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Mobile phones
   transform
Kenyan publishers
on
          ya           ile
                                          g
                                       hin a              ati
       en text      ob tion         lis                r m le
     K n          M lu           ub eny           n sfo vitab
        co           o          P K            Tra s ine
    in            rev             in              i




                 Strategy Boutique Thaesis




     Kenya
Research briefing
                     January 27, 2011
In this research briefing you will read about...
1. importance of the mobile phone becoming the main gateway for
   communication, money transfer, information, and commerce in
   Kenya;
2. trends and developments in the Kenyan mobile services industry
   including innovative new initiatives within the Kenyan context;
3. the structure and challenges of the Kenyan book and newspaper
   publishing industry;
4. online and mobile initiatives of Kenyan newspaper publishers;
5. the inevitable transformation of the Kenyan publishing industry
   driven by fierce competition of disruptive mobile substitute
   information and commerce service providers.
Content
                      1   Statistics and images explaining the Kenyan context              6-13
          ya
        en text
      K n
         o
     i nc


                      1   Drivers, solutions, and statistics of mobile communication      15-19
                      2   Drivers, solutions, and statistics of mobile money transfer     20-24
            e
         bil on       3   Mobile phone as a gateway for information and commerce          25-29
     Mo luti          4   Trends in the four mobile segments                              30-61
        o
     rev

                      1   Kenyan book publishers are educational publishers               64-68
                      2   Future of education is e-learning                               69-74
           g          3   Book publishers are in a Catch-22 with the government           75-77
       shin a
    bli eny           4   Kenyan newspaper publishers are media publishers                78-88
  Pu K
    in                5   Online and mobile initiatives of newspaper publishers           89-97
                      6   Two strategic challenges for Kenyan publishers                     98


                  n
                      1   Transformation is inevitable for Kenyan publishers            100-104
            a tio
                      2   Learning from and utilization of mobile success stories       105-106
     sf or mtable
  an nevi
Tr s i                3   Opportunity for local content in niches                       107-110
   i
                      4   Transformation strategy is required                           111-114
Kenya in
                           context
Later:

                                          on
     ile
                      g
                   hin a              ati
  ob tion       lis                r m le
M lu         ub eny           n sfo vitab
   o        P K            Tra s ine           Source: Central Bureau of Statistics, 2010
rev           in              i
                                               Photos: Thaesis/Koen Voermans
Beautiful nature and therefore tourism
21% of people live in urban environments
44% of people is younger than 14 years
510 euro is the GDP per capita
Bad road, water, and power infrastructure
8.1% of rural households have electricity
Strong local culture with local needs...
...and strong tribal bounds with rural areas
Mobile
                       revolution
Before:       Later:

                                           on
      ya
                       g
                    hin a              ati
   en text       lis                r m le
 K n          ub eny           n sfo vitab
    co       P K            Tra s ine
in             in              i
                                                Photos: Thaesis/Koen Voermans
50% of the people have a mobile phone
<--- Communication --->
<--- Communication --->
         Drivers:

      Cheap handsets
         Batteries
     Wireless networks
     Low calling rates
      Many resellers
Usage:

Connect with friends      Connect with relatives
                   Sell goods
  Inquire prices              Finding a job

   <--- Communication --->
                   Drivers:

             Cheap handsets
                Batteries
            Wireless networks
            Low calling rates
             Many resellers
20 mil.
                                mobile subscribers in Kenya
                                20


                                18
Mobile subscribers (Millions)




                                16


                                14


                                12


                                10


                                 8
                                     SEP07 DEC07 MAR08 JUN08 SEP08 DEC08 MAR09 JUN09 SEP09 DEC09 MAR10
                                Source: Communications Commission of Kenya, 2010
70% of Kenyans use mobile to pay
<--- Money transfer --->
<--- Money transfer --->
           Drivers:

     Mobile penetration
   Hardly any bank accounts
           Simplicity
        Cost effective
         Many agents
Usage:

Pay to remote areas     Save money securely

           No transport costs

 Pay for goods        Transfer to relatives

   <--- Money transfer --->
                 Drivers:

         Mobile penetration
       Hardly any bank accounts
               Simplicity
            Cost effective
             Many agents
13.5 mil.
M-PESA subscribers and 20,000 M-PESA agents




Source: Safaricom, 2010
Anything else?
You bet!
Mobile phone as a gateway for ...



