Economy

The Economics of Big Brother Naija (BBN)

“When LayCon was announced the winner of the BBN Season 5 edition, the trend table on twitter disappeared”

Big Brother Naija (BBN) is the Nigerian version of the reality TV series created by John de Mol Jr’s Endemol, a Dutch TV network. The Big Brother franchise named after George Orwell’s “Big Brother” was first broadcast in the Netherlands in 1999 with a record 4 million out of 15 million Dutch people watching the final episode on 30th December 1999. The production format was sold across different countries where it has been adapted to local cultural norms and production codes with varying degrees of success. However, the theme of the show still relates to the Orwellian influence of mass surveillance, and “Big Brother’s” absolute power.

In Africa, the reality TV show started with Big Brother Africa, which first premiered in 2003 and based in South Africa with the participants coming from 14 different African countries. Along the line, Big Brother spread slowly, across the continent, with Angola-Mozambique, South Africa, Nigeria, and more recently Cameroon having their respective Big Brother reality TV shows.

Big Brother Nigeria premiered in 2006 before an 11-year hiatus when it rebranded itself as Big Brother Naija (BBN) in 2017, becoming a massive hit among television viewers in Nigeria and beyond. Since then, the show has been recording improved participation from both the viewers and sponsors due to the growth in the acceptance.

By Economics standard, we follow the money and the monetary impact on the real sector of the economy. Based on the last edition of the BBN, the next few paragraphs explain what we call the Economics involved in a show like that.

The Value Chain

The BBN is a program/show of Multichoice (the owners of DStv and GOtv), that is, Multichoice owns it. This means Multichoice undertakes some form of investment for the success of the show, the majority of which is the cost of the BBN house (N2.5 billion), cost of producing the show for the whole 70 days (N1 billion). By our estimation, the cost also includes the grand prize for the winner (N85 million) as well as N30 million for the 30 lucky fans during the presentation of awards to the winner of the season 5 edition. The N1 billion cost of producing the show includes the payment of salaries to the 374 production crew and talents employed to make the whole live show seamless, marketing, talent performances. The N2.5 billion cost of the BBN house includes the building design permits, civil engineering works, air conditioning, provision of furniture, and other sunk costs absorbed by the pre-existing BBN house.

Along with the owner of the show, are the sponsors of the show of which Betway was the headline sponsor. By doing this, Betway gets to pay Multichoice a certain amount of money (allegedly $1 million compared to $5 million paid by Bet9ja in 2019) as Multichoice is literarily giving Betway the platform to showcase its products and services to the teeming number of viewers.

Elsewhere, there are also the other sponsors of the show and they range from Pepsi, to Airtel, flutterwave, Guinness, Indomie, TravelBeta, Kuda Bank, etc. They also pay a different amount of money to Multichoice, which is the owner of the show.

Next in line in the value chain are the Small and Medium Scale Enterprises (SMEs) which include the food suppliers, fashion designers, wig makers, lounges, housekeepers, etc. They also form a significant part of the value chain because they ensure the housemates are good looking and appealing to the audience. They also ensure food items and other products get to the BBN house whenever they should be there.

Joining the SMEs in the value chain, are the crew members. These are the producers, directors, videographers, sound engineers, business analysts, and even Big brother himself. These are the people that ensure the shows stay up and running for 24 hours a day for the whole 70 days.

The crew members tickle down to the entertainers which include the DJs, Artistes, Social media handlers, bloggers, and digital marketers. These are the part of the value chains that ensure the promotion of all the housemates, the show itself, Multichoice, and the sponsors of the show. They are the ones that make sure social media is always filled with talks about the shows. That then tends to pull people to watch the show and know what it is about. The curiosity to know what the show is about turning an individual into one of the audiences/customers of the show.

Telecommunications operators also have a role to play in the value chain as they are the middlemen between Multichoice and the audience whenever it comes to voting with SMS. As part of the telecoms operators, the value-added service providers also come in as a part of the value chain. These are the companies that are in charge of the development of the short codes used for the SMS voting.

