MGT 576 Wk 4 – Practice: Formative Assessment

India and the Diamond of National Advantage

The remarkable success of Nigeria’s film industry is described in this case. Emphasis is placed on the various country-level factors that affect the Nigerian film industry as a whole.

The success of Nigeria’s film industry can be well explained by the National Competitive Advantage framework (also known as Porter’s Diamond).  The key lesson of this case focuses on the role of specific country-level factors that affect the growth of a given industry.

Read the case below and answer the questions that follow.

Nigeria is Africa’s largest economy and the most populous nation.  It is estimated that the Nigerian film industry, commonly dubbed as Nollywood, surpassed Hollywood as the world’s second largest movie industry by volume sometime around 2009.  According to data released by the Nigerian government in 2014, Nollywood was a $3.3 billion sector (Bright, 2015).

However, critics note that while Nollywood has volume, it lacks production value, and African actors have yet to breakout globally. “The truth is key players in the global movie industry still have little idea what Nollywood is about,” said Nigerian producer Kunle Afolayan. “The volume won’t matter until we can connect the art to the money with better content and profits.”  The volume, however, attests to the tremendous demand for Nigerian movies, even at its current sub-optimal quality.  Yet, financial investments to improve film quality remain inadequate.  According to Jason Njoku, founder of Nollywood’s video-on-demand (VOD) platform iROKO, “The revenue is already there, it’s just scattered. If stakeholders can invest in Nollywood and make back profits, it will lead to larger budgets and better quality content.”

Pirating of Nollywood productions is a big problem in Nigeria and throughout Africa.  According to data published by Nigeria’s National Bureau of Statistics, Nollywood’s greatest shortcoming is its severe revenue bleed.  Less than 1 percent of the 3 billion dollars of revenue was tracked from official ticket sales and royalties!  In other words, over 99% of the revenues came from pirated reproductions sold by unauthorized vendors.  In such a situation, producers and financiers hardly see any of the economic value of their creative productions.

As recently as 2015, Nigeria’s film regulatory agency merely posted online the existing laws, enforcement actions, and arrest details for film copyright infringement.  Industry insiders find such measure woefully inadequate, and they have pressed for stronger copyright laws.  They have even led a campaign to expose violators, including posting photos and films of alleged pirating operations.

African digital content startups are trying to change this equation with the use of subscription-based VOD. For example, a company called iROKO Partners licenses and streams Nollywood content to global subscribers for a fee of $1.50 a month per subscriber.  In Jason Njoku’s words, “The focus is to take this popular movie industry, digitize it, and put the right framework around it to capture the proper value.”

Notwithstanding the rise of VOD as a platform for Nollywood content, an ongoing concern has been the reliability of the internet in Nigeria.  New solutions are emerging as well: iROKO has challenged its developers to create smaller Nollywood movie files and more direct download options. Another Nigerian startup, SOLO, is bridging the device and broadband gap by offering entry level smartphones (around $75) and its View App that allows customers to buy and rent digital content at download hotspots throughout the country.

According to Bright (2015), “Competition in African digital entertainment is heating up. In 2014, Africa Magic, a Naspers owned South African satellite TV channel, announced its $8 a month Africa Magic Go VOD package. Then there’s Kenyan startup Buni.tv’s new Buni+, a $5 a month streaming movie service. Each has a heavy focus on consumers of Nigerian content. Meanwhile, YouTube is also becoming a competitor. Taking a cue from U.S. disruptors like Netflix, Africa’s digital film platforms are already creating proprietary programming. iROKOTV is now directing its own productions through its ROK Studios. So too is Nairobi based Buni.tv.”

“Nollywood’s popularity across Africa and the diaspora certainly demonstrates the capacity of the films to travel,” says Nigerian film producer and financier Yewande Sadiku.  Nigerian movies are not merely demanded by other African markets, but have already proven to have a global reach.

Source: Bright, J. 2015. Meet ‘Nollywood’: The second largest movie industry in the world. Fortune, June 24. Retrieved from: http://fortune.com/2015/06/24/nollywood-movie-industry/

Which part of the Diamond Framework is the strongest in Nigerian film industry?