  Communication               Money transfer
... information and commerce



  Communication                Money transfer




    Information                 Commerce
Information                    Commerce


                 Drivers:

                3G networks
                Smartphones
            Mobile applications
         Local developer community
          Low internet penetration
Trends in four mobile
      segments
Communication        Money transfer
     Price wars
   Social networks




 Information          Commerce
78%
market share of telecom provider Safaricom

                   5%
             6%

     11%




                                    Safaricom
                                    Airtel
                          78%
                                    Orange
                                    Yu

Source: Safaricom, 2010
Price war
increased competition among telecom providers




1. Call rates dropped to 3-4   Kenyan Shillings per minute



2. SMS rates dropped to 1-2    Kenyan Shillings per message
996,180
Facebook users in Kenya




Source: Socialbakers, 2010
Active
use of social networks for many purposes

                          56 percent                             6 percent
                           contributed to a
                                                                   got a job
                             discussion




          69 percent                          40 percent                         56 percent
         uploaded photos or                                                      joined a brand fan
                                              clicked on an ad
               videos                                                                  group




                          48 percent                             12 percent
                        met in person with an                    met and dated
                              old friend                           someone


Source: TNS Research International, Digital LIfe project 2010
Communication   Money transfer
                      Banking
                   Point of Sales
                  Online shopping




 Information     Commerce
Money transfer extends to banking
Money transfer extends to point of sales
Money transfer extends to online shopping
Many players try to claim online domain
Communication        Money transfer




 Information          Commerce
   Data Collection
    Notification
      Content
Data collection: from consumers send to content provider




Consumer Consumer Consumer Consumer                        Content provider
Data collection: from consumers send to content provider




Consumer Consumer Consumer Consumer                                         Content provider

Notification: from content provider send to subscribers




 Content provider                                         Consumer Consumer Consumer Consumer
Data collection: from consumers send to content provider




Consumer Consumer Consumer Consumer                                           Content provider

Notification: from content provider send to subscribers




 Content provider                                         Consumer Consumer Consumer Consumer

Content: by consumer gathered from content provider



               Consumer                                          Content provider
Information services for different industries

                 Education                 Retail            Agriculture

   Data        Questionnaire answers
                                           Reviews             Stock levels
 collection                                Ratings             Market prices




                                                               Market prices
                   Exam results           Promotions
Notification     Schedule changes       Product arrivals
                                                               Weather alert
                                                               Health alert



                                       Product catalogue
                    Animations
                                        Opening hours       Crop rotation advice
  Content            E-books
                                          Directions        Health information
                   Presentations
                                       Business directory



                                                            And many more....
Mocality: innovative business directory
3707: events, matatus, movies, exchange
Ushahidi: data collection and visualization
M-Farm: market prices and weather alerts
Yoza: cellphone stories from South Africa
Jumuika: vouchers and product offers
Communication   Money transfer




 Information     Commerce
                  Business services
                     Webshops
                     Classifieds
Four
barriers for online or mobile commerce


1. Lack of   trust


2.   Social shopping culture


3.   Supply chain management issues and dificulties


4. Lack of a single payment solution
Three
applications of mobile commerce


1.   Businesses offering their goods online


2. Retail organizations offering goods in Webshops


3. Consumers or businesses advertising products
   and services in Marketplaces
Business: book and pay flights
Business: collect school fees
Webshops: books, media, and technology
Webshops: buy abroad deliver in Kenya
Classifieds: offer and find cars
Classifieds: or many things more...
10+ trends of the mobile revolution



  Communication               Money transfer
         Price wars                  Banking
       Social networks            Point of Sales
                                 Online shopping




    Information                 Commerce
       Data Collection          Business services
        Notification               Webshops
          Content                  Classifieds
Publishing in
                Kenya
Before:                      Later:

