Mobile Entertainment Africa 2011 Keynote by Mark Kaigwa


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At the One & Only Resort in Cape Town, South Africa at All Amber's Mobile Enterainment Africa Conference in August 2011, I gave this keynote on the Mobile Entertainment market and some trends and case studies from East Africa.

The main point: music discovery is still a big gap and micropayments/nanopayments are an underrated key to a successful mobile value added services product.

For more and where to comment, have a look at the blog post here on Mark: My Words

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  • Welcome to “SILICON SAVANNAH”Home to the iHub, Ushahidi, The IDEOS phone and the epicenter of the Mobile Money revolution.75% of East African countries have at least 1 mobile money operator present.
  • 14 Million Mobile Subscribers42% Mobile Penetration
  • 21 Million Mobile Subscribers47% Mobile Penetration
  • 26 Million Mobile Subscribers63% Mobile PenetrationAccording to the CCK when they published the last quarter’s rise of 12% to 25M was the highest seen all year.This can be attributed to a number of things within the market. Certainly competitively priced handsets from manufacturers and subsidies from Mobile Network Operators.
  • Since the beginning of the year approximately 400,000 IDEOS in the marketThe $100 smartphoneThanks to how Kenya Shilling is doing vs. The dollar is now $85The Android Marketplace blowing up. Google responds by including Kenya as one of localization nations for the Marketplace with local billing albeit no mobile money solution present yet.The drive for local apps has begun through Google’s Android Developer Challenge (ADC) where semi-finalists all get presence on the Android Marketplace and winners take home $25,000 for their local apps.
  • But more importantly, let’s see how the countries weigh up in the East African community. For most, Kenya remains the epicenter of those looking to penetrate the African market. A great market to observe to put your finger on the pulse of what’s going on in East Africa.
  • M-Pesa (M for mobile and Pesa – “money” in Swahili) Mobile payment platform that transferred $850M in 2010 according to Central Bank of KenyaTotal volume of transactions processed exceed s $9 BillionM-Kesho Stats: Partnership with Equity30,000 Registered Agents pioneering “Retail Banking”THE ECOSYSTEMWhat any mobile entertainment operator aims to do is connect two things: Sources of money to uses of money.Sources:AirtimeMNO WalletsBanksUses:Information ServicesMediaJBB Research in a report projected the Kenyan mobile entertainment market to be worth $165M by 2013The Value Added Services estimates for they year from several industry voices remain slightly skeptical:Current estimates of Digital Music in Kenya stand at $12MVAS industry is closer to $40M
  • Welcome to the Nano-economy. Malipo Pole Pole – Swahili for “Paying slowly” pioneered by Cellulant to allow people to make micropayments for music downloadsOkoaJahazi – Swahili for “Save my ship or Save me” Airtimeadvance of between 10,20,50,100SkizaMicrobilling OptionsAt their launch, the charges were Ksh. 20 a month. There wasn’t as much traction as anticipated.Note: the Highest denomination in the country (on the Safaricom network at least) isKsh. 10 ( $10c)They switched to a microbilling model of Ksh. 5 a week.Success.Point: Microbilling for entertainment breaks it down to smaller manageable payments that appeal to the lower levels of the market who still want to consume content just need a more flexible structure to pay for it.
  • This is David Mathenge, known to many as Nameless. The artist derives his value from strong hit singles and follow up appearances, endorsements and his own business ventures funded by his brand. He doesn’t need to release an album because the mechanics of the market don’t support artists through album sales.Piracy accounts for 95% of music sales. The best an artist is going to do is 5%. There’s typically a 2 week window for pirates. This is because once a song’s discovered to be a “hit” it works its way through the system including a trip across the border where it is mass produced and copied to return and flood the grey market across Kenya.Point: The Music Value Chain is messed up.The Music Copyright Society of Kenya has lost the trust of the artists and the mandate to prosecute and act on their behalf thanks to wrangles and mismanagement. This leaves Premium Rate Service Providers (PRSPs) to connect directly to artists or labels and make arrangements directly.You can innovate around this dilemma or you can innovate to solve it.To solve the dilemma one needs to look at the challenge for artists. The challenge for the artist is the capital to fund the hit single.One company innovating the landscape of the industry is Cellulant. With their “Studio to Deck” program they’ve used their connections and partnership with financial institutions to connect artists to finance and capital to produce singles with a revenue split and digital music rights to Cellulant to deliver the content through their system.
