Cable Technology Feature Article
Content Leads the Middle East's TV Explosion
By Tara Seals, TMCnet Contributor
Pay-TV penetration is slowing down in mature markets like the United States and Western Europe, but thirst for fresh content and exclusive sport broadcasts is propelling the market in the Middle East. Last year was the third in a row and the eighth since 2004 where pay-TV penetration rates grew there—challenging, for the first time, the region’s dedication to free-to-air TV.
According to IHS’ (News - Alert) annual Middle East Media Market Monitor, the MENA pay-TV market grew rapidly in 2013, as it has done for eight of the last 10 years, reaching 4.35 million subscribers, or 9.4 percent of the households in the region.
“There are 300 million households in the region and it is growing faster than any other emerging market,” said report author Constantinos Papavassilopoulos, senior analyst at IHS Technology. “That presents huge opportunities for businesses in this sector.”
Programming Draws Viewers
Overall, the pay-TV market in the Middle East grew 11.2 percent in terms of market share and 14.13 percent in terms of subscriber numbers. Over the last decade (2004 to 2013), the number of primary pay-TV subscribers almost quadrupled from 1.33 million in 2004 to 4.35 million in 2013, growing at an annual average rate of 14.64 percent.
A big driver for that is exponentially increasing content. Across the region, providers have been beefing up their programming bouquets, which has contributed significantly to subscriber growth and which has driven more investment in fiber, and video infrastructure equipment and software.
For instance, OSN's Arabic channel Ya Hala HD this year became the exclusive home for the final chapter of the wildly popular Turkish TV drama Hareem Al Sultan. The show, which documents the story of Sultan Suleiman has, since its premiere, recorded the highest viewing figures of the many Arabic and Turkish series shown on OSN's pay-TV platform.
"The fourth season of Hareem Al Sultan will bring audiences up-and-close with one of the prime eras of the Ottoman Empire, which flourished during the reign of Sultan Suleiman. Following his death, the Kingdom was brought to ruins," said Khulud Abu Humus, executive vice president of programming and creative services, OSN. "This will be one of the most riveting series of all time to be telecast first and exclusively on OSN Ya Hala HD.”
And sports continue to be a subscriber acquisition tool. The rights to air FIFA 2014 World Cup from Brazil are held by beIN Sports in the Middle East, which charges new subscribers about $250 for an annual package of channels that includes games from the upcoming tournament.
A combined total of 151 channels are now provided by the four subscription-based satellite channels in the Arab world, with OSN leading the pack in terms of volume of content, according to a new survey from Arab Advisors Group.
BeIN Sport Arabia meanwhile offers 20 channels, providing the largest amount of subscription-based sports programming, while Al Majd TV, owned by Saudi businessman Abdur-Rahman Ashmemri, has the fewest paid channels, including an Arabic news service, Arabic documentary channels and Arabic children's channels.
Abu Dhabi TV Network, which has recently added extra entertainment and sports content after losing the regional broadcast rights for the English Premier League to BeIN Sport Arabia, provides its entire pay-TV offering in high definition (HD).
"By August 2013, OSN had the highest number, with 102 channels (including the three pay-per-view channels and an on-demand channel), Abu Dhabi Sports and [BeIN Sport Arabia] came in second with 20 channels each, while Al Majd TV provided nine encoded channels," said Hiba Al Atiyat, research analyst at Arab Advisors Group. The region's latest pay-TV operator, My-HD, was not included in the report.
All of this has the potential to disrupt the region’s preference for free-to-air (FTA) TV. "Despite the promotions of pay-TV operators, most of the Arab world remains tuned to FTA satellite TV channels. Economically, many viewers seem to favor the free content of FTA channels rather than paying for TV content," said Arab Advisors Group’s Al Atiyat.
That’s changing however, as content for paid channels continues to ramp up. HD could be one key in pay-TV’s favor.
HD Sharpens its Impact
The HD channels on offer in the MENA region have also experienced an explosive growth, both subscription-based and FTA. MENA has gone from just two HD channels in 2009 to 158 in the first two months of 2014.
About 71 HD channels, or around 45 percent of the total offer, are being provided for free throughout the region. The free HD offer in MENA is higher than the total HD offer in countries like Italy, Spain, Russia, Australia and South Africa; and unlike in markets like the United States, pay-TV operators do not have a policy of up-selling their HD content.
But, Dubai-based My-HD, which launched in mid-2013, is testing the willingness to pay for HD content with a low-cost offer of HD channels tied with the purchase of a specific set-top box, with no further subscription charges for the first 12 months. It keeps adding content, most recently launching three channels from Herring Networks: One America News Network, AWE and AWE 3D.
“This agreement increases our HD channel offering to over 40 quality networks, which is more than any other DTH/satellite TV platform in the region,” said Cliff Nelson, the CEO of My-HD. “We will continue to strive to provide the best viewing experience to our subscribers in the MENA region.”
In terms of access segment growth, both IPTV and satellite continue to make their mark throughout the region. High IPTV uptake significantly contributed to last year’s pay-TV growth in the Middle East according to Pyramid Research. One in four pay-TV households (25.56 percent) now take an IPTV offer, IHS said. To put that in perspective, just four years earlier, in 2009, only one out of 15 pay-TV households did so.
"Latin America and Africa and the Middle East are the smallest IPTV markets globally, with a combined estimate of 2.3 percent of global IPTV subscriptions at year-end 2013, or 901,000 and 1,432,000 subscriptions respectively," says Leslie Arathoon, research director at Pyramid Research.
Africa and Middle East IPTV revenue will grow at the second fastest CAGR behind Latin America, at 22.1 percent between 2013 and 2018, she noted.
Satellite is still the region’s star, however. According to IHS data, at the end of 2013 satellite controlled 74.4 percent of the pay-TV market while IPTV’s share stood at 25.56 percent. BeIN Sports Arabia and Dubai-based OSN essentially dominate MENA’s satellite pay-TV market: the combined market share of BeIN Sports Arabia and OSN has fluctuated between 85 percent and 82 percent.
OSN has been steadily targeting new markets and growing by acquisition (most recently, it bought South-Asian pay-TV operator Pehla); IHS said that between Q4 2012 and Q4 2013, OSN’s subscriber base increased by 32.3 percent.
Meanwhile, Al Jazeera integrated its global sports operations under the beIN Sports brand on 1 January 2014, and simultaneously launched an over-the-top (OTT) online video service across MENA. The Qatar-based beIN Sports Arabia now reaches 2.43 million active subscribers across 23 countries in the Middle East and North Africa (MENA) – recording 26 percent subscriber growth in 2013 – according to Dataxis.
Dataxis also said that the sports television network took around 81% of its pay-TV revenues from direct-to-home (DTH) satellite TV subscribers, with the remainder accessing its channels via IPTV networks in Qatar, Saudi Arabia and the UAE. At the end of 2013, 1.34 million or 56% of beIN Sports' total MENA subscription base lived in Saudi Arabia and the UAE.
Satellite TV is expected to take two-thirds of the 2020 total revenues for the region (similar to the 2013 proportion), according to Digital TV Research. Satellite TV revenues will reach $3.74 billion in 2020, up by $1 billion on 2013 and nearly double the 2010 total.
Edited by Maurice Nagle