REINVENTING THE MENA CONTENT INDUSTRY
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.
EVOLUTION TOWARDS DOMESTIC CONTENT MARKETS
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.
OTT HITS THE MAINSTREAM
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.
ARABIC ORIGINAL PRODUCTION HAS ARRIVED
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