The Harsh Truth About Streaming in Africa - More Viewers, More Losses
Expensive bandwidth, low ARPU, and YouTube’s global subsidy machine expose the impossible economics facing African broadcasters.
I am often asked at Kana TV (a premium entertainment broadcaster in Ethiopia that I lead as its CEO and co-founder) why we don’t launch our own streaming app. The answer to this question can be a long and frankly an exhausting one. I explain it below at best using examples and a more pan-African context. This is a long read, so brace yourself.
Imagine any major African broadcaster with millions of linear TV audiences - from Nigeria’s Channels TV to Kenya’s Nation Media Group to South Africa’s e.tv - facing declining advertising markets and increased competition for the same advertiser budgets. Wouldn’t launching a streaming platform be a huge monetary uptick, especially given Africa’s booming digital population? The answer reveals one of the most counterintuitive truths in modern media economics.
The Hidden Variable Costs of Digital Delivery
Every stream represents a discrete data transmission that scales linearly with viewership. A two-hour Nollywood movie in HD format consumes approximately 3 GB of bandwidth per viewer. When a hit African series attracts one million viewers across Nigeria, Kenya, South Africa, and Ethiopia, platforms must deliver 3 million gigabytes of data through content delivery networks (CDNs). These CDNs are essentially networks of servers placed around the world that store and deliver video content to users, similar to how warehouses store and ship physical products to customers.
Across African markets, CDN providers charge $0.08 to $0.12 per gigabyte, among the highest rates globally. To put this in perspective, delivering one gigabyte costs roughly the same as sending 200 text messages. These elevated rates reflect limited local server infrastructure and expensive international internet connectivity through undersea cables connecting the continent to global internet networks.
Money Heist Across African and American Markets as a Case Study
To illustrate how dramatically economics change across regions, consider Netflix’s hit series “Money Heist” (La Casa de Papel). The show cost approximately $50 million to produce across five seasons. Here’s how the same content performs in different markets:
American Market Performance:
1 million viewers watching all 47 episodes
Each episode: 50 minutes = 2.5 GB per viewer
Total data delivery: 47 episodes × 2.5 GB × 1 million viewers = 117.5 million GB
CDN costs in US: $0.03 per GB = $3.5 million in delivery costs
ARPU: $16 per month × 12 months = $192 per viewer annually
Total revenue: 1 million viewers × $192 = $192 million
Content cost allocation: $50 million (shared globally)
Net margin: $192M revenue - $3.5M delivery - $50M content = $138.5M profit
African Market Performance (Nigeria, Kenya, South Africa, Ethiopia combined):
1 million viewers watching the same 47 episodes
Same data consumption: 117.5 million GB total
CDN costs across Africa: $0.10 per GB = $11.75 million in delivery costs
ARPU: $3 per month × 12 months = $36 per viewer annually
Total revenue: 1 million viewers × $36 = $36 million
Content cost allocation: $50 million (same show, same cost)
Net result: $36M revenue - $11.75M delivery - $50M content = -$25.75M loss
The contrast reveals the brutal mathematics of streaming economics across African markets. The same content, consumed by the same number of viewers, generates $138.5 million profit in America but a $25.75 million loss across African markets.
Why Advertiser Belief in Digital Scale Collides with Streaming Reality
Advertisers frequently approach African broadcasters with statements like “everyone is on digital now, you should go digital,” often referencing the explosive growth of social media platforms and short-form content consumption. They point to TikTok’s millions of African users or Instagram’s penetration rates as evidence that audiences have migrated online. This logic assumes that social media engagement translates directly to willingness to pay for streaming subscriptions or that short-form content consumption patterns apply to long-form video streaming.
However, this conflates different types of digital video economics. TikTok’s 30-second videos still require CDN delivery costs to serve millions of African users, but the platform benefits from entirely user-generated content that costs nothing to produce. Streaming services face the double burden of both CDN delivery costs and expensive content production. A two-hour Netflix movie requires not only bandwidth delivery expenses but also the $50 million production budget, licensing fees, talent contracts, and distribution rights. TikTok receives professional-quality content for free from creators while only paying delivery costs.
The infrastructure requirements and cost structures for social media platforms versus streaming services represent entirely different economic equations, even when both serve video content digitally.
You Might Be Asking - How Does YouTube Manage Even in Markets Where Monetization CPMs Are Near Zero?
The YouTube paradox appears puzzling across African markets. Nigerian users alone watch over 1 billion hours of YouTube content monthly, while Ethiopian users consume millions of hours weekly, yet these markets generate minimal local advertising revenue (CPMs often below $0.50 compared to $3-8 in developed markets). Yet YouTube thrives across Africa, where subscription services struggle. The answer lies in three fundamental structural advantages.
Google’s Infrastructure Ownership Advantage
Unlike Netflix, which purchases CDN services from third-party providers like Akamai or Cloudflare at market rates, Google owns its entire global delivery infrastructure. Google Global Cache represents one of the world’s largest private content delivery networks, with servers installed directly inside telecommunications companies’ facilities across Africa.
MTN Group, Safaricom, Vodacom, and Ethio Telecom host Google cache servers within their data centers across multiple African markets. When Nigerian or Ethiopian users watch YouTube videos, the content streams from servers physically located inside local telecom facilities rather than traveling through expensive international bandwidth from Europe or America. This arrangement transforms delivery costs from $0.10 per gigabyte (Netflix’s cost) to approximately $0.005-0.01 per gigabyte for Google across African markets.
Zero Content Production Costs
YouTube’s content model eliminates the largest expense category that cripples subscription services in low-ARPU markets. While Netflix spends $50 million producing Money Heist, African content creators produce millions of hours of programming at zero cost to Google. Nigerian musicians, Ethiopian comedians, Kenyan educators, South African entrepreneurs, and Ghanaian filmmakers create content that attracts both local and diaspora audiences without Google investing a single dollar in production.
