AVOD, SVOD to Drive GCC Video Revenues


Video revenues in the six Gulf Cooperation Council (GCC) countries are set to hit $2.1 billion by 2026, with AVOD and SVOD gains expected to make up for contractions in pay and free-to-air revenues, per a new report from Media Partners Asia (MPA).

The report, GCC Video & Broadband Distribution 2021, explores SVOD, AVOD, pay-TV and free-to-air revenues in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). In 2021, the entire ecosystem grew by 11 percent to reach $1.9 billion. Of that, SVOD brought in $453 million, a 29 percent hike. By 2026, MPA projects Gulf SVOD revenues will grow $667 million. Saudi Arabia accounted for more than half of the region’s SVOD revenues last year, with UAE at 28 percent.

AVOD, meanwhile, was up 54 percent to reach $521 million. By 2026, MPA estimates that GCC online video revenues will reach $1.4 billion, a compound annual growth rate (CAGR) of 7 percent. By then, SVOD’s share of video revenues will rise to 31 percent, with AVOD at 34 percent.

Pay-TV revenues, meanwhile, dipped by 10 percent to $631 million last year and will contract further to $436 million by 2026. Similarly, advertising-funded terrestrial and satellite free-to-air revenues fell by 3 percent last year to hit $366 million. By 2026, MPA projects these revenues will fall to $311 million.

Aravind Venugopal, VP of MPA, commented, “During 2021, some of the momentum from Covid-19 that accelerated the adoption of online services started to taper. While subscriber additions decelerated during 2021 as Covid-related restrictions eased, an increased content pipeline for SVOD platforms resulted in flat to marginal subscriber growth for most operators. In the medium term, the launch of new platforms and the increased scale and frequency of investment in premium content by SVOD players should drive future net new customer additions. However, profitability remains a challenge with heightened competitive intensity, which will only increase as the beIN-owned TOD, Disney+ and HBO Max launch over the next 12 to 24 months.”

Venugopal noted that the “traditional” video segment will continue to be challenged. “Despite improvement in macro fundamentals, advertising spend remains weak. A bounce-back is expected with the Expo 2021 and World Cup 2022, but ad spend is unlikely to revert to 2019 levels over the medium term as budgets shift online. The deployment of new, more granular measurement systems in [Saudi Arabia] and UAE could help improve TV advertising levels.”

Myat Pan Phyu (May), an analyst at MPA and co-author of the report, added, “Investment in local (Arabic-language) content production has started to scale, driven by the likes of MBC-backed Shahid, Viu and lately, Netflix. Shahid and Viu lead the pack, having produced 25 to 30 originals since launch. Despite a slow start, Netflix has started to ramp up its output, with 2021 and 2022 starting to see a raft of new releases. Despite a late start, stc-owned Jawwy TV has also invested in original productions and acquisitions, with 18 titles t0 date. Investments by regional streamers STARZPLAY and OSN in Arabic-language content have slowly commenced, particularly as they look to slowly move away from the highly competitive English-language segment. Notably, the SVOD platforms have also initiated a change in investment cycles, with the earlier format of Ramadan-heavy releases slowly giving way to yearlong release schedules.”