                                        on
      ya          ile               ati
   en text     ob tion           r m le
 K n         M lu           n sfo vitab
in
    co
             rev
                o        Tra s ine
                            i
                                             Photos: Thaesis/Koen Voermans
Kenyan publishing
       =
     books
       +
   newspapers
Book publishers are educational publishers
2009
Education in Kenya in numbers


  Preprimary                  Primary            Secondary          Universities

   1.9 million              8.8 million          1.5 million          177,735
    children                 children             children            students

38,247 schools            26,667 schools        6,971 schools       31 institutes
      of which                  of which             of which           of which
  23,823 public and         18,543 public and    5,019 public and     7 public and
    14,424 private            8,124 private        1,952 private       24 private



92,955 teachers 171,301 teachers 43,016 teachers                           -

Source: Kenyan Ministry of Education, 2010
Textbooks
only viable (book)publishing products


1. Government funded textbook market has a large market                 size
             “Textbook market is 80 percent of the in total estimated
              50 - 75 million euro large Kenyan publishing market”



2.   Lack of a general reading culture and therefore no
     general books market
            “We once organized a book signing event in a supermarket.
                  People were coming in with pencil and paper,
                        not being sure who had to sign.”
80%
market share of seven biggest publishers




                                           }
KIE
Kenyan Institute of Education controls textbook market


                           1. Publishers offer their educational
                              books to the KIE


                           2. KIE, based on the curriculum,
                              reviews and approves the books


                           3. Approved books are published in a
                              yearly catalog and can be sold to
                              schools
The future of education
     is E-learning
Government leads e-learning innovation
And many more....


Government partners with private firms
E-learning is installing hardware
E-learning is content fit to the curriculum
E-learning is mobile
What does this mean for
  book publishers?
Publishers are controlled by the government




    Funding of                             Leading
 textbook market                      transformation to
     and most                         e-learning market
important source                        with disruptive
    of income                            competitors
Strategies by publishers to solve the paradox


1.   Digitize textbooks for e-learning solutions


2. Improve the reading      culture to stimulate general books
   market



3. Selling through new channels including supermarkets and
   saloons
Newspaper publishers are media publishers
123
                               radio stations make up the Kenyan media landscape
                               125


                               100
Number of stations or titles




                               75


                               50


                               25


                                 0
                                              Radio     Television   Newspapers

                               Source: Synovate, 2010
23%
                           annual growth rate of radio stations over the last 10 years
                           125


                           100
Number of radio stations




                           75


                           50


                           25


                             0
                              2000    2001    2002   2003   2004   2005   2006   2007   2008   2009   2010

                           Source: Synovate, 2010
70.6%
             of households in rural areas possess a radio
             100.0%


             80.0%


             60.0%
Households




             40.0%


             20.0%
                                                                            Urban
                                                                            Rural
                0%                                                          Total
                             Radio              Television   Mobile phone
             Source: Central Bureau of Statistics, 2010
90%
                             of men and 77% of women listen to the radio at least once a week
                             100.0%


                             80.0%
Weekly usage of mass media




                             60.0%


                             40.0%


                             20.0%


                                0%
                                        Listens to radio Watches television Reads newspaper   All three   None

                             Source: Central Bureau of Statistics, 2010                                      Men
                                                                                                             Women
83%
of advertisement space is placed on radio


                     2%
                      0%
             15%




                                     Radio
                           83%       Television
                                     Print
                                     Cinema

Source: Scangroup, 2010
209%
                              growth of gross advertisement exposure since 2006
                              50



                              40
Kenyan Shillings (billions)




                              30



                              20



                              10



                               0
                                        2006           2007            2008           2009            2010
                              Source: Synovate, 2010
                              Note: 1 Euro is 107 Kenyan Shillings, the total advertisement exposure in 2010 is 390 million Euro
301,488
                                         daily newspapers are distributed every day in 2009
                                         350,000
Average circulation (daily newspapers)




                                         300,000

                                         250,000

                                         200,000

                                         150,000

                                         100,000

                                          50,000
                                                                                                           Total
                                               0                                                           English
                                                2004          2005           2006     2007   2008   2009   Swahili

