Cinemart - Broadcast & Film Africa Conference v5 (Web)

Centum

BUILDING A PAN-CONTINENTAL INFORMATION, ENTERTAINMENT & RETAIL (PIER) PLATFORM IN AFRICA!

Broadcast & Film Africa Conference!Nairobi, July 2011!

Dayo Ogunyemi!234 Media Ltd. [email protected] Twitter: @234media

PRESENTATION OVERVIEW

  I. Connecting the Screens – Why cinema and mobile are going to drive audiences (and advertisers)

  II. Film in Africa – Challenges, Gaps & Opportunity

  III. An Introduction to Cinemart

1 CINEMART: THE PIER PLATFORM

I. Connecting the Screens – Why cinema and mobile are going to drive audiences (and advertisers)


AFRICA ADVERTISING INDUSTRY OVERVIEW

  Ad spending has increased dramatically in many countries, with spending by new entrants in telecommunications and financial services industries dwarfing traditional stalwarts in the FMCG and food and beverage industries

  Ad spending on TV has increased disproportionately, in many countries without any significant increase in reach, particularly not to base of the pyramid demographics.

  Telcos and banks are making major pushes to target BOP demographics in Africa, who constitute 70-85% of the population inmost Sub-Saharan African countries


Key Takeaways

MARKET - AFRICA ADVERTISING OVERVIEW – AD SPEND IN NIGERIA


•  Ad spend in Nigeria increased from N6.9 billion in 2003 to N40 billion in 2007 •  TV’s share of that spend has gone from N2.56 billion (37%) in 2003 to N20.54 billion (51%) in 2007

ADVERTISING

  Why is this of interest?

  Because understanding the economics of media is key to developing sustainable models

  Commercial media economics, costs are covered by:   consumption charges (per use or subscription)

  advertising revenues


CONNECTING THE SCREENS – CINEMA AND MOBILE

  Where is growth going to come from?

  What type of growth? Reach, Impact, Conversion   Television (Pay & FTA)?

  1 in 4 households have TVs

  Sluggish growth historically

  Print?

  Not a growth industry anywhere in the world

  Radio?

  Already very effective in reach, limited scope for increase in impact.

  Mobile

  Significant growth, voice close to saturation

  Significant scope for growth – data and VAS

  Cinema

  Incredible scope for growth, excluding South Africa, SSA has one screen for every 5 million Africans. US 1 screen per 8,300 citizens, SA 1 screen for every 60,000 citizens, India, 1 screen per 100,000 citizens.


CONNECTING THE SCREENS – CINEMA AND MOBILE

  Where is rapid (100%+) growth going to come from?   Mobile   Cinema

  These are the two mediums that have the strongest possibility of rapid mass market growth   Mobile from new applications – data, VAS - other than voice

  Cinema from infrastructure growth – like mobile in Africa over the past decade

  Growth Indicators   1.8 trillion SMS in 2007 v. 6.1 trillion sms in 2010, globally

  400,000 phone lines in 2001 to 82 million in 2010 - Nigeria   40m British citizens going to the cinema 1.6 billion times in 1946

  60m Brits go to cinema 164 million times in 2008


CONNECTING THE SCREENS – Mobile & Cinema

Mobile and Cinema - Parallels and differentiators for Advertising:   The oldest and the newest screen   The largest and the smallest

Common Elements:

  Measurability

  Targeting

Unique Selling Points

  Mobile   Ubiquitous   Personally pervasive

  Cinema   Immersive (big-screen, OOH, single focus)   Communal   Permits hyper-segmentation   Permits BTL tie-ins


CINEMA - ADVERTISING VALUE PROPOSITION

Scale & Measurability   Single point of contact for

local, regional, national and pan-continental campaigns

  Unprecedented levels of accountability and measurability; a big selling point on a continent where this is sorely lacking, especially in print, OOH, TV.

Reach, Impact & Value   Has all the advantages of radio:

  Better reach than print   More cost-effective than television,

print and OOH   Unlike televisions and print, permits

localization, micro-targeting and integration of the communication with Below-The-Line marketing initiatives

  With some extra advantages:   Delivers the full impact of a TV

commercial instead of just audio.   Can easily reach the target

demographics in regional and national markets, not just local.

  Captive audience gives greater attention than TV, recall and impact several magnitudes higher than TV

CINEMART: THE PIER PLATFORM 9

II. Film in Africa – Challenges, Gaps & Opportunity


GLOBAL FILM INDUSTRY OVERVIEW

  Globally, the movie industry has three main revenue prongs:   Theatre

  Video

  Broadcast/ancillary

  Of the three top movie industries – Bollywood (India), Nollywood (Nigeria) and Hollywood (The US) – only Nollywood has failed to develop all three prongs:   Nollywood makes virtually no domestic box office revenues (Nigeria has fewer than 30

formal cinema screens, which show primarily Hollywood fare!);

  Broadcast revenue was only developed in the last five years and is still anemic;

  The second largest movie industry in the world depends almost entirely on physical sales of video into an informal distribution network!!


