{"id":1873,"date":"2018-05-12T13:05:26","date_gmt":"2018-05-12T17:05:26","guid":{"rendered":"http:\/\/worldscreen.com\/tvmiddleeastafrica\/by-popular-demand\/"},"modified":"2018-06-12T13:11:21","modified_gmt":"2018-06-12T17:11:21","slug":"by-popular-demand","status":"publish","type":"post","link":"https:\/\/worldscreen.com\/tvmiddleeastafrica\/by-popular-demand\/","title":{"rendered":"By Popular Demand"},"content":{"rendered":"

OTT platforms are picking up steam in the Middle East and Africa.\u00a0<\/em><\/p>\n

OTT is disrupting the TV business around the world, and it\u2019s happening fast\u2014even in markets where the traditional pay-TV ecosystem has been slow to develop. Of note, Qatar, Saudi Arabia and the United Arab Emirates all rank in the top 20 of consultancy A.T. Kearney\u2019s recent Global TV Disruption Index, which assessed where various markets stand in terms of the shift in video consumption from linear broadcast to OTT platforms from 2017 to 2021.<\/p>\n

A.T. Kearney also measured the progress of disruption as a ratio of on-demand versus linear viewing, ranking countries in three different groups: A (where consumption shifts are clear), B (where enabling factors are in place and things are starting to happen), and C (some necessary enablers are lacking). Saudi Arabia is among the handful of countries in the A group, while Qatar, the UAE and South Africa are all in group B, and Kenya in sub-Saharan Africa is not far from joining that category.<\/p>\n

Pay-TV penetration in the Middle East and North Africa is still very low, and because of that, the market is more open for OTT. In the Middle East, digital disruption has come in two waves. The first was the local ventures like Icflix (which launched in 2013), Telly and Cinemoz. The main pay-TV providers, OSN and beIN Media Group, then diversified into OTT. The second wave was the arrival of North American giants Starz and Netflix. Now Amazon Prime Video has also arrived. Another new international entrant is iflix from Malaysia, with deep-pocketed backers including Liberty Global, Hearst, Sky and Evolution Media (TPG Growth and Creative Artists Agency). The platform has aimed for the lower end of the market and cleverly teamed up with Kuwaiti telco Zain, which covers eight markets in the region.<\/p>\n

HEAVY HITTERS
\n<\/strong>The biggest OTT regional operator is probably the free-to-air satellite broadcaster MBC, which has a portfolio of linear TV channels and expanded into nonlinear with a free OTT offer, Shahid, and more recently, an SVOD service, Shahid Plus.<\/p>\n

\u201cWe spotted the opportunity, and we knew the potential for a local Arabic online-video platform for premium content in the region,\u201d says Fadel Zahreddine, MBC\u2019s group director of brand management and digital businesses. \u201cSome audiences are seeking on-demand besides linear TV, and advertisers like to connect them to premium content. We see Shahid as a stand-alone offering. At the beginning, the aim was to gain more audiences for MBC. Now, Shahid has its own programming and content strategy, including the paid Shahid Plus service.\u201d<\/p>\n

Content on Shahid has never been limited to MBC programs, \u201cbut we have been noticing that MBC content performs better than others on OTT,\u201d Zahreddine says. \u201cWe have the largest online library of series, shows and movies, and soon we will be commissioning our own exclusive content for Shahid.\u201d<\/p>\n

Shahid Plus is ad-free and includes unique content that doesn\u2019t sit on MBC\u2019s broadcast channels or on Shahid, such as the latest local movies, Western films and TV shows. \u201cWe see an interest and a willingness to pay for content and for the seamless experience with no commercial interruptions,\u201d Zahreddine says.<\/p>\n

Now, the MBC group is launching an SVOD service for kids called Goboz.<\/p>\n

MAKING WAVES
\n<\/strong>Perhaps the biggest change in the OTT landscape has been the launch of WAVO by OSN in 2017. The pay-TV giant\u2019s stand-alone streaming and on-demand service offers movies, TV series and sports.<\/p>\n