The 20 contestants of the show are also a major part of the value chain because they are the contents the viewers sign up for. They are the reasons for BBN.

The last in the value chain is the viewers or audience, who are the final consumers in the value chain.

Hence, just like the chain of production, without one of the components in the value chain, some or most of the remaining components cannot exist properly.

What then does each Value Chain Gain?

Multichoice gains through increased subscribers to DStv and GOtv. This is because people want to watch the show and cannot do so without buying any of the mentioned decoders. Getting the decoders also mean more voting power. So to keep a housemate in the house, one needs to have enough voting power. With any of the decoders and subscription plans, voting power increases with each upgrade in a plan. Multichoice also gains through Voting. There are four methods of voting- Mobile Site, Desktop website, MyDStv & MyGOtv app, and SMS. While voting on the mobile and desktop site is free, it is N30/vote with SMS and free on the apps provided the individual is a subscriber. Aside from that, Multichoice also gains from the payment sponsors make to be one of the sponsors of the show.

For the Sponsors, their gains come through brand awareness which translates to an increase in sales. For a start, it is estimated that after 49 days of airing, the show reached a milestone of 1.2 billion audiences, including 24.3 billion digital expressions created on social networks in the first one month of airing. Little wonder why the trend table on twitter crashed on the day the winner was announced. Aside that, awareness is also created through the house games, tasks, Saturday parties and mentions by the Hosts. In fact, without BBN, the Airtel’s “444” advert would not have been this popular. That increases the awareness of such product Airtel is trying to sell with the advert, and it translates to an increase in sales for the telecommunications company.

SMEs and Entertainers also gain in form of increased patronage. This is because their names or the mention of their names alone, bring in customers for them, increase patronage, and translate to an increase in sales. It also keeps them in employment, with a multiplier effect of creating indirect jobs especially as the orders increase rapidly than what a one-man or one-woman could handle.

Telecoms operators also gain in form of SMS revenue sharing with Multichoice. Not all the amount generated from SMS revenue goes to Multichoice. In fact, the telecoms operators receive the largest share of the money. This is the same scenario that plays with the banks when you transfer money using USSD. A certain percentage goes to the bank while the rest goes to the telecoms operators.

The contestants also gain through increased followers, brand engagements, ambassador appointments, venture into the creative scene, and so on.

For the audience, the entertainment is satisfactory and that is the use of the show- Contents, Entertainment. Yes, we are entertained.

Following through with the Money

Following the money, our major focus is on Multichoice (the company) which is the owner of the show. As highlighted earlier, there are four major ways the company makes money from the show and they are:

  1. Sponsorship: All the sponsors of the show, pay Multichoice different amounts of money based on the category of sponsorship. For example, it has been alleged that Betway paid $1 million to be the headline sponsor of the show. For us, we estimated the total sponsorship amount at N11 billion when we factor in the amount obtained from Betway, Indomie, Guinness, TravelBeta, and the likes, to be part of the sponsors. Our estimate was based on the fact that N10 billion was raked in from sponsors in the 2019 edition of the show based on Plaqad survey of experts. Hence, the estimated amount factored in historical sponsorship amount (2017, 2018, and 2019) which have been growing edition after edition.
  2. SMS: This is the only voting platform that is not “free” as one had to pay N30 per vote. We did an online poll via our twitter handle and found out that the majority of the voters did not vote using SMS. Compared to the previous editions, our survey shows that SMS was not a popular method of voting in the BBN5, and the plausible reason we can attach to that is due to the shrinking income of consumers brought about by the lockdown measures introduced to reduce the spread of the COVID-19 pandemic. This led to citizens staying at home, some laid-off from their work, thereby making them deep into savings to keep up with consumption amid upward pressure in domestic prices of goods and services.

