LED screen market to Africans

Alan Joy

The digital LED screen business in South Africa is booming, and digital media network operators are looking to expand across the continent. Alan Joy profiles the market and the companies. Alan Joy is the head of Video Communication Consultants, which provides consultancy and research to the digital signage industry.

With the long distances between major cities and to in South Africa, banks, retail chains, fast food outlets, hotels and petrol stations all have branches across the country which present opportunities for LED screen networks.

After an initial growth period three to four years ago the South African digital media network market is going through the same stages we have been through in the UK - asking “How many people does it reach?” and “How effective is it?” Research still needs to be done on footfall, providing advertisers with meaning audience figures to attract brands.

South Africa has a population of 45 million (only 3.4 million of whom are white), but many live in rural tribal areas, so the number of economically active people is some 16-18 million, of whom 30 per cent are unemployed. Although only 10 per cent of the working population (1.1 million) earns more than R8000/month ($727), with the current business growth that South Africa is experiencing there is a new black middle class consumer entering the market place for houses, cars and luxury goods.

The players - Primedia

Primedia Unlimited is part of Primedia Outdoor, a division of the largest outdoor advertiser and cinema chain in the country. Primedia Unlimited was started to focus on growing media sectors and it has grown its digital media division by purchases which include Rank TV and FTN.

Rank TV is a network of 10 giant LED screens situated at black taxi ranks throughout Johannesburg. These LED screens are seen by 1.3 million passengers a day waiting for a taxi to take them to and from the townships. They show a mixture of sport, music, news and entertainment. But although Unilever says it is the best and most effective advertising medium it has used Primedia says it will not be expanding the LED screen network, citing the high capital cost of the installations.

Forecourt Television Network (FTN) is a network of 40 petrol station sites with large LED screens viewable from the pump lanes, and other screens situated in the forecourt shops. Since its purchase Primedia has decided that it is not a viable network and will not be expanded.

LED screen of FTN network LED screen of FTN network
LED screens of FTN network

Primedia also has a contract to supply digital screens in the domestic terminal at Johannesburg International Airport. Primedia Outdoor has recently stunned the digital media network market in South Africa by paying £2.5m to take a 25 per cent stake in design and graphics company Barrows and Merchint which wants to expand into the digital signage market, but as yet has no track record.

The players -TBM Communications

TBM is the most experienced and well established digital media network company in South Africa. It has been operating for seven years and has specialized in government contracts, airport networks, banking, gyms and golf shops - most on a managed services basis, so it doesn't rely solely on advertising revenue.

Its media sales division is now being asked by other networks to sell space, which gives TBM a critical mass of sites that few other network provider can compete against. TBM is developing hotel and travel based networks which link in with its newly-acquired TV channel SA-Direct TV - a channel promoting and advertising tourism and business in Southern Africa - which will begin transmitting on Sky in the UK in early 2007. TBM will sell all the media space for this channel as well as providing the content.

With TBM's black empowerment credentials and the appointment of senior black management, it is actively helping government and municipality departments to develop customer facing screens for information delivery and back office screens for staff training.

The players - Ethniks

The major reseller of Scala software in SA, Ethniks has been developing digital media networks over the last three years in the retail, health, and post office markets.

Ethniks has been awarded the contract to roll out screens in 1 600 post offices on a “you install, run and pay for the network and give the Post Office a percentage of airtime and advertising revenue” basis. So far 100 sites have been rolled out. Revenue is mainly being generated by advertising sales and funding from agencies such as Aids Awareness, whose programs are shown on the network.

Ethniks also provides IT services to the medical and education sector across the whole of Southern Africa, so its connections enable it be the major digital media network supplier in these areas. It has also been working on pilots in the retail sector. It has had a 16 site trial running with Woolworths (SA's equivalent to Marks & Spencer); and it has a trial running with Ellerines, a major countrywide furniture store chain which could roll out to over 500 stores. It's another ‘you install and run the network at your own cost' venture. Ethniks is also working with PicknPay, South Africa's equivalent to Tesco in trialing a network, and it has taken on Bill Pennel (ex head of Tesco TV) as an advisor.

The players - smaller groups

As well as the three large operators, smaller groups are beginning to make an impact. They include:

  • Omega Media Wave, a new systems integrator which is the main reseller in South Africa for NDS software. It has just installed a digital screen network in 200 Toyota dealerships.
  • Spectrum Visual Networks SVN was formerly part of Spectrum, a leading outdoor advertising agency. SVN has installed digital projectors in 15 Primedia Cinemas across the country and supplies commercial advertising for Cinemark - Primedia's cinema advertising arm. It sees itself as a systems integrator not a content provider, and says it does not see the real benefits of digital screens outdoor, as the initial capital cost far outweigh backlit poster screens, which are very popular and just as effective.
  • AirMedia Broadcasting provides in-store radio and TV services to retail chains in Southern Africa. It also produces radio and TV content and supplies, finances and maintains all equipment in stores. It developed FTN.

LED screen outdoor advertizing

Apart from Rank TV and Forecourt TV, the only major company using digital screens outdoor is Alive Advertising, which has 20 large LED screens at major road junctions around the country. The Alive Advertising giant outdoor LED screens offer the largest coverage in South Africa reaching over a million viewers a day. Although very effective in daylight and at night, the capital cost is very expensive for the possible revenue return. So it is not a market that is expanding rapidly. Clear Channel has looked at LED screen opportunities in South Africa but as yet has not progressed this market.

Looking ahead

South Africa offers exciting opportunities for digital media network owners, systems integrators and production companies. With a very buoyant economy and a new middle class of black consumer emerging who is very receptive to screen advertising, it is very much a growing market.

Government and municipal agencies are also looking for digital signage solutions. The South African revenue service has been operating one with TBM for three years. As more South African companies move into other parts of Africa networks will expand - Standard Bank is already planning a digital media network stretching as far afield as Lagos in Nigeria, and Nairobi in Kenya.

The distances are of USA proportions and cause all sorts of communications problems which only satellite can solve. Besides providing two way data services and visual communications, the requirements for training and distance learning across networks are very real.

Several South African entrepreneurs are already looking at these opportunities and black empowerment money is very keen to invest in African communications services - making South Africa an attractive place to be for digital media service providers.