Martin Stewart, who has been CEO of OSN since 2016, says the move into the OTT space was a logical one, given the direction the industry is heading. \u201cWhen I arrived, I saw what was overwhelmingly a DTH single-screen linear pay-TV business,\u201d he notes. \u201cAs in the rest of the world, the region was going to shift to a multiscreen, multiplatform environment as the adoption of new devices was accelerating. We needed to get into making available a TV anytime-anywhere service.\u201d<\/p>\n

WAVO is branded separately from OSN because the primary target is a different audience. OSN offers high-quality entertainment on a subscription basis, while WAVO is aimed at a younger demographic that is not necessarily interested in making a long-term commitment to a service. In many cases, these younger viewers have never subscribed to a pay-TV platform before. \u201cThere is a brand association with OSN in our marketing materials and that provides quality assurance,\u201d Stewart says. \u201cBut the benefits of WAVO are different. Above all, the price is lower. There is bound to be some cannibalization, but the aim was to open up a new market of customers who couldn\u2019t afford pay TV, or maybe could not access it when they wanted to, or simply didn\u2019t want to commit to a long-term contract.\u201d<\/p>\n

Like other OTT platforms, OSN does not release numbers, but Stewart volunteers that WAVO-type subscriptions will account for a significant portion of the company\u2019s revenues in next three to five years.<\/p>\n

OSN launched ASLI, its latest digital brand, in early February, when it kicked off with 40 hours. The new service offers free short-form content on WAVO. The idea is for it to become a stand-alone service. The word \u201casli\u201d means \u201cthe real deal\u201d in Arabic and many of the other languages around the region, including Swahili and Farsi.<\/p>\n

\u201cWe will be developing a lot more original content,\u201d Stewart says. \u201cWe need to be showcasing more of what\u2019s produced in the region, not only in our market but around the world. We want to be more of a content owner and producer. There is no [Middle Eastern equivalent of] FremantleMedia or Endemol Shine or HBO. That\u2019s a shame, and taking that role is something we ought to be thinking about.\u201d<\/p>\n

MULTIPLE CHOICE
\n<\/strong>Customers in the Middle East often subscribe to multiple OTT providers. OSN recently did an in-house survey and found that even most of its employees (who get WAVO free) take other services, too.<\/p>\n

OTT pioneer Carlos Tibi, founder and CEO of Icflix, welcomes the competition. \u201cWe are happy that other players are now available in the region, as this has helped further build confidence in consumers for online methods of payment and given the public more choice and a chance to compare between providers. With the rise of streaming services in the region, audiences have become more inclined to subscribe to multiple streaming services, as this gives them more content to choose from, making entertainment options for the entire family limitless. This also helps to curb piracy in the MENA region, since fighting internet piracy has always been a challenge.\u201d<\/p>\n

Icflix is growing by around 25 percent month on month, and Tibi expects his company to move to profitability within 18 to 24 months.<\/p>\n

One of Tibi\u2019s principles is that Icflix\u2019s programming is mainly nonexclusive. \u201cUnless it\u2019s an original production, we don\u2019t believe in acquiring anything exclusively,\u201d he says. \u201cIn the past, some entertainment providers in the region would buy output deals from the major studios so no one else could get rights to the content. However, the situation is changing slowly, and hopefully the studios will realize that they are locking their content from [being seen by] more viewers.\u201d<\/p>\n

Arabic content is the key differentiator for Icflix, Tibi says, with 70 percent of the program budget invested in original content production and the remaining 30 percent on acquisitions. \u201cOur focus on original drama not only differentiates Icflix as a brand, but also helps to enhance Arab content production.\u201d<\/p>\n

