IHS has published key findings from its annual Middle East Media Market Monitor. The report estimates that at the end of 2013, 4.35 million households in the Middle East North Africa (MENA) region subscribed to at least one pay-TV service.
“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. Last year was the third in a row and the eighth since 2004 where pay-TV penetration rates grew. We expect those numbers to grow in the years ahead.”
“We examined 13 countries in MENA and looked at data across the operator and technology levels, OTT business models as well as mobile and fixed broadband dynamics. The report is the result of insights across the Media and Telcoms teams that examine both risks and opportunities for businesses operating in the region,” Papavassilopoulos said.
The MENA Pay TV market grew rapidly in 2013
Last year the pay-TV market grew 11.2 per cent in terms of market share and 14.13 per cent in terms of subscriber numbers. Over the last decade (2004 – 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. The Gulf states (Saudi Arabia, UAE, Kuwait, Qatar, Oman, Bahrain) account for two out of three pay-TV households (or 66 per cent of the total). There are huge disparities in the uptake of pay-TV services across the region where UAE has the highest penetration rate at 85 per cent and Egypt the lowest with just 2.4 per cent.
2013 growth was primarily supported by an impressive rise in satellite operator OSN’s customers; High IPTV uptake contributed equally to last year’s pay-TV growth
Dubai-based OSN executed a policy of attracting new customers (through acquisitions and enrichment of its content offer) and of targeting new markets that has paid off. Between Q4 2012 and Q4 2013, OSN’s subscriber base increased by 32.3 per cent.
One in four pay-TV households (25.56 per cent) now take an IPTV offer while just four years earlier (in 2009) only one out of 15 pay-TV households subscribed to an IPTV package. IPTV uptake was highest in the UAE and Qatar. In the UAE, IPTV is the largest Pay TV platform, accounting for 70.82 per cent of the market, while in Qatar, Ooredoo’s IPTV service (Mozaic TV) controls the largest market share among all pay-TV operators with 32 per cent.
Satellite’s dominance, as a TV platform, rests unabated in the MENA region
For the vast majority of MENA countries, satellite continues to be the pre-eminent service for receiving television signals, both encrypted and free-to-air (FTA). In 2013 it exceeded a 90 per cent primary TV set penetration rate among all TV households. In the pay-TV landscape, satellite is slightly less salient, due in part to the existence of IPTV. According to IHS data, at the end of 2013 satellite controlled 74.4 per cent of the pay-TV market while IPTV’s share stood at 25.56 per cent.
BeIN Sports Arabia and OSN are forming a virtual duopoly in MENA’s satellite pay-TV market
BeIN Sports Arabia (formerly known as Al Jazeera Sports) and OSN have managed to attract the vast bulk of satellite subscribers establishing a virtual duopoly in the market. Since 2009 (year of the merger between Showtime and Orbit to form OSN, and the year of Al Jazeera’s acquisition of all ART sports channels), the combined market share of BeIN Sports Arabia and OSN fluctuated between 85 per cent and 82 per cent. The recent acquisition of the English Premier League rights by BeIN Sports Arabia as well as the acquisition of South-Asian Pay TV operator Pehla by OSN will further reinforce this trend, according to IHS.
A large HD channel offer is not complemented by a clear and concrete monetisation strategy
The HD channels offer in the MENA region experienced an explosive growth from just two HD channels in 2009 to 158 in the first two months of 2014. However, 71 HD channels, or around 45 per cent of the total offer, are being provided for free. The free HD offer in MENA is higher than the total HD offer in countries like Italy, Spain, Russia, Australia and South Africa. Pay-TV operators do not have a policy of up-selling their HD content. My-HD Media, a Dubai-based channel aggregator, is testing the waters launching in mid-2013 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.