During a period of three months Koen Voermans, consultant working for strategy boutique Thaesis, interviewed 26 executives, entrepreneurs, and representatives from organizations in the Kenyan publishing and mobile industry. In the 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. We hope you will enjoy reading the briefing and get inspired by the great developments within the Kenyan mobile and publishing industries!

1. Mobile phones
transform
Kenyan publishers

2. on
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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:
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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:
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Photos: Thaesis/Koen Voermans

15. 50% of the people have a mobile phone

16. <--- Communication --->

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

21. <--- Money transfer --->

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

25. Anything else?

26. You bet!

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

37. Money transfer extends to banking

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....

46. Mocality: innovative business directory

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

56. Business: collect school fees

57. Webshops: books, media, and technology

58. Webshops: buy abroad deliver in Kenya

59. Classifieds: offer and find cars

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
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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

70. Government leads e-learning innovation

71. And many more....
Government partners with private firms

72. E-learning is installing hardware

73. E-learning is content fit to the curriculum

74. E-learning is mobile

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

90. Portals

91. Mobile websites

92. E-papers

93. Premium SMS services

94. Classifieds

95. Talent scouting

96. Social media

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:
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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

109. Restaurants in Nairobi

110. East-Africa market analysis for investors

111. This requires a...

112. ...clear transformation strategy

113. Is this really different
for Western publishers?

114. Let’s discuss!

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