What are African media startups doing wrong?

Olawale Adetula
Jul 20, 2017 · 8 min read
Image via: thenextweb.com

Let’s begin with a story. Yesterday, Imoh Umoren tweeted a question: What was your first job? To this, I replied, a VB programmer at a software development firm. What I left out of my response was the year I got this job and the story behind it. It was 2001, I had just graduated from secondary school and while waiting to resume Uni, I applied for what was supposed to be a summer internship at WADOF Software Consulting. (If you know Systemspecs, you should know them) I was surprised I got accepted despite my average Visual Basic skills. One of the co-founders later told me he also liked my passion for developing clean, user-friendly interfaces.

My time at WADOF opened me up to the tech world and by the time I was leaving for Uni, I was already a Microsoft Certified Professional (we read the old school way back then, without dumps). I started playing around with other languages, C++, Java and so on. By the time I got into Uni, I fell even more in love with the web and so I moved on to PHP, CSS and MySQL. During my first year in Uni, I joined up with four of my friends to start a web design and development company called Icebox Studios.

The more I explored the Internet, the more my creative side grew. I lived on sites like thefwa.com and worshipped Hall of Famers like Eric Jordan of 2advanced Studios, Robert Lindstrom of North Kingdom. Naturally, I took up Adobe Flash and started writing Action Script. At the time, Flash was the perfect tool to capture the two things I loved, design and development. By my third year in Uni, our team was down to two — Segun Afolahan (now cofounder at Sendbox) and I. We restructured the company, incorporated and threw everything we had at it.

By 2008 we closed an investment round that left us with more money than we knew what to do with. I won’t give specific details but imagine two young boys in their early 20’s employing about 10 people with a fully furnished office in Ikeja complete with official vehicles and the works. We had clients from telcos to state governments. Yes, the ‘tech world’ definitely did a lot of good for me and I owe a lot of what I am today to those early days.

I moved on from Icebox because my creative side was still restless. After majoring in Media and Communications for my post grad, I knew I wanted to commit my future to all things media. I founded The Naked Convos in 2010 and I’m thankful for growth, which saw the launch of TNC Kenya last year. Both sites are now owned by Helium Media, a company dedicated to helping African content creators monetize their talent.

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While doing my daily newsletter round, I read from the guys at Techcabal that TLcom has released an open-source database of (African) investors for African entrepreneurs. I’d taken up more interest in TLcom recently not just because of Omobola Johnson (who I’m a silent fan of) but also because they closed their Africa tech fund (TIDE Africa). I quickly clicked on the link to THE SPREADSHEET not really knowing what to expect. At first I was surprised to see 83 names on the list. And then I started going through the rows in detail. The major column that got my attention was the “Sector Focus” one. After I went over the list a few times, I was not surprised to see the same values recurring in the column — “Fintech, eCommerce, tech this, tech that….” For the benefit of doubt, I searched the document for the word “Media” and again, not to my surprise, it only came up once in the sector focus column.

I must admit that I have jealously observed the recent growth experienced specifically in the Nigerian tech space and I find myself asking why the same is not happening for media (please note that I use this term loosely as it includes sectors like digital publishing, SVOD, Nollywood etc). Perhaps for a sector like Nollywood, it once enjoyed a similar buzz but lost out or didn’t take advantage as posited by Naz Onuzo (Producer — Wedding Party, Arbitration) here.

Why didn’t institutional investors come in then? The short answer is that they did and they lost pretty much all their money. The distribution in those days was run by the marketers and was conducted primarily via informal channels, which sold VCD and DVD copies across Nigeria. The institutional investors had no way to track sales and to stop piracy. They got burnt and they went away. — Naz Onuzo

With the likes of 234Next and HiTV in Nigeria, you can argue that entrepreneurs in the media space haven’t exactly given great accounts of themselves when given the opportunity. But not only are those single stories, we’ve also had time to learn and move on from them. Things have changed significantly over the past couple of years so why aren’t the investors coming back to say, Nollywood? And how about the other sectors like Digital Publishing? We all read about Linda Ikeji turning down a $2m partnership investment offer in 2016 but with all the other decent platforms existing in Nigeria and the rest of Africa, why aren’t we seeing a lot more interest?

