Nigeria’s entertainment industry is gaining quite a lot of attention for its ability to quickly scale and generate huge ROIs for investors. Major music and movie brands and businesses have sprung up in the last ten years, making the African culture become a global sensation.
Afrobeats and Nollywood films have not only dominated the African entertainment scene but attracted a swam of adherent audiences, thereby attracting collaboration and partnerships with leading global organizations and individuals in the business.
Across major social media platforms, people from all nations and creeds can be seen dancing and singing to the most native lyrics of naija hit songs. Nigerian superstars’ concerts around the world are often sold out and filled with all nationals chanting Yoruba, Igbo, and Pidgin English-filled lyrical contents. Afrobeats has become a stable contender in global top charts and billboards much so that there’s been a call for the creation of its own category in the Grammy Awards.
Likewise, Nollywood films are global sensations. Though, more strategically holding down the African market, edging out Hollywood’s biggest releases. Most importantly, the industry has seen great expansion that its inclusion in Nigeria’s GDP calculation (along mobile phone market, ecommerce and music) helped to double the economy’s worth in the rebasing project of 2014.
Nollywood is a huge industry creating unusual amount of wealth and non-traditional career paths. Smart investors are recognizing its humongous potential and are putting their monies into strategic sectors of the industry with high ROI and relatively shorter time to break-even.
In this report, Freelanews details the facts, challenges and opportunities of the industry as a motivator to prospective investors. Though we advise that you carry out further research towards making a decision but this article seeks to point in the direction of established opportunities.
Some key facts and figures of the Nollywood Industry
- Second largest in the world after Hollywood
- About $6bilion industry, nearly 2,500 films a year
- 6th best performing box office in the world (average of $16million/annum grossed in Nigeria cinemas alone).
Sub sectors
- Writing: from script writing, story development, editing for tone / language, to even translation and subtitling. These are very important to the industry because without stories there is no Nollywood. Companies may be able to invest in the acquisition of the intellectual property rights to well established stories (e.g. Play Network acquiring the rights to some old Nollywood classics and going a step ahead to remake them). Investors could also fund companies that represent/hire writers for story development / creation of film or TV treatments, and script writing.
- Equipment leasing: Filmmaking requires equipment. Modern filmmaking may require some state-of-the-art equipment that cost significant amounts that would destroy the budget of a singular film. Based on the foregoing, many filmmakers seek out companies who can lease them such equipment for the duration of their production without incurring the heavy investment required to purchase the equipment.
- Production and set design
- Wardrobe and costuming
- Music licensing and creation of original music, sound design and scoring
- Casting services
- Editing – including modern editing suites
- Visual effects
- Stunt coordination
- Location receiving services and provision of sets
- Entertainment legal services
- Production accounting services
- Talent management
- Entertainment marketing, and public relations
- Short film production
- Music video production
- Production of tailored films for advertising, public relations.
- Documentary filmmaking
- Distribution
- Exhibition: either in terms of cinemas, TV, streaming platforms etc.
The above list is nowhere exhaustive. In fact, the standard feature film production will have many of the sectors above as part of its budget. Which means that, an investor in one of the businesses above is making money during the value chain of feature film production and can provide services to the multiple film productions being undertaken annually. In reality, some of the above sub-sectors have received attention from potential investors – the industry has seen investments in equipment leasing, exhibition, distribution, talent management.
However, a good number of sectors still lack structure and are handled by individual practitioners who may not have a proper business structure in place (some individuals have built good businesses for themselves though).
Spotlight on movie exhibition sub sector
A slice of over 18 billion per annum cinema revenue pie – In the midst of a global pandemic, Funke Akindele-Bello’s “Omo Ghetto: The Saga” surprised the Nigerian entertainment scene by grossing over NGN630million in Nigerian cinema.
In brief
- Nollywood films makes up 55% of the movies seen across West Africa Cinemas, ahead of Hollywood’s 43%.
- The cinema screening revenue has consistently grown at a yearly average of 11% in the last five years (except the temporary 2020 deep caused by the pandemic)
- A well-researched cinema investment is estimated to payback between 3 – 6years.
- The average cost of setting up a cinema (inclusive of property development or rental) is:
- Standard (5-rooms)– $1.3million to $1.6million
- Premium (2 rooms)– $1.8 million to $2.1million
- Average cinema monthly revenue:
- Highbrow city center – N 21million to N64million
- City suburbs – N7.6million – N17million
- Others (besides Lagos, Abuja and Port Harcourt) – N1.2million – N4.8million
- Most suitably located within a mall
- Lagos and Surulere attract the highest patronage for cinemas in Nigeria
The Opportunity
With a population of 200million fun-loving people across 36 state and the FCT, the current 77 cinema locations in Nigeria grossly underserves the nation. Hence, maximizing the theatrical potential of Nigeria in terms of revenues, job creation and talent management, there’s a need for huge investments in cinema locations across the nation. Nigeria has a potential to accommodate 900 viable cinemas.
Considering the sparse availability of disposable income around different metropolitan settlements, below is projected allocation of cinema locations that can help maximize the potential of Nigeria’s theatrical market:
An average cinema employs 35 direct and 1,000 indirect staff. Therefore if you looking at adding people empowerment to your investment motivation, there is a good chance you will be achieving this with a cinema.
Ojelabi, the publisher of Freelanews, is an award winning and professionally trained mass communicator, who writes ruthlessly about pop culture, religion, politics and entertainment.