                                         Source: Central Bureau of Statistics, 2010
336,635
                                          weekly newspapers are distributed every week in 2009
                                          350,000
Average circulation (weekly newspapers)




                                          300,000

                                          250,000

                                          200,000

                                          150,000

                                          100,000

                                           50,000
                                                                                                            Total
                                                0                                                           English
                                                 2004          2005           2006     2007   2008   2009   Swahili

                                          Source: Central Bureau of Statistics, 2010
13.67%
                    net profit margin for Nation Media Group in 2009
                    16%


                    15%


                    14%
Net profit margin




                    13%


                    12%


                    11%


                    10%
                       2005             2006           2007   2008   2009

                    Source: Nation Media Group, 2010
Newspaper publishers offer radio and television
                Nation Media                  Standard               Radio Africa                  Media
                   Group                       Group                  Holding                      Max

                  The Daily Nation
                    Business Daily
Newspaper          The East African
                                               The Standard                The Star                The People
                  Taifa Leo (Swahili)

                                                                         Classic FM
                                                                           Kiss FM
                       Easy FM                                             East FM
  Radio                 Q FM
                                                Maisha FM
                                                                          Jambo Fm
                                                                                                  Kameme FM
                                                                            X FM
                                                                         Smooth FM


                        NTV                                               Classic TV                  K24
Television            East Africa
                                                   KTN
                                                                           Kiss TV                    STV


    Note 1: Also broadcasting organizations (i.e. Royal Media Services, Capital FM, and KBC) are active in the market
    Note 2: Only titles and stations within the Kenyan market are included
Online & Mobile
   initiatives
Portals
Mobile websites
E-papers
Premium SMS services
Classifieds
Talent scouting
Social media
Kenyan newspaper publishers
 have the opportunity to satisfy
customer information    needs in
 a fully cross-medial manner
Two strategic challenges for Kenyan publishers




Book publishers are forced into a Catch-22 by the Kenyan
government



Newspaper publishers have an opportunity to claim a
dominant position utilizing their cross-medial organization
Transformation
      is inevitable
Before:


                                   g
      ya          ile        lishin a
   en text     ob tion
 K n         M lu         ub eny
                         P K
    co          o
in           rev           in
                                        Photos: Thaesis/Koen Voermans
Mobile will evolve to information and commerce



  Communication              Money transfer




    Information                Commerce
Publishing organizations traditionally
     create information and
       enable commerce
Mobile will therefore enter the   market
              of publishers and
         transform dynamics
Publishers could utilize
strengths in information and commerce
    and claim a dominant position
Being ahead of fierce competition from
    new entrants and substitute services
Learning from successful mobile services
1. solve real problems of target customers


2. with understanding of the local context and needs


3. by offering data collection, notification or content services


4. in a simple and accessible way


5. utilizing the customer and rewarding him
Benefiting from mobile
  money transfer services
     which enables charging for
information and commerce services
With an opportunity for
 local content in niches
Events and lifestyle in Nairobi
Restaurants in Nairobi
East-Africa market analysis for investors
This requires a...
...clear transformation strategy
Is this really different
for Western publishers?
Let’s discuss!
Thank You
... for your attention. Discovered new opportunities? We can help you transform.


Koen Voermans, consultant of Thaesis, researched the Kenyan mobile and publishing market between
October and December 2010. He interviewed 26 executives, entrepreneurs, and representatives.




Strategy Boutique Thaesis               Kanaalweg 17L-A                Koen Voermans
Since 2006                              3526 KL Utrecht                Consultant
http://www.thaesis.nl                   The Netherlands                koen.voermans@thaesis.nl
info@thaesis.nl                         +31 30 267 3514                @kvoermans
ti   on               gy
    ed
       ia               ma                  n olo
   M                 or                ch
               Inf                   Te


We research trends and consult clients
We invest in our people
We are Thaesis




What we do
Thaesis is all about strategy. We develop strategies for large companies, for example in publishing and
retail. We challenge outdated assumptions that underly current business models. We understand changes
in consumer behaviour. And we help companies redefine their raison d'être in today’s business
environment. In the last year, Thaesis has worked on strategies related to e-books, mobile, digital rights
and social media. In formulating winning strategies, Thaesis combines financial analysis with business
model design. In short: we translate tomorrow’s developments into today’s answers. And we do it precise
and fast.


