How South Africa got the bulk of Netflix

Sarah Smith

Global Courant 2023-04-26 15:58:36

Netflix has been making headlines lately with its plans to expand across Africa. The streaming giant recently released its socio-economic report, showing just how well the company has fared since making its way to sub-Saharan Africa in 2016. According to the report, the company has invested a total of $175 million in South Africa, Nigeria and Kenya between 2016 and 2022. Interestingly, South Africa received the bulk of this investment – about 71% of total investment went to the SA film industry. The investment was aimed at developing the local creative ecosystem, with an emphasis on bridging the financial gap, fostering collaborations, developing talent and commercializing the industry.

When it comes to investments, companies like Netflix carefully evaluate a range of factors before spending huge sums of money. According to the regional head, it was always part of Netflix’s plans to invest heavily in African stories. Hence, when Netflix went through the first decline in its history, it lost some 200,000 subscribers worldwide in 2022, the company didn’t shake much. Africa offered development potential that the company hoped would reassure investors. Still, the decision to invest significantly in South Africa can be tied to specific market dynamics, such as a favorable regulatory environment and SA’s reputation for more advanced infrastructure.

A camera crew at work in central Cape Town, South Africa, taken on April 22, 2021.

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Apart from an attractive consumer market, SA had a regulatory framework. The government has always implemented various initiatives, including tax incentives and financing schemes, to support the growth of the local entertainment industry. One is the 25% movie incentive offered to foreign film and TV productions shot on location in SA, up to a maximum of R50 million, and an additional 5% incentive for productions shot and post-production in SA and using the services of a service company in black hands. For productions that only perform post-production in SA, the incentive is calculated at 20% with an additional 2.5% for spending at least R10 million of post-production budget in SA.

However, the fact that Netflix invests most of its investment in South Africa doesn’t mean it lacks interest or involvement in other African countries. Over six years, the company has invested a total of $107 million in sub-Saharan Africa. Netflix’s revenue from Sub-Saharan Africa is expected doubling by 2026. And following the positive socio-economic report, the company will continue to expand its presence on the African continent.

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