Because the sample size was small, we decided to estimate that out of the 900 million number of votes recorded for the 70 days, 35% was done through the use of SMS. And 35% of 900 million votes, translates to 315 million votes. Multiplying by N30, we estimate the total amount of revenue generated through voting to be N9.45 billion. Further research and talks with the value-added service providers for the telecoms, made us know that a huge part of the revenue from SMS goes to the telecoms operators. Specifically, MTN rakes in 70% of the revenue, Glo rakes in 80% while Airtel rakes in 75%. Withholding tax of 10% is also charged and the value-added service provider (the shortcode- 32052) receives 5%. By taking the average, we estimate that Multichoice only receives 15% of the SMS revenue.

  • Mobile and Desktop Site: Provided that a website is monetized, an increased number of organic visitors translate to getting some amount of money from Google. Aside from that, clicks also generate money when the website is monetized. An increase in the number of visitors also leads to improved sales through the different products and services advertised on the website.
  • MyGOtv and MyDStv Apps: These only work for those that are subscribers to any of the two decoders and the number of votes using them is higher than using website and SMS. With this, there tends to be an increase in the sale of GOtv and DStv decoders, and this serves as a form of revenue booster.

In our analysis, however, we only factored in the first two sources of revenue while leaving the other two out as they cannot be quantified unlike the first two. Also, including the fourth revenue source will be double-counting because it will most likely filter directly into decoder sales and not into the BBN account of Multichoice. That is to say, it is more of an indirect revenue for BBN.

Going by our analysis, therefore, we estimate that Multichoice generated roughly N12.42 billion organizing the BBN season 5. It however incurred a total cost of N3.62 billion from previous calculations and this translates to an estimated profit of 8.8 billion naira. This translates to a Return on Investment (ROI) of 243.1% and a Profit Margin of 70.9% in 70 days.

What then for the Economy?

Multichoice erecting a BBN house in Nigeria at the cost of N2.5 billion is a form of capital inflow into the country. The multiplier effect is the creation of job opportunities for the builders and fitters. Multichoice also pays tax to the government of Lagos state, and that adds to the fiscal buffers of the state. DJs and artistes are invited to perform at the Saturday night parties- They are lodged in hotels and are flown from other parts of the country in some instances, to perform. This has a positive impact on the hospitality and transport sectors. Jobs are also created for PR agencies, broadcasting firms and TV stations due to the heavy advertising campaigns run on the show by the different sponsors. The impact is increased flow of money in form of revenue and prompt payment of taxes by the firms involved. The job opportunity is created for the crew members, the make-up artists, fashion designers, and so on. This has a net positive effect on employment. Overall, the addition of the monetary value of all the value-added activities, lead to the injection of an estimated amount of N8 billion into the Nigerian economy

In conclusion, it is not as rosy as you might have been thinking especially when it comes to revenue from the SMS voting platform. Multichoice gets more revenue from sponsorships than from the voting platforms. That said, BBN will continue to be a success in Nigeria for a long time due to some favorable reasons. First, the growing number of internet subscribers (149.77 million as of August 2020), social network users (24.59 million as of 2019), and connectivity (43.3% broadband penetration as of August 2020) which provide ubiquitous streaming service experience. Second, the demographic nature of the economy (206 million citizens) which is positively skewed towards the youth (c. 65% under the age of 25 years). Three, unemployment (27.1%) and underemployment (28.6%) rate in the country.  Four, leverage on the success of previous editions.

With contribution (second, third, and fourth paragraph) from Sheriffdeen Adeoti and Samuel Adebisi (25th paragraph).

For questions, opinions, corrections, and contributions, please drop them in the comment section. You can as well contact the writer on Twitter @K2ice_Jr

Additionally, should you need data-backed research and analysis for your business or research needs, you can contact us by sending a mail to info@giftedanalysts.com

12+

4 Comments

Leave a Reply

%d bloggers like this: