This week, as AIG’s bonus payment plan continues to draw criticism, I began thinking about how the global recession is affecting popular demand for Nollywood films. The recession has certainly taken a toll on the Nigerian economy. In 2008, Nigeria’s GDP fell by 9.1% from the previous year, as compared to a 2% decline in the U.S. during the same period.
Yet the demand for certain goods has actually increased during this recession: candy, Spam, and condoms have all reaped record profits in the American marketplace. In these times of financial hardship, many people have decided to reduce expensive outings and have opted to stay close to home for entertainment. As Nollywood is primarily known as a “home video industry,” does it fall within this category of recession-proof goods? Or do consumers consider it a luxury that they can live without?
Since most economic transactions in Nigeria are not tracked, it is difficult to monitor Nollywood’s sales and distribution statistics. Most reports are gauged by word of mouth. According to a March 2009 Nigeriafilms.com article, many producers, directors, and marketers have complained of a recent decline in profits and consumption. Some actors report 50% pay cuts, while video club operators complain of a similar dip in demand.
But can this decline be blamed solely on market forces? In the above article, a member of the Video Club Owners Association of Nigeria (VCOAN) primarily attributes his business woes to frequent power outages in the region. Other Nollywood actors blame the downturn on the broadcasting of Nollywood films on DSTV’s Africa Magic channel, which is available throughout the African continent. In addition to reducing the market value of the films through repeated broadcast, Africa Magic lowers the value of Nollywood product by paying a paltry US$1000 acquisition right per film. This is widely considered an inexpensive rate for such broadcasting rights because it doesn’t cover the average budget of a film (which ranges between US$20,000 and US$100,000).
Regardless of the cause of the decline, many insiders seem to believe that the Nollywood industry is heading south after almost two decades of unprecedented prosperity. What do you think? What can be done to save the industry?