Digital Studio - - 2018 YEAR END REVIEW -

The con­tent in­dus­try in MENA is in the grip of seis­mic change says Nick Grande, CEO of Chan­nel Sculp­tor. Af­ter two decades of dom­i­nance, FTA satel­lite TV still leads view­er­ship but has be­come com­mer­cially un­vi­able. Con­sumers are wak­ing up to global and re­gional in­ter­net- de­liv­ered ser­vices and the prom­ise of a new wave of premium Ara­bic con­tent.

For sev­eral years, the MENA TV in­dus­try has been held back com­mer­cially by is­sues such as mar­ket frag­men­ta­tion, tooth­less reg­u­la­tion and a lack of trans­parency. Most re­gional broad­cast­ers now de­pend on in­vest­ment from gov­ernemtns to sus­tain their op­er­a­tion and growth.

Pan-re­gional free to air (FTA) satel­lite TV re­mains the main­stay of view­er­ship, reach­ing 95% of homes and view­ing time of 4+ hours per day, but de­spite ma­jor ef­forts in UAE and Saudi Ara­bia, the TV ad­ver­tis­ing sec­tor lacks any cred­i­ble au­di­ence mea­sure­ment sys­tem. This vul­ner­a­bil­ity has been cap­i­talised on by YouTube and Face­book, and TV ad rev­enues have re­port­edly de­clined 25% year-on-year over the past 3 years. De­spite 20 years of in­vest­ment, lin­ear Pay-TV in the re­gion still lan­guishes in sin­gle digit pen­e­tra­tion, com­pared with global av­er­ages above 30%. Ram­pant piracy, high con­tent costs and lack of credit card pen­e­tra­tion have con­strained it to a niche of­fer­ing.


Uni­ver­sal fi­bre con­nec­tiv­ity in the UAE al­lows con­sumers to en­joy the ben­e­fits of IPTV and OTT and ex­pect the con­ve­nience of catch-up and PVR ser­vices, proper EPG in­for­ma­tion and art­work, on de­mand con­tent li­braries, search tools and rec­om­men­da­tion en­gines. How­ever, most of the 350+ mil­lion view­ers in the re­main­ing 20 MENA coun­tries don’t have high-speed broad­band, re­ly­ing in­stead on a rudi­men­tary “zap­per box” TV view­ing ex­pe­ri­ence with no TV guide and no chan­nel num­ber­ing or group- ings. Every coun­try has a dif­fer­ent di­alect and cul­ture, so most of the 980+ satel­lite channels are ir­rel­e­vant but view­ers, have no ef­fec­tive means of avoid­ing them.

In­creased broad­band af­ford­abil­ity will make in­ter­net-de­liv­ered lin­ear and VOD ser­vices an easy al­ter­na­tive to satel­lite TV. Con­sumers will gain ac­cess to con­tent tai­lored to their do­mes­tic cul­ture and in­ter­ests. In­ter­net de­liv­ery will also al­low lo­calised, mea­sur­able TV ad­ver­tis­ing to de­velop for the first time, and bring op­por­tu­ni­ties for right­sh­old­ers to mon­e­tise on a per coun­try ba­sis.


SVOD ser­vices are al­ready gain­ing trac­tion in the re­gion. Net­flix and Ama­zon signed their first tele­coms op­er­a­tor part­ner­ships in the re­gion this year. They join emerg­ing mar­ket OTT plat­forms such as Starzplay, Iflix and VuClip and broad­caster-owned ser­vices such as Shahid Plus (MBC), Wavo (OSN) and Weyyak (Zee).

Re­gional OTT ser­vices rely heav­ily on tele­coms net­works for their growth, be­cause in the ab­sence of credit cards and di­rect deb- it, di­rect car­rier billing is their most ef­fec­tive pay­ment col­lec­tion op­tion. It’s no sur­prise then that a trend to­wards op­er­a­tor-backed plat­forms is also emerg­ing. Ser­vices such as Jawwy TV com­bine var­i­ous lin­ear FTA, pay TV and VOD ser­vices. Jawwy’s ad­van­tage of its par­ent STC con­trol­ling the largest tele­coms mar­ket in the re­gion, pro­vides a lu­cra­tive base from which to grow.


The wave of in­vest­ment into OTT plat­forms is also cre­at­ing a re­nais­sance in Ara­bic con­tent pro­duc­tion. Un­til re­cently, Arab pro­duc­ers re­lied on lim­ited bud­gets com­pared with in­ter­na­tional stan­dards.

With the ex­plo­sion of OTT, high end pro­duc­ers now have ac­cess to a new and well-funded cus­tomer base be­yond tra­di­tional TV net­works. There was a fur­ther boost to Ara­bic pro­duc­tion in Feb 2018 when Saudi Ara­bia an­nounced a ban on all Turk­ish con­tent. Turk­ish drama rep­re­sented 35% of all Saudi en­ter­tain­ment view­ing in 2017 and the ban cre­ated an ur­gent need for new high-qual­ity drama. MBC re­sponded with the launch of MBC Stu­dios in Septem­ber.

Even the for­mats of Ara­bic pro­duc­tions are chang­ing. For years, pro­duc­ers fo­cused on 30-episode pro­gram­ming cre­ated to serve the spike in view­er­ship and ad­ver­tis­ing bud­gets dur­ing the Ra­madan. The change in mar­ket dy­nam­ics has al­lowed pro­duc­ers start pro­duc­ing drama, with fewer episodes and big­ger bud­gets per episode. Even a small share of the $20bn+ in­vested by ma­jor global SVOD plat­forms will dra­mat­i­cally im­prove the qual­ity and range of orig­i­nal Ara­bic pro­duc­tions.

The fu­ture for the Ara­bic Orig­i­nal Pro­duc­tion looks bright for years to come.

Nick Grande, CEO of Chan­nel Sculp­tor

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