expanded its operations in Africa following the success of its local content productions. The streaming giant invested a total of $175 million in South Africa, Nigeria, and Kenya, with a focus on the SA film industry due to its more advanced infrastructural setup and potential for high returns. To appeal to more subscribers and generate revenue from ads, Netflix introduced a lower-priced, ad-supported plan. The plan has become very popular, as Netflix’s latest earnings showed that 40 percent of new subscribers opted for it. Netflix has been enhancing the plan, offering 1080p video and dual streaming.

The streamer took things a step further by cracking down on password sharing, something Netflix was notoriously known for embracing in a 2017 tweet. In Kenya, Netflix ended its free plan and canceled the memberships of those using it. Netflix did not give a clear reason for ending the free plan, but it looked like a strategic move to focus on converting users into paying customers. With the discontinuation of the free plan, users had to upgrade to one of Netflix’s paid plans if they wished to continue using the service. The estimation was that it would lead to an increase in the number of paid subscriptions, contributing to Netflix’s revenue in the region. After years of vying for subscribers, Netflix had to prove that streaming in the region was still lucrative.

However, this came at a time when low incomes and high food prices were increasingly affecting the disposable income and savings of potential customers. For example, in Nigeria, one of Netflix’s big markets, with more than 66% of Nigeria’s population being multidimensionally poor, and residents spending between 59% to 97% of their earnings on food, the pool of disposable income was becoming even smaller for SVODs to target. More people were opting for cheaper entertainment. Hence YouTube and Telegram also became big competitors for Netflix in Africa, with YouTube offering free and premium content, and Telegram contending as a top resource for pirated content. Then there was Nigeria’s volatile exchange rates which made it difficult (still does) to project how much international companies like Netflix can make from the Nigerian market. Last year alone, the naira lost over 40% of its value against the dollar.

By the end of 2023, Netflix, the previous market leader with more than 40% of the market share, lost its status to Showmax, a South African streaming platform and relatively newcomer. Amidst these concerns, Nigeria’s most famous indigenous streaming platform, Iroko TV, pivoted toward serving the diaspora because it made too little money from its home country. Amazon Prime, the other global streaming giant bullish on the African market, laid off staff and scaled back its local content production in Africa and the Middle East at the beginning of the year. Netflix’s moves didn’t do much to improve morale in a subscriber base hit, and yet, it still seems like it all worked in Netflix’s favor. 

In its Q4 2023 report, Netflix stated that it has added 13.12 million new subscribers and met its key financial objectives for the year. Middle East, and Africa region contributed 5.05 million subscribers, bringing its total subscribers to 260 million. On average, analysts expected Netflix to report about 8.8 million net new subscribers globally for the year-end quarter. A week ago, Netflix announced a $5 billion deal for WWE Monday Night Raw. The streamer plans to use WWE content to appeal to a younger audience that might not be attracted by its low price alone. This way, Netflix can access parts of the broader market that it would otherwise miss out on. And Monday Night Raw isn’t your traditional type of sports broadcast, “it’s “sports entertainment,” as Netflix co-CEO Ted Sarandos put it. Netflix has undergone a lot of changes to keep its edge in an increasingly competitive market, and it has no intention of stopping with the number of SVoD subscriptions in Africa expected to reach 18 million by 2029.

Elsewhere on Ventures

Triangle arrow