Strategy Boutique Thaesis                             Kanaalweg 17L-A        Koen Voermans
Since 2006                                            3526 KL Utrecht        Consultant
http://www.thaesis.nl                                 The Netherlands        koen.voermans@thaesis.nl
info@thaesis.nl                                       +31 30 267 3514        @kvoermans
26
executives, entrepreneurs, and representatives
Cyber School Technologies             Kalahari                       Ratio Magazine

Daily Nation                          Kenya Buzz                     Safaricom

Dealfish                              Kenya Publishers Association   Story Moja

East African Educational Publishers   Kenyan Blogs Webring           Symbiotic

eMobilis                              Longhorn                       Synovate

Homes Kenya Magazine                  Longman                        TBL Mirror Fund

InReturn Capital                      Mobile Planet                  Ushahidi

Jambopay                              Mocality                       Virtual City

Jomo Kenyatta Foundation              Pesapal

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Kenya Research Briefing - Mobile Phones Transform Kenyan Publishers - Strategy Boutique Thaesis

  • 1. Mobile phones transform Kenyan publishers
  • 2. on ya ile g hin a ati en text ob tion lis r m le K n M lu ub eny n sfo vitab co o P K Tra s ine in rev in i Strategy Boutique Thaesis Kenya Research briefing January 27, 2011
  • 3. In this research briefing you will read about... 1. importance of the mobile phone becoming the main gateway for communication, money transfer, information, and commerce in Kenya; 2. trends and developments in the Kenyan mobile services industry including innovative new initiatives within the Kenyan context; 3. the structure and challenges of the Kenyan book and newspaper publishing industry; 4. online and mobile initiatives of Kenyan newspaper publishers; 5. the inevitable transformation of the Kenyan publishing industry driven by fierce competition of disruptive mobile substitute information and commerce service providers.
  • 4. Content 1 Statistics and images explaining the Kenyan context 6-13 ya en text K n o i nc 1 Drivers, solutions, and statistics of mobile communication 15-19 2 Drivers, solutions, and statistics of mobile money transfer 20-24 e bil on 3 Mobile phone as a gateway for information and commerce 25-29 Mo luti 4 Trends in the four mobile segments 30-61 o rev 1 Kenyan book publishers are educational publishers 64-68 2 Future of education is e-learning 69-74 g 3 Book publishers are in a Catch-22 with the government 75-77 shin a bli eny 4 Kenyan newspaper publishers are media publishers 78-88 Pu K in 5 Online and mobile initiatives of newspaper publishers 89-97 6 Two strategic challenges for Kenyan publishers 98 n 1 Transformation is inevitable for Kenyan publishers 100-104 a tio 2 Learning from and utilization of mobile success stories 105-106 sf or mtable an nevi Tr s i 3 Opportunity for local content in niches 107-110 i 4 Transformation strategy is required 111-114
  • 5. Kenya in context Later: on ile g hin a ati ob tion lis r m le M lu ub eny n sfo vitab o P K Tra s ine Source: Central Bureau of Statistics, 2010 rev in i Photos: Thaesis/Koen Voermans
  • 6. Beautiful nature and therefore tourism
  • 7. 21% of people live in urban environments
  • 8. 44% of people is younger than 14 years
  • 9. 510 euro is the GDP per capita
  • 10. Bad road, water, and power infrastructure
  • 11. 8.1% of rural households have electricity
  • 12. Strong local culture with local needs...
  • 13. ...and strong tribal bounds with rural areas
  • 14. Mobile revolution Before: Later: on ya g hin a ati en text lis r m le K n ub eny n sfo vitab co P K Tra s ine in in i Photos: Thaesis/Koen Voermans
  • 15. 50% of the people have a mobile phone
  • 17. <--- Communication ---> Drivers: Cheap handsets Batteries Wireless networks Low calling rates Many resellers
  • 18. Usage: Connect with friends Connect with relatives Sell goods Inquire prices Finding a job <--- Communication ---> Drivers: Cheap handsets Batteries Wireless networks Low calling rates Many resellers
