LONDON, March 27, 2013 /PRNewswire/ --

Throughout sub-Saharan Africa there are numerous examples of industries that have undergone a period of deregulation and privatisation having previously been state-controlled. Market liberalising reforms gathered momentum during the 1990s as African nations sought to align themselves with an increasingly integrated global economy. In Nigeria, the Structural Adjustment Programme (SAP) launched by the Federal Government in 1986 marked the start of a progressive withdrawal of state involvement from a number of sectors.

Until that time television broadcasting had been among the industries in Nigeria that were entirely state-run. A proliferation of private stations following deregulation in 1992 included the arrival of Digital Satellite Television (DStv), the first pay TV operator. DStv is owned by the South African firm MultiChoice and is the leading satellite TV service in sub-Saharan Africa.

It was not until 2004 that Frontage Satellite Television (FStv) became the first indigenous pay TV provider in the country. Others followed, including the direct-to-home (DTH) service HiTV, established by businessman and lawyer Toyin Subair; and DAARSAT, another DTH service that offered the country's first high definition programming. After promising starts, these and other stations collapsed within a few years due to intense competition and a difficult operating environment.

In the DTH and Digital Terrestrial Television (DTT) segments of the subscription TV market it is clear that domestic stations have not yet been able to compete effectively either with DStv or with Star TV, the more affordable offering of China's StarTimes. But while MultiChoice and Star lead those areas of the market, Nigerian firms predominate in cable TV. Cable stations are generally licensed to operate within a smaller range of coverage and offer more regional, grassroots programmes.

Whatever the scope or the means of delivery, broadcasting is a capital-intensive industry and operators need investment in order to grow and maintain market share. MultiChoice and StarTimes have had a head start in this regard but capital has also been flowing to smaller, indigenous firms. Compared with their public counterparts, private stations across the market are generally characterised by better equipment and higher quality production.

It is estimated that total private investment in Nigerian broadcasting has now passed the $1bn mark. Thousands of jobs have been created, not just within the sector itself but in related industries too: advertising in particular is on the rise as firms look increasingly to domestic agencies to make their TV adverts.

For all the good news however there are a number of obstacles to the growth of pay TV in Nigeria. Power scarcity means stations are reliant on diesel generators while consumers are forced to deprioritise TV. With both supply and demand thus constricted, newer, smaller firms often find it tough to survive. Piracy, mainly in the form of so-called 'string' operations in which signals from multiple decoders are transmitted locally, is also choking demand. For Nigerian providers, lack of confidence on the part of foreign content owners has sometimes translated to a reluctance to hand over rights.

Infrastructure development, tighter legislation and stronger regulatory frameworks would go a long way to addressing these issues, but the initiative should not just lie with government. High quality Nigerian-produced TV can itself do much to challenge the negative perceptions that deter business. More international broadcasting in a similar vein to that of African Independent Television (AIT) in Lagos and Minaj Broadcast International (MBI) in Obosi-both of which transmit to a global audience-would go a long way towards bridging the divide between Nigeria and the rest of the world. Such channels present an opportunity to showcase the growing expertise of Nigerian producers and to reflect the best of Nigerian culture.

Underpinning everything is content. A perceived lack of quality in the output of indigenous providers has been a major factor in their failure to take more of the market. Nigeria is due to go digital in 2015: a huge opportunity for more domestic firms to offer subscription services. Nigerian operators must deliver programming that competes with foreign-backed providers, drives viewership and attracts revenue. If they can achieve this, the digital future will be very bright.

Kola Aluko is a Nigerian-born international businessman with commercial interests spanning energy, media and private aviation. For more information please visit http://www.kolaaluko.com.

SOURCE The Press Office of Kola Aluko