Research: Rapid MEA digital conversion, but hands stay in pockets

Despite the recent social and political turmoil, rapid conversion to digital TV continues in the Middle East and Africa, according to a new report from Digital TV Research (DTVR). Digital TV penetration for the 18 countries covered in the research firm’s Digital TV Middle East & Africa report is already approaching two-thirds of the total.

Report author Simon Murray forecasts that digital penetration will reach 81 per cent of TV households by 2016. Eight countries will achieve 100 per cent penetration (and Israel will be the first to reach it, during 2011. “Another bonus for the region’s TV industry is the high birth rate, with nearly 20 million TV households to be added between 2006 and 2016,” he added.

According to DTVR, more than 40 per cent of TV households watch free-to-air DTH signals. There are 500 FTA channels serving the Arab world, many of which do not operate in a true commercial environment as they are funded by their local government or by a wealthy patron. Many FTA (free-to-air) DTH homes receive illegal transmissions of legitimate pay-TV services. FTA DTH penetration varies will be highest in Jordan (86 per cent), Algeria (85 per cent) and Morocco (82 per cent) by 2016.

Murray observed that only 15 per cent of TV households (analogue and digital combined) are actually paying for legitimate TV signals. This proportion will climb only gradually to 22 per cent by 2016. Even so, the number of pay-TV homes will nearly double between 2010 and 2016 to 21.2 million, due partly to the boom in TV households.

Legitimate pay-TV revenues for the 18 countries will grow by more than $1 billion between 2011 and 2016 to $5.9 billion. However, the 2016 total is only $1.98 billion once Turkey, Israel and South Africa are excluded.

DTH will continue to dominate pay TV revenues, taking 77 per cent of the 2016 total (though this is down from 80 per cent in 2010). Pay DTH penetration will climb to 13.7 per cent by 2016, adding four million subs between 2010 and 2016.

According to DTVR, cable TV is not a big business in the region. Penetration is less than three per cent of TV households and this proportion will fall over the next five years as competition increases. This competition will lead cable TV revenues to fall over the next five years, especially in Israel where the government is pushing DTT to force down pay TV subscription rates.

The number of paying IPTV homes will overtake cable subs in 2015. IPTV revenues will grow tenfold between 2010 and 2016 to reach $586 million.

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