  • 19. 20 mil. mobile subscribers in Kenya 20 18 Mobile subscribers (Millions) 16 14 12 10 8 SEP07 DEC07 MAR08 JUN08 SEP08 DEC08 MAR09 JUN09 SEP09 DEC09 MAR10 Source: Communications Commission of Kenya, 2010
  • 20. 70% of Kenyans use mobile to pay
  • 22. <--- Money transfer ---> Drivers: Mobile penetration Hardly any bank accounts Simplicity Cost effective Many agents
  • 23. Usage: Pay to remote areas Save money securely No transport costs Pay for goods Transfer to relatives <--- Money transfer ---> Drivers: Mobile penetration Hardly any bank accounts Simplicity Cost effective Many agents
  • 24. 13.5 mil. M-PESA subscribers and 20,000 M-PESA agents Source: Safaricom, 2010
  • 27. Mobile phone as a gateway for ... Communication Money transfer
  • 28. ... information and commerce Communication Money transfer Information Commerce
  • 29. Information Commerce Drivers: 3G networks Smartphones Mobile applications Local developer community Low internet penetration
  • 30. Trends in four mobile segments
  • 31. Communication Money transfer Price wars Social networks Information Commerce
  • 32. 78% market share of telecom provider Safaricom 5% 6% 11% Safaricom Airtel 78% Orange Yu Source: Safaricom, 2010
  • 33. Price war increased competition among telecom providers 1. Call rates dropped to 3-4 Kenyan Shillings per minute 2. SMS rates dropped to 1-2 Kenyan Shillings per message
  • 34. 996,180 Facebook users in Kenya Source: Socialbakers, 2010
  • 35. Active use of social networks for many purposes 56 percent 6 percent contributed to a got a job discussion 69 percent 40 percent 56 percent uploaded photos or joined a brand fan clicked on an ad videos group 48 percent 12 percent met in person with an met and dated old friend someone Source: TNS Research International, Digital LIfe project 2010
  • 36. Communication Money transfer Banking Point of Sales Online shopping Information Commerce
  • 38. Money transfer extends to point of sales
  • 39. Money transfer extends to online shopping
  • 40. Many players try to claim online domain
  • 41. Communication Money transfer Information Commerce Data Collection Notification Content
  • 42. Data collection: from consumers send to content provider Consumer Consumer Consumer Consumer Content provider
  • 43. Data collection: from consumers send to content provider Consumer Consumer Consumer Consumer Content provider Notification: from content provider send to subscribers Content provider Consumer Consumer Consumer Consumer
  • 44. Data collection: from consumers send to content provider Consumer Consumer Consumer Consumer Content provider Notification: from content provider send to subscribers Content provider Consumer Consumer Consumer Consumer Content: by consumer gathered from content provider Consumer Content provider
  • 45. Information services for different industries Education Retail Agriculture Data Questionnaire answers Reviews Stock levels collection Ratings Market prices Market prices Exam results Promotions Notification Schedule changes Product arrivals Weather alert Health alert Product catalogue Animations Opening hours Crop rotation advice Content E-books Directions Health information Presentations Business directory And many more....
  • 47. 3707: events, matatus, movies, exchange
  • 48. Ushahidi: data collection and visualization
  • 49. M-Farm: market prices and weather alerts
  • 50. Yoza: cellphone stories from South Africa
  • 51. Jumuika: vouchers and product offers
  • 52. Communication Money transfer Information Commerce Business services Webshops Classifieds
  • 53. Four barriers for online or mobile commerce 1. Lack of trust 2. Social shopping culture 3. Supply chain management issues and dificulties 4. Lack of a single payment solution
  • 54. Three applications of mobile commerce 1. Businesses offering their goods online 2. Retail organizations offering goods in Webshops 3. Consumers or businesses advertising products and services in Marketplaces
  • 55. Business: book and pay flights
  • 57. Webshops: books, media, and technology
  • 58. Webshops: buy abroad deliver in Kenya
