South African streaming explosion

Streaming services are gaining popularity in South Africa, with subscription spending on online entertainment more than doubling in 2024. 

This is coupled with a rise in subscription spending in South Africa as consumers search for value, and the rise of artificial intelligence (AI) services fuels demand. 

Discovery Bank and Visa revealed this trend in the latest SpendTrend report, which compiles data from over a million South Africans and 2.6 billion transactions. 

The report used data from Discovery Bank clients across income segments, Visa’s card data, and a survey of 1,000 South Africans. 

Discovery Bank CEO Hylton Kallner explained that the aim is to determine how much South Africans spend, what they spend on, and how they spend their money. 

The bank then uses this data to inform the new products and services it develops and improve its existing product set. 

The key trend highlighted in the report is that consumer spending is facing renewed pressure in South Africa, despite a decline in inflation. 

Kallner explained that average spending per card is flat year-on-year and has trended downwards throughout 2024. The growth in spending was below the headline inflation, with consumers spending less in real terms.

The data also showed that South Africans are increasingly turning to credit to make everyday purchases, and some are tapping their retirement savings for additional liquidity. 

One way South Africans are trying to improve their cash flow is through subscription services, which break down otherwise large, single payments into multiple smaller payments. 

Spending on subscriptions per active card has increased steadily since 2019, with notable increases in entertainment spending and sports bookings. 

Another driver of this trend is the return to the office, with South Africans looking for opportunities to balance costs and convenience. 

This has come at a cost, with consumer brand loyalty likely to decline as value trumps everything else, Kallner explained. 

The graphs below show the increase in online subscription spending in South Africa. 

Streaming boom 

Subscription spending on online entertainment saw particularly strong growth, with it more than doubling since 2022. 

South Africans are spending more on online entertainment than ever before, with the category growing by 110% since 2023. 

Streaming, sports entertainment, and event bookings make up the bulk of this surge, reflecting a shift towards digital leisure.

 While consumers are making more transactions in sports bookings and gaming, they are spending smaller amounts per purchase. 

This trend suggests a growing appetite for entertainment, but with a focus on affordability and accessibility, according to Visa’s head of country for South Africa, Lineshree Moodley.

Discovery Bank clients are leading the surge in online entertainment spending, outpacing the rest of the market. 

This growth is primarily driven by increased spending on event bookings, as clients make purchases more frequently and at higher transaction values. 

A key factor is Discovery Bank’s exclusive early access to concert and event tickets, which has likely contributed to a 20% increase in average transaction value. 

This growth is set to continue, with PwC’s Africa Media and Entertainment Outlook for 2024 to 2028 expecting South Africa’s entertainment sector to achieve a compound annual growth rate of 4.2% over this period. 

The report also expects the sector’s revenue to grow from R295.3 billion to R363.2 billion over the next five years.

It explained that streaming services and internet advertising will expand the most because of more stable internet connectivity and 5G adoption in South Africa.

In South Africa, video is the largest content category consumed, with a share of data consumption of roughly 82%.

PwC estimates that video will make up about 84% of data consumption by 2028, followed by communications and games at around 7% and 5%, respectively.

The financial services firm expects the streaming market to grow at a compound annual rate of roughly 8% to produce a revenue of R6.8 billion.

Since significant investment has been made in infrastructure and content for streaming, it is expected to gain 1.6 million additional subscribers by the end of 2028.