The Entertainment and Media (E&M) industry has become a gold mine in the most advanced economies and other developing markets are just beginning to harness it. For the purposes of this piece, E&M hereinafter refers to commercial activities related to the production, marketing, distribution, broadcast, licensing or other exploitation of media and entertainment assets; assets such as music, films/TV shows, video games and other multimedia content. The increasing convergence of media and entertainment with telecommunications and technology is a key growth driver of the sector globally.

Given the maturity of entertainment markets in the West, investors’ eyes are beginning to turn towards the huge (and for all intents and purposes untapped) Asian and African markets respectively.

The potentials of the Asian entertainment markets have been clearly recognised with investment firms having already positioned themselves to capitalize on the anticipated growth. For example in India, KKR and Chernin Group formed a joint fund, Emerald Media, to invest specifically in digital E&M businesses. Similar strategies can also be seen in Singapore and South Korea.

And it is not just the increased investment that is eye-catching; returns have also been positive. According to investment analysts, Venture Intelligence, E&M investment in Asian markets in 2015 hit a record high of just under $90 million, with a corresponding record number of exits valued at $294 million at an average return ranging between 20 and 25 percent.

On the other hand the Nigerian E&M markets (and those across Africa generally – South Africa excluded) are still only in their earliest stages of development. Despite total private equity investment in Africa seeing a steady increase over the last few years – with $3.8 billion invested across the continent over the course of 2016 – very little of that investment (less than 1 percent) has gone into E&M anywhere across the continent let alone Nigeria.

Market Value

The overall value of the Nigerian E&M sector, especially when held up against other comparable developing E&M markets, can be perceived as significantly lacking in value.

According to Price Waterhouse Cooper’s “Entertainment and Media Outlook: 2017-2021” report, the combined total estimated value of the music and film segments of Nigeria’s E&M sector is circa $3.2 billion. When compared to South Korea ($11.6 billion) or South Africa ($9 billion), it is clear that the Nigerian E&M market still has a significant value gap to bridge. However, in light of strong market indicators, this gap is expected to be significantly reduced in the short to medium term.

Domestically, despite some macroeconomic volatility, there are positive demographic factors and socioeconomic trends that bode well. These factors and trends have been well documented and can be summarised as follows: a youthful, aspirational, and increasingly urbanised population that is growing at an exponential rate. Moreover, increasing mobile technology and internet penetration further strengthens the domestic opportunities. Combine these indicators with the increasing consumption power and appetite of a growing middle class, and the possibilities become clearer.

Foreign market opportunities also look bright. Nigerian cultural products and services are increasingly gaining export value particularly due to increasing numbers of diaspora Nigerians spending more of their incomes on homegrown entertainment. Furthermore, strengthened African influence on global popular culture means demand for Nigerian entertainment products will only increase abroad.

For example, popular Nigeria based performers are now selling out major venues around the world and Nigeria based digital content producers and distributors are finding that an increasing portion (if not the majority) of their audience/users/subscribers are based in Europe, Asia and the United States.

Investment Opportunities

It is the author’s considered view that the time has arrived for private equity (and venture capital) investment to start flowing into certain strategic segments of the Nigerian E&M sector.

Recent currency devaluations, despite being perceived as having an adverse effect on institutional investor appetite for investments in Nigeria, have actually presented an opportunity for investors to gain stakes in well positioned media and entertainment businesses at much better rates thereby reducing risk and positioning themselves for potentially much higher returns. E&M investments provide the best opportunities for large returns with minimal risk to investors who have (access to) specialised expertise in, and knowledge of, the market.

And the opportunities are tremendous. Iroko Partners Ltd, whose core business Iroko TV (a subscription video on demand service (SVOD)), has successfully raised $40 million till date with backers including Kinnevik, RISE and Tiger Global. Furthermore, some seed investors exited with returns of over 3000% on their investments after an average investment hold period of around 4-5 years. The business has since expanded to integrate an audiovisual production arm into its operations in addition to launching television channels both in Nigeria and the UK. It recently also announced that for the first time, the majority of its revenues came from outside Nigeria.

When one considers that the majority of private equity investments in Africa in 2016 alone were investments of less than $50 million, small investments (ranging from $500k – $2 million) in viable businesses such as this, and others in the Nigerian E&M sector, seem a very worthwhile prospect when potential returns are weighed against risks.


In conclusion, there is an increasing opportunity for private equity firms to generate significant returns in the Nigerian E&M sector for investors that have (access to) information and insights related to the sector based on local knowledge and expertise. The film/TV/SVOD segment in particular is ripe for private equity investment at this time. Given the demand for content in this segment and the relatively capital intensive requirements to produce same, the patient nature of private equity capital makes such type of funding a better fit than Venture Capital – which in the author’s view is better suited for music sector investments. Based on growth projections over the next five years, any private equity investments made in the film/TV/SVOD segment at this point in time will very likely see impressive returns at the point of exit (should the usual hold periods of 5-6 years apply).

Private equity firms must begin to actively look into the available opportunities and engage suitable local advisors with specialist knowledge of the sector to guide them along the narrow path towards the proverbial pot of gold at the end of the rainbow.


Olumide Mustapha is a corporate and commercial attorney with particular specialism in the telecoms, media/entertainment, and technology sectors in Nigeria and the UK. He also has deep expertise in corporate finance – both private finance and capital market funding – as well as significant management consultancy experience.


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