Cross-Market Subsidization Through Global Scale
Google’s advertising revenue in 2022 exceeded $280 billion, with the vast majority generated in high-CPM markets like the United States and Western Europe. This revenue scale enables YouTube to operate at a loss across African markets while maintaining global profitability. American and European advertisers essentially subsidize African users’ YouTube consumption.
More importantly, YouTube benefits from network effects that span continents. A Nigerian artist’s video uploaded to YouTube attracts viewers from the Nigerian diaspora in Houston, London, or Toronto. An Ethiopian musician’s content reaches diaspora audiences in Washington DC or Stockholm. These international views generate advertising revenue at $3-8 CPMs that justify the local upload and storage costs across Africa, where CPMs approach zero.
How About TikTok and Other Social-First Video Platforms?
TikTok’s success across African markets follows similar economics to YouTube, but with even more favorable cost structures. TikTok also faces CDN delivery costs for video content, but benefits from several additional advantages that streaming services cannot replicate.
Like YouTube, TikTok’s content comes almost entirely from user-generated videos created at zero cost to the platform. African creators produce millions of hours of content - from Nigerian comedy skits to Ethiopian cultural dances to South African music performances - without TikTok paying production costs, licensing fees, script development, or talent contracts.
The bandwidth mathematics also favor short-form content dramatically. A single 50-minute Money Heist episode requires 2.5 GB of data delivery per viewer. The same 2.5 GB could deliver approximately 150 one-minute TikTok videos to the same viewer. This means TikTok can serve 150 pieces of user-generated content for the same delivery cost that Netflix pays for one episode of professionally produced content that costs millions to create.
TikTok also benefits from ByteDance’s global advertising revenue and cross-market subsidization, similar to Google’s model. The platform can afford to operate at a loss in African markets while building user engagement and content inventory that may attract international audiences.
The critical distinction remains content costs. While streaming services must pay for scripts, production crews, actors, directors, post-production, music licensing, and distribution rights, social-first video platforms receive professional-quality content for free from creators hoping to build audiences. This eliminates the largest cost category that makes streaming economics impossible in low-ARPU African markets.
The Paradoxical Advantage of Traditional Broadcasting
In a strange twist, these streaming economics actually extend the lifeline of traditional television broadcasting across Africa. While advertisers push digital transformation narratives, satellite and terrestrial broadcasting maintain fundamental cost advantages that streaming cannot match. Producing high-quality content for traditional broadcast carries fixed infrastructure costs that serve one viewer or millions equally.
At Kana TV, reaching one million Ethiopian viewers through our satellite distribution costs the same whether we have 100,000 or 5 million total viewers. Our content production investments, transmission infrastructure, and operational expenses remain constant while our potential audience scales without additional variable costs. This represents the opposite economics of streaming, where each additional viewer adds delivery expenses.
Traditional broadcasters can invest in premium content production, hire talented producers, and create compelling programming without worrying about per-viewer delivery costs. A high-budget Ethiopian drama series that costs $500,000 to produce can reach millions of viewers through satellite transmission for the same fixed infrastructure cost. The same content delivered through streaming would accumulate massive variable costs as viewership scales.
The Impossible Economics for African Broadcasters
For African broadcasters with millions of linear TV audiences, the streaming narrative seems particularly tempting. “We have the world’s youngest and fastest-growing population. Nigeria alone has 200 million people. Kenya’s middle class is expanding rapidly. Ethiopia has ≈132 million people with growing internet access. South Africa has established internet infrastructure. The scale would make us super profitable. Content consumption is exploding across our markets. We have millions of viewers on linear TV already across multiple countries - let’s pivot them to subscription and multiply our revenue per user.” This logic appears sound until confronted with the unforgiving mathematics of streaming delivery costs.
The population scale argument collapses when each additional viewer adds variable costs rather than marginal revenue. Africa’s high content consumption becomes a liability when delivery expenses scale linearly with viewing hours. Existing linear TV audiences across Nigeria, Kenya, South Africa, and Ethiopia represent zero marginal cost viewers who become expensive streaming customers the moment they migrate to digital platforms.
African streaming services face structural disadvantages that no amount of content quality, Nollywood productions, Ethiopian cultural programming, or pan-African marketing sophistication can overcome. They cannot match YouTube’s delivery cost advantages, Netflix’s content investment capabilities, or global platforms’ cross-market subsidization models. The physics of data transmission and the economics of content production create barriers that technology adoption alone cannot solve.
Unless fundamental changes occur in data transmission costs, satellite delivery infrastructure, or content production economics, African broadcasters face an impossible competitive landscape in streaming. Traditional broadcasting remains their most viable path to profitability and audience reach across the continent.
The future points toward YouTube becoming the television of tomorrow across Africa, a transformation already accelerating from Lagos to Addis Ababa to Nairobi to Cape Town. YouTube’s infrastructure advantages, content model, and cross-market economics position it to dominate video consumption in ways that subscription services and African broadcasters cannot replicate. For African media companies, the streaming revolution represents a compelling mirage rather than a sustainable business opportunity.
The harsh mathematics reveal that in streaming, more African viewers truly means more losses, not more profits.
So the next time you find yourself thinking “with this many viewers, imagine if we could even capture just 5% of them and get them to pay $2-4 monthly! We would be making millions,” remember this: yes, you absolutely would be making millions... if the content proved compelling enough for customers to subscribe, if you could somehow bypass the fundamental physics and mathematics of streaming delivery costs, and if you could still walk away with sufficient margins to declare “profitable” at the bottom of your profit and loss statement. Until those conditions align, the streaming dream remains exactly that for African broadcasters.