Mdundo Strategy Update // Expects to Reach 50m Users by 2025

Mdundo Strategy Update // Expects to Reach 50m Users by 2025

Mdundo.com is pleased to announce a strategy update for the period June 2022 to June 2025 including guidance for the year 2022/23.

The company expects 50m users and positive EBITDA by 2025. For the financial year 2022/23, 25m monthly active users and a growth in revenue to DKK 13-16m are expected.

“Our growth strategy over the last 2 years has paid off with strong user growth and consistent revenue growth across our core markets. Looking forward towards 2025 we will continue focusing on aggressive growth in users and revenue but with an increased focus on driving value per user and we expect a positive EBITDA by end-year ending 2025.” CEO, Martin Møller Nielsen.

As part of the IPO process in September 2020, Mdundo presented a two-year strategy and guidance. During these two years, Mdundo has grown the number of Monthly Active Users by 290% from 5m to an expected 19-20m monthly active users by June 2022 and revenue has grown approximately 340% over the same period. The Company is now presenting “2025 strategy” as well as 2022/23 guidance.

Mdundo’s 2025 Strategic Focus will be towards the year 2025, where the company’s focus will be around growing it’s monthly active users from an expected 19-20m monthly active users in June 2022 to a total of 50m monthly active users.

The company furthermore strives towards a positive EBITDA in the year ending June 2025. They will also focus on an increased focus on driving value per user through paid telco products.

Last year Mdundo announced telco partnerships with Vodacom in Tanzania as well as MTN and Airtel in Nigeria. The partnerships enable the telco customers to subscribe to Mdundo’s premium products directly through their telco.

Additionally, the strategy states that Mdundo will have a deeper focus on the five biggest music markets in Sub-Saharan Africa: Kenya, Tanzania, Nigeria, Ghana, and South Africa. The five countries account for a total population of 410m people (30% of Africa’s population).

Mdundo will continue the strong focus on the mass market consumers across Africa. From 2020 to 2025, mobile internet subscribers are expected to grow with an average growth rate of 9.3% and reach nearly 500m internet subscribers.

The company will also continue its focus on locally relevant content, formats, and channels. The service is primarily accessed through the website, Mdundo.com, and has more than 100,000 African artists signed up directly through the platform offering locally-relevant music.

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The vision is adjusted from “Provide Africa with Easy and Legal Access to Music” to “Provide Africa with Easy and Legal Access to Online Entertainment”, which reflects a long-term ambition of moving into other types of online content and entertainment, like sports content and podcasts to attract a wider audience to the service.

Africa ripe for music streaming growth

According to the Advanced Television platform, music streaming in Africa has undergone a multi-speed development. The platform states that Africa’s streaming music market is undoubtedly centralized in South Africa according to Dataxis, which records around 40 percent of the revenues and almost 11 percent of the Monthly Active Users (MAUs). Combined with Egypt, Nigeria, Morocco, and Algeria, 86 percent of the total market revenues are generated by the top five countries.

The African territory also contains some specificities and subtleties that make this market unique and complex for music streaming platforms to approach.

The music streaming market is first intricately bound to connectivity and devices’ adoption. Those external factors have a major impact on streaming services’ adoption and remain the biggest challenge in the African case. In fact, the internet penetration rate is currently around 35 percent and still below 20 percent for some countries.

As for smartphone adoption, for example, the penetration rate was 35.5 percent on average in 2021. Even if the revenues are forecasted to significantly increase in the years ahead, there is still a limit to music streaming growth in Africa and streaming cannot go faster than infrastructure, says Dataxis.

As a result, the penetration of streaming services on population is expected to stay low compared to the American and European markets, at least for a bit.

Low purchasing power and the number of unbanked people in African countries are also factors that come with some challenges for music streaming services. People are generally not ready yet to pay for music streaming services, which implies that paid subscriptions are less present than in the other markets.

Most of the streaming music is supported by advertisements. The next step for many actors is thus to find a way to convert these users into actual subscribers.

Nevertheless, the African market is still to be conquered. Its large population and strong growth potential make various music platforms capitalize on it for their expansion.

As premium is not the king, most of the platforms have opted for a hybrid model and offer both paid and free versions. However, the unique aspects of the African market force the different actors to set tailor-made strategies in order to not only address the low connectivity and purchasing power but also fight content piracy, which is a real issue in every country.

For instance platforms like Mdundo have chosen to work in close collaboration with local artists, also delivering them 50 percent of their turnover, hoping that the quantity of African artists’ music available on the platform will bring success.

Boomplay, first launched in Nigeria, benefited from its partnership with Transsion, a mobile manufacturer whose smartphones have been pre-integrating Boomplay in the whole continent.

The Chinese platform Audiomack also bets on partnerships and artists while getting involved with Ziiki Media, one of Africa’s leading entertainment providers. For its part, the Nigerian actor Spinlet is popular for its weekly and monthly subscriptions that offer high flexibility to the users.

Altogether, the specificity of the African music streaming market is such that the actors will have to show a sharpened level of adaptability.

Africa can certainly be a growth lever for music streaming platforms, the latter have now to figure out how to activate it, concludes Dataxis.