  • 60. Classifieds: or many things more...
  • 61. 10+ trends of the mobile revolution Communication Money transfer Price wars Banking Social networks Point of Sales Online shopping Information Commerce Data Collection Business services Notification Webshops Content Classifieds
  • 62. Publishing in Kenya Before: Later: on ya ile ati en text ob tion r m le K n M lu n sfo vitab in co rev o Tra s ine i Photos: Thaesis/Koen Voermans
  • 63. Kenyan publishing = books + newspapers
  • 64. Book publishers are educational publishers
  • 65. 2009 Education in Kenya in numbers Preprimary Primary Secondary Universities 1.9 million 8.8 million 1.5 million 177,735 children children children students 38,247 schools 26,667 schools 6,971 schools 31 institutes of which of which of which of which 23,823 public and 18,543 public and 5,019 public and 7 public and 14,424 private 8,124 private 1,952 private 24 private 92,955 teachers 171,301 teachers 43,016 teachers - Source: Kenyan Ministry of Education, 2010
  • 66. Textbooks only viable (book)publishing products 1. Government funded textbook market has a large market size “Textbook market is 80 percent of the in total estimated 50 - 75 million euro large Kenyan publishing market” 2. Lack of a general reading culture and therefore no general books market “We once organized a book signing event in a supermarket. People were coming in with pencil and paper, not being sure who had to sign.”
  • 67. 80% market share of seven biggest publishers }
  • 68. KIE Kenyan Institute of Education controls textbook market 1. Publishers offer their educational books to the KIE 2. KIE, based on the curriculum, reviews and approves the books 3. Approved books are published in a yearly catalog and can be sold to schools
  • 69. The future of education is E-learning
  • 71. And many more.... Government partners with private firms
  • 73. E-learning is content fit to the curriculum
  • 75. What does this mean for book publishers?
  • 76. Publishers are controlled by the government Funding of Leading textbook market transformation to and most e-learning market important source with disruptive of income competitors
  • 77. Strategies by publishers to solve the paradox 1. Digitize textbooks for e-learning solutions 2. Improve the reading culture to stimulate general books market 3. Selling through new channels including supermarkets and saloons
  • 78. Newspaper publishers are media publishers
  • 79. 123 radio stations make up the Kenyan media landscape 125 100 Number of stations or titles 75 50 25 0 Radio Television Newspapers Source: Synovate, 2010
  • 80. 23% annual growth rate of radio stations over the last 10 years 125 100 Number of radio stations 75 50 25 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Synovate, 2010
  • 81. 70.6% of households in rural areas possess a radio 100.0% 80.0% 60.0% Households 40.0% 20.0% Urban Rural 0% Total Radio Television Mobile phone Source: Central Bureau of Statistics, 2010
  • 82. 90% of men and 77% of women listen to the radio at least once a week 100.0% 80.0% Weekly usage of mass media 60.0% 40.0% 20.0% 0% Listens to radio Watches television Reads newspaper All three None Source: Central Bureau of Statistics, 2010 Men Women
  • 83. 83% of advertisement space is placed on radio 2% 0% 15% Radio 83% Television Print Cinema Source: Scangroup, 2010
  • 84. 209% growth of gross advertisement exposure since 2006 50 40 Kenyan Shillings (billions) 30 20 10 0 2006 2007 2008 2009 2010 Source: Synovate, 2010 Note: 1 Euro is 107 Kenyan Shillings, the total advertisement exposure in 2010 is 390 million Euro
  • 85. 301,488 daily newspapers are distributed every day in 2009 350,000 Average circulation (daily newspapers) 300,000 250,000 200,000 150,000 100,000 50,000 Total 0 English 2004 2005 2006 2007 2008 2009 Swahili Source: Central Bureau of Statistics, 2010
  • 86. 336,635 weekly newspapers are distributed every week in 2009 350,000 Average circulation (weekly newspapers) 300,000 250,000 200,000 150,000 100,000 50,000 Total 0 English 2004 2005 2006 2007 2008 2009 Swahili Source: Central Bureau of Statistics, 2010