  • Flint East Africa’s mobile lotteriesIt started initially as “SMS 6868” charged at Ksh. 50 per SMSIt changed with no notice to “SMS 6969 charged at Ksh. 69 per SMSTheir “reward” was over $12M in 3 Months after which the lottery was renewed and they generated large revenues once again.Thanks to a lack of firm regulation and a gap in enforcement between the Betting Control and Licensing Board (BCLB) and the Communications Commission of Kenya, Flint East Africa changed the game mechanics from a simple SMS entry mechanic to a questionnaire format that charged for each answer into the game, multiplying revenues at the expense of the end userSome estimates say they were making at least Ksh.120,000,000 a day.With over $1.2Bn in 3 months the Kenya Anti Corruption Commission stepped in and began investigations that remain inconclusive into the ownership, structure, charity payment (every lottery must pay 25% of profits be donated to charity, of which this was never fulfilled)One interesting end result of this was that everyone within Flint’s supply chain began some sort of play into the lottery space. The television station partners began their own SMS lottery games using their media coverage and audiences, notably KTN, NTV and currently Citizen Television.Mobile network operators who had revenue share agreements with every mobile lottery also launched their own with very similar game mechanics, banking on the trust they have with their audiences.
  • Further up, another bottleneck is lack of capitalNokia: About 30 apps have been reportedly been created by Kenyan developers for the Ovi Store. About 99% of those are locally focused. Nokia is actively promoting these apps on billboards, radio and traditional media on behalf of the developers in an attempt to compete with Android and Blackberry and in the app landscape (though neither has made any such efforts as yet besides just device volumes)Conferences investing in this gap of success stories of apps and startups over the past few months have includedPivot25 Conference:$75,000IPO48: €40,000With IPO48’s investments all being in the media and entertainment space, the Estonian/Danish investors recognise the opportunity and are pushing these developers and startups to produce content and working with mobile operators to begin to deliver it to the Kenyan market.
  • Delivery is key:At Mobile Network Operator level Safaricom is trying to address thisLast year they launched a partnership with Opera Mini, the popular mobile browser.And a few months ago launched a first, a white labelled option of the popular browser “powered by Safaricom Live”This pointed to Safaricom’s existing portfolio of value added services but a source at Safaricom pointed out that this would change to become more of a mix of Safaricom’s portfolio and what’s popular on the Opera Mini service since this was a pilot phase.According to Opera Mini’s State of the Mobile Web and their recent survey on Social Networks use on the Opera Mini platform, Facebook accounts for67% of all pageviews in social media (and since Facebook is the #1 accessed site in Kenya it therefore accounts for 67% of all pageviews on the mobile web)However, “social” is yet to be integrated as part of the fold in spreading and delivering content especially popular content such as music.
  • Delving into Music Discovery and giving better access to news and information services that can link up social and music discovery will be “right on the money” for the future of content across the continent.
  • Mobile Entertainment Africa 2011 Keynote by Mark Kaigwa

    1. 1. 14 Million 42% M.P.
    2. 2. TANZANIA 21 Million 47% M.P.
    3. 3. KENYA• Subscribers – 25 Million 26 Million• Mobile penetration – 63% 63% M.P.
    4. 4. “Kenya is an economic powerhouse in East Africa and its mobile telephone market is ranked as one of the most competitive in Africa.” Eeva Nuutinen, FinPro Project Manager
    5. 5. Shukrani | Thank You | Asante @mkaigwa