Let me give some context for you to better understand how much things have changed. I got the stats below from engaging various players in Nollywood:

In 2008, there were 4 cinemas in Nigeria with attendance totaling 492,474. By 2015, that number had risen to 24 with box office receipts totaling $13 million. In the same year, over 2.7 million movie tickets were sold in Nigeria. Non-ancillary sales like VOD, iROKO, Netflix and more recently, Amazon, Global TV Rights, Tecno, inflight entertainment bring in another 30–60% of box office revenue.

30 Days in Atlanta reportedly cost N24M to produce and made over N137M from ticket sales at 16 cinemas. Fifty reportedly cost N40M to produce and promote. It made N94M in cinemas and the Netflix deal was estimated at $250,000

Taxi Driver (Oko Ashewo) which was not properly managed and promoted reportedly cost N13M (production + marketing + advertising) and made N22M at the box office, and an additional around of N25M, which came later in ancillary sales.

Couple of Days was shot in four days. Cost N4M to produce and grosses N22M at the box office. Wives on Strike reportedly had a N9M production cost, released in April 2016 and in its first three days, grossed N15M. By June, it had made N70M. Its Netflix rights deals was $85,000

And of course, sitting at the top of the highest grossing Nigerian films list is The Wedding Party, which has made N453m till date. Fluke? One-off? Time will tell but I remember a conversation I had with one of the founders at Inkblot (one of the production companies involved with the movie) shortly after the cast was announced. My guess was between N200 — N250m; little did I know. How did I know? I’m certainly no prophet or anything because I wasn’t the only person who predicted the success of the movie. As risky as the media business can be (sometimes), with experience (especially in Africa), you know what to expect from the right recipe of story, cast and promotion.

Earlier this year I worked on my first production, Our Best Friends Wedding; a romantic dramedy initially scripted as a feature film. After unsuccessfully shopping the movie around for two years, we ended up partnering with RedTV to run it as a web series. Production and marketing budget ended up around N18m (we spent a lot on digital promotion, especially outside Nigeria). The 11-episode series has so far garnered over 2 million views on the RedTV Youtube channel. That’s an average of 180k views per episode. Let’s put number of unique viewers at 25% of that figure and we have 45,000. Charging N1000 (say at a cinema) per viewer means we’d have ended up close to breaking even. From my findings, current revenue split is around (43% — producer, 4% — distributor, 53% — Cinema).

Of course this is an over simplified projection which does not take many other variables into account but I went through the exercise to give you a fair idea of the numbers many investors claim they just can’t understand. Even for digital publishing the story is the same. At Helium, we have turned down offers from two different investors and engaged others who after gaining access and analyzing our numbers still either conclude they don’t understand them or want to steer the company in a completely different direction.

In 2021, there are projected to be 50 cinemas in Nigeria with expected receipts at $40 million. These are numbers no one can argue with. On the flip side, you read news of apps like JR Kanu’s REACH (which is ‘free’ by the way) and with about 1k users raising money. If Reach had as many users as the footprints to one cinema in Lagos for a movie like Wedding Party, I wonder just how much more it’d raise. It’s almost as if investors have zero confidence in media.

Our work at Helium allows me to interact daily with content creators, most of whom will tell you they never imagined they could get paid for what they’re doing. I’m talking bloggers, writers — short and long form, Youtubers, Instagramers and the likes. Most of them are young everyday Africans who picked up a pen and paper or a smartphone (most times out of boredom) and started creating magic. The basic elements required to create content and join the media ecosystem are a pen and paper or maybe just a smartphone. For tech, whether you’re a front-end designer or developer or a python programmer, you need a computer — preferably a laptop. A quick check will tell you the average cost of a laptop is about $250. After you buy the laptop you need to acquire the required skills. Andela won’t accept everyone and existing startups can only accept so many ‘interns’ from the pool of our 60m youths in Nigeria. And don’t get me started on the non-existing infrastructure with which these tech solutions will run.

Recent news of Ghana’s OMG Digital raising $1.1m in seed funding almost brought tears of joy to my eyes. I always get this reaction whenever startups in the media space experience growth and we’ve had only a handful of those recently too — s/o to my guys at Big Cabal. It means more jobs, less young Africans (with no ‘tech skills’) on the streets and win-win for Africa as a whole.

After all is said and done, both tech and media can and will contribute to the development of our continent but based on available data, it will benefit investors if they not only focus on one industry because of the potential massive payoff — there can only be so many Facebook’s but there sure are going to be many more Wedding Parties to come.

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Olawale Adetula

Written by

Founder — Helium Media & The Naked Convos. Passionate about helping African content creators monetize their talent.

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