  • 87. 13.67% net profit margin for Nation Media Group in 2009 16% 15% 14% Net profit margin 13% 12% 11% 10% 2005 2006 2007 2008 2009 Source: Nation Media Group, 2010
  • 88. Newspaper publishers offer radio and television Nation Media Standard Radio Africa Media Group Group Holding Max The Daily Nation Business Daily Newspaper The East African The Standard The Star The People Taifa Leo (Swahili) Classic FM Kiss FM Easy FM East FM Radio Q FM Maisha FM Jambo Fm Kameme FM X FM Smooth FM NTV Classic TV K24 Television East Africa KTN Kiss TV STV Note 1: Also broadcasting organizations (i.e. Royal Media Services, Capital FM, and KBC) are active in the market Note 2: Only titles and stations within the Kenyan market are included
  • 89. Online & Mobile initiatives
  • 97. Kenyan newspaper publishers have the opportunity to satisfy customer information needs in a fully cross-medial manner
  • 98. Two strategic challenges for Kenyan publishers Book publishers are forced into a Catch-22 by the Kenyan government Newspaper publishers have an opportunity to claim a dominant position utilizing their cross-medial organization
  • 99. Transformation is inevitable Before: g ya ile lishin a en text ob tion K n M lu ub eny P K co o in rev in Photos: Thaesis/Koen Voermans
  • 100. Mobile will evolve to information and commerce Communication Money transfer Information Commerce
  • 101. Publishing organizations traditionally create information and enable commerce
  • 102. Mobile will therefore enter the market of publishers and transform dynamics
  • 103. Publishers could utilize strengths in information and commerce and claim a dominant position
  • 104. Being ahead of fierce competition from new entrants and substitute services
  • 105. Learning from successful mobile services 1. solve real problems of target customers 2. with understanding of the local context and needs 3. by offering data collection, notification or content services 4. in a simple and accessible way 5. utilizing the customer and rewarding him
  • 106. Benefiting from mobile money transfer services which enables charging for information and commerce services
  • 107. With an opportunity for local content in niches
  • 108. Events and lifestyle in Nairobi
  • 110. East-Africa market analysis for investors
  • 113. Is this really different for Western publishers?
  • 115. Thank You ... for your attention. Discovered new opportunities? We can help you transform. Koen Voermans, consultant of Thaesis, researched the Kenyan mobile and publishing market between October and December 2010. He interviewed 26 executives, entrepreneurs, and representatives. Strategy Boutique Thaesis Kanaalweg 17L-A Koen Voermans Since 2006 3526 KL Utrecht Consultant http://www.thaesis.nl The Netherlands koen.voermans@thaesis.nl info@thaesis.nl +31 30 267 3514 @kvoermans
  • 116. ti on gy ed ia ma n olo M or ch Inf Te We research trends and consult clients We invest in our people We are Thaesis What we do Thaesis is all about strategy. We develop strategies for large companies, for example in publishing and retail. We challenge outdated assumptions that underly current business models. We understand changes in consumer behaviour. And we help companies redefine their raison d'être in today’s business environment. In the last year, Thaesis has worked on strategies related to e-books, mobile, digital rights and social media. In formulating winning strategies, Thaesis combines financial analysis with business model design. In short: we translate tomorrow’s developments into today’s answers. And we do it precise and fast. Strategy Boutique Thaesis Kanaalweg 17L-A Koen Voermans Since 2006 3526 KL Utrecht Consultant http://www.thaesis.nl The Netherlands koen.voermans@thaesis.nl info@thaesis.nl +31 30 267 3514 @kvoermans
  • 117. 26 executives, entrepreneurs, and representatives Cyber School Technologies Kalahari Ratio Magazine Daily Nation Kenya Buzz Safaricom Dealfish Kenya Publishers Association Story Moja East African Educational Publishers Kenyan Blogs Webring Symbiotic eMobilis Longhorn Synovate Homes Kenya Magazine Longman TBL Mirror Fund InReturn Capital Mobile Planet Ushahidi Jambopay Mocality Virtual City Jomo Kenyatta Foundation Pesapal