Deal focus: Boomplay aspires to become Africa’s Spotify

Africa is the world’s youngest continent, with 70% of its more than billion population aged under 30. Despite huge demand for entertainment products including movies and music from these youngsters, the region remains untapped by media giants due to the relatively slow development of telecommunications infrastructure and high language and cultural barriers.

Ambitious players like music streaming service provider Boomplay see this disconnect as an opportunity. While Spotify waited until last year to launch in Africa, it entered the market in 2015, riding on the popularity of the smart phones churned out by its Chinese parent, Transsion, now the region’s top handset maker. Now Boomplay – which was originally a pre-installed music player on Transsion phones – claims to be Africa’s number one for music streaming.

GPs including Maison Capital and Yunshi Capital have piled in, bullish on the company’s market position and potential. They recently committed $20 million in Series A funding, with Maison understood to have contributed $12 million from its first US dollar fund, which closed at $200 million last September.

“We are pretty excited about the African market. It is still a ‘empty sea’ in terms of entertainment services but with very strong demand from customers. The business model of Boomplay is similar to that of Tencent Music and Spotify. If those two can achieve huge success, I’m sure Boomplay can do so in Africa,” says Roger Wu, a partner at Maison.

The company mainly targets customers living in countries south of the Sahara Desert and now covers the most important music streaming markets in Africa, including Nigeria, Ghana, Kenya and Tanzania. Its eventual aim is to cover the entire continent.

Boomplay’s major revenue channel is subscription fees, with additional income derived from advertising and other value-add services. The company currently has 42 million users, of whom 20 million are monthly active users.

A key competitive edge is the local music database. Given the fragmented nature of the music industry in Africa, securing licensing rights to songs produced by independent and small to medium-sized music labels is a challenging process that involves individual negotiations. Over the past four years, Boomplay has accumulated the rights to five million songs. In addition to streaming local African music, the company has established partnerships with Warner Music Group and Universal Music Group with a view to broadening its offering.

The new round of funding will be used to enhance the company’s music database, recruit additional talent, and improve service quality, further solidifying its market-leading position in Africa. The company also plans to find new ways to monetize its services. Wu suggests that Tencent Music – which makes money through virtual gifting sales and sub-licensing to other platforms, as well as subscriptions – could be a good reference point.

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• Topics
• Greater China
• MENA
• Media
• Technology
• Early-stage
• China
• Africa
• Maison Capital
• TMT