Key Takeaways

FILM IN AFRICA

  The movie landscape in Africa is dominated by Nollywood, Nigeria’s movie industry. It is the world’s 2nd largest by output, with over 1000 movies released commercially every year

  Nollywood content is now the dominant movie content consumed across sub-Saharan Africa

  Its small budget, digital-based quick turnaround production style has inspired other African movie industries to follow suit – most notably, Gollywood (Ghana) and Riverwood (Kenya)

  New fronts are appearing in African film with a new generation of filmmakers who emphasize strong production and story values:   Djo Tunda Munga (Congo) – “Viva Riva”

  Wanuri Kahiu (Kenya) – “From a Whisper,” “Pumzi”

  Kunle Afolayan (Nigeria) – “Figurine”


MARKET - MOVIE INDUSTRY OVERVIEW

HOLLYWOOD

13

BOLLYWOOD NOLLYWOOD

CINEMART: THE PIER PLATFORM

  Bollywood, gets only 4% of its total revenue from home video and a whopping 86 % from theatrical exhibition (75% domestic, 11% international).

  As sub-Saharan Africa has a similar size as, and somewhat more favorable demographics and per capita income than India, with the right model, Nollywood’s theatrical revenues could potentially dwarf its current home video revenues.

  Indeed, many consumers at the base of the pyramid in Africa patronize “viewing centers” – informal and unlicensed rooms in which people watch Nollywood movies on televisions while sitting on wooden benches or standing.

  In 2006, UNESCO estimated that Nigeria alone had 4871 viewing centers.

Global Comparison – Annual Revenues By Category

COMPARISONS - CINEMA ADMISSIONS & REVENUES

•  Annual Admissions per capita: •  US - 4.7

•  India – 3

•  Kenya- .013

•  Nigeria – 0.004 •  South Africa – 0.5

•  Annual Admission Revenues per capita: •  US - $30

•  India - $1.6

•  Kenya - $0.09

•  Nigeria - $0.03 •  South Africa - $2 14

CINEMART: THE PIER PLATFORM

8991

1403 1700

3500

3.6 0.5 4.3 0.6 100 25 0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Box Office Revs ($m) Box Office Admissions (millions)

US '06

India '08

Kenya '09

Nigeria '10

S. Africa 10

COMPARISONS - THEATER PENETRATION


  Kenya needs to build at least 400 screens to reach India’s 2008 penetration level of 100,000 viewers per screen.

  At per capita attendance and revenue numbers comparable to India’s in 2008, Kenya could comfortably generate $180 million in annual cinema admission revenues at this penetration level.

III. An Introduction to Cinemart



CINEMA FOR THE PEOPLE

  Cinemart’s core business is selling movie tickets to mass audiences – “putting bums in seats.”

  Cinemart has assembled a mass-oriented cinema business model capable of rapidly achieving Kenya’s potential $180 million in annual admission revenues.

CINEMART – BUSINESS MODEL

  The key elements of this business model are:

  Exhibition Technology   Pricing

  Geographical Coverage   Content


KEY ELEMENTS – CONTENT

Compelling Content, Unbeatable Cost

  Cinemart’s programming is anchored by partnerships that give it affordable access to African film programming

  Cinemart will also have public viewing rights and licenses to a wide range of additional content ranging from Hollywood movies, televised content, and premium sports (football, boxing, mixed-martial arts).



CINEMART – VIVA RIVA

Viva Riva - East Africa Rights Acquired

Ground-breaking Congolese Movie

  Winner Best Movie (Africa) - 2011 MTV Movie Awards

  Winner of 6 African Movie Academy Awards (including Best picture, best director)


CINEMART – VIVA RIVA

BUSINESS MODEL SUMMARY


Entertainment

Retail Partnerships Advertising

Consumer:

  Consumer market for out-of-home film and televised entertainment

Business:

  Market for commercial and social advertising

  Market for commercial retail space, focusing on key sectors

Cinemart’s business model is based on three distinct lines – the primary consumer-facing and two ancillary business-facing :

WHY IS THERE A NEED FOR CINEMART?

  2.4 million out of 8.8 million households - 2009 census estimates

  From these numbers, we estimate that fewer than 15% of the roughly 6.5 million households in Kenya’s low income demographics have televisions.


Existing TV reach in Kenya is weak

WHY IS THERE A NEED FOR CINEMART?

  Tickets are over-priced, unaffordable to the masses   Tickets priced at up to KSH 700 ($8)

  The number of screens is grossly insufficient   30 screens nationwide, roughly one screen for every one million Kenyans

  Content not compelling to Kenyan audiences   Fewer than 10 titles gross above a relatively low $100,000 (less than 12,000 admissions)


Kenya Box Office 2009

Existing Cinema Reach In Kenya Is Ineffective

TARGET DEMOGRAPHICS – GEOGRAPHIC DISTRIBUTION Prospective Nairobi Locations


CONCLUSION - CINEMART? Fantastic Business Model   Great return on investment

  Highly scalable

  Low CapEx, high cash flow

  Leverages proven African IP   Takes movie content with proven pan-

continental demand and expands the revenue horizons for it

  Thinks and Acts Local – uses African resources, stimulates African economies   Unlike telecoms, the key success factors

(and expenditure items) are primarily local – movies, land, and local construction.

  The roll-out of this project would create a variety of jobs an even greater stimulus to local economies than has telecoms, which relies largely on foreign technology and labor.

Broad Socio-Economic Impact   Provides structural solutions that

benefit at-risk demographics   Solves structural “last-mile”

challenges that impede growth and development, particularly in rural and peri-urban Africa, where the demographics in greatest need of transformational tools and interventions are located.

  Enables commercial and social enterprises to better access low income demographics   The platform enables the poor to

sustainably access critical, essential and/or life-enhancing goods and services – including healthcare, education, information, financial services.

CINEMART: THE PIER PLATFORM 27


THANK YOU!

Cinemart - Broadcast & Film Africa Conference v5 (Web)

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