MENA a maturing market with familiar growth issues

With a young and fast-growing population, a growing middle class, a solid medium-term economic outlook – despite the turbulence caused by falling oil prices in the Gulf States – the media market in the Middle East and North Africa is a positive one.

CABSAT in Dubai
CABSAT in Dubai
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With a young and fast-growing population, a growing middle class, a solid medium-term economic outlook – despite the turbulence caused by falling oil prices in the Gulf States – the media market in the Middle East and North Africa is a positive one.

Pay TV households, for instance topped a record five million last year, growing 8% year-on-year largely on the back of competition between Qatari-based media group beIN and Dubai-based OSN. These operators dominate the market, controlling over 60% of subscribers and over 55% of revenues and both were forced to launch their own on-demand services to counter the introduction over the past couple of years of international OTT giants Netflix and Amazon.

For example, beIN’s on-demand service launched in February this year with an array of exclusive content including the back catalogue of Miramax, the film producer set up by Harvey Weinstein and acquired by BeIN in 2016. It is also launching an Olympic-only online service in time for the Winter Games in February.

“The MENA region is one of the fastest growing regions for pay TV, in both subscriber numbers and revenues,” said Constantinos Papavassilopoulos, Senior Analyst at IHS Markit.

With online video services in the region surging 137% in 2016, future subscription is expected to contribute 45% of total market revenues or close to U$2 billion by 2020.

This positive outlook is boosted by cellular network rollouts, with the bonus of creating a massive new base of screens for watching video – although the reality is somewhat patchy. On the one hand, Bahrain, Kuwait and the UAE have a penetration rate of over 90 per cent, placing them among the most mobile saturated countries in the world. These countries will be in the vanguard of 5G services anywhere in the world by 2020.

On the hand, other Arab States such as Djibouti and Somalia less than a third of the population subscribe to mobile services. Taken as a whole, MENA has now fallen behind Asia Pacific as the second least penetrated region in the world. Analyst IHS Markit projects the region will fall further back further in terms of subscriber penetration, reaching 63% by the end of 2020 compared to a global average of 73%.

Strategies to adapt content and distribution to mobile and OTT are under the spotlight in the conference sessions at CABSAT’s Content Congress.

MENA is no different from other regions in suffering from video piracy. A report by advisors IDC estimates illegal content distribution costs the local industry more than US$750m every year.

“Piracy in MENA impacts the pay-TV industry immensely,” said Mohammad Al Subaie, executive director of commercial affairs at beIN.

Posted by Adrian Pennington, technology journalist. 11th December 2017.