The first big international OTT player in the Middle East, Starz Play Arabia, launched in 17 territories in the region in April 2015. It was Starz\u2019s first foray outside the U.S. \u201cIt was almost an R&D venture,\u201d says Scott Macdonald, CFO of Starz, who worked on putting the venture together and is on the board of Starz Play Arabia. \u201cWe were looking at how to grow our business internationally. We first looked at Spain, and then we saw that the Middle East and North Africa was the big untapped market. Netflix wasn\u2019t there yet.\u201d<\/p>\n

Macdonald observes that \u201cthere\u2019s a willingness to pay in the Middle East and North Africa. The beauty of the region is that with so many different markets and socio-economic characteristics, we can adjust how much [to charge] to fit the situation. We\u2019ve experimented with pricing.\u201d For example, what costs $8 in the UAE costs $3 in Tunisia.<\/p>\n

STARZ IN THEIR EYES
\n<\/strong>Starz Play is now in 19 markets across the region. Unsurprisingly, it is faring best in the most affluent markets of the UAE, Qatar and Saudi Arabia, as well as in Egypt, Morocco and Tunisia. It launched as a pure SVOD app for mobile devices, and now it is also offering a near-linear service\u2014which is closer to the original American product\u2014through IPTV platforms. The regional service includes a mix of first-run and second-run television series, plus second pay, third pay and library movies. All of the first- and second-run content is exclusive for six to 12 months. For other content, some is exclusive and some isn\u2019t. Starz series like Power<\/em>, Black Sails<\/em> and Spartacus<\/em> have been successes, as have Vikings<\/em> and library fare such as Friends <\/em>and older seasons of Grey\u2019s Anatomy<\/em>.<\/p>\n

\u201cWe are an American international service like Netflix,\u201d Macdonald says. \u201cWhat differentiates us from them is that we are local in the region. We have Arabic content. We have a lot of French content for North Africa and a lot of content from Bollywood and Lolly\u00adwood [Pakistan] for the large South Asian populations in the Gulf.\u201d<\/p>\n

Indeed, now Starz Play is looking east, with Pakistan as the next market on its horizon.<\/p>\n

While Netflix is growing, it has not yet made massive waves in the Middle East and North Africa. It unveiled its first Arabic original drama this spring, a teen supernatural thriller called Jinn<\/em>, which will film in Jordan and feature regional talent. Its first project in the region was the stand-up special Adel Karam: Live from Beirut<\/em>.<\/p>\n

Netflix is increasingly pursuing distribution partnerships. It recently closed a deal with OSN. Netflix will be offered on the new OSN Box, launching in the second quarter.<\/p>\n

Most OTT entrants in the Middle East and Africa seek partnerships with telcos, as the structural challenges of OTT can be eased by this sort of collaboration. The telco can improve distribution and cure the payment headache in a region where most people do not use credit cards.<\/p>\n

Starz Play Arabia, headed by co-founder and CEO Maaz Sheikh, had to build its own platform from scratch and integrate it with local telco partners, which enabled it to bill through its partners\u2019 platforms, even when it was not bundled with their services (what\u2019s called carrier billing).<\/p>\n

Starz Play Arabia recently signed a five-year strategic partnership with Etisalat, the UAE\u2019s leading telco, and it also reached agreements with Orange for Egypt and Morocco. There is also a partnership with Saudi Telecom.<\/p>\n

TELCO TIE-UPS
\n<\/strong>\u201cIntegrating with a telco requires a lot more than a snap of the fingers,\u201d Macdonald says. \u201cIt\u2019s a complex process, but our guys can do it quickly.\u00a0 It\u2019s like having a container ship with lots of containers. Each telco needs a different container.\u201d<\/p>\n

Similarly, OSN has deals with several telcos in the region, including a very strong partnership with du in the UAE. There are numerous other deals in the works. \u201cThere are 36 telcos in the region, so we still have a ways to go,\u201d Stewart says. \u201cEach of them requires us to be integrated into its system. It takes some doing. We bundle WAVO with their broadband, or at the very least with their payment systems.\u201d<\/p>\n

In January, MBC added to its many partnerships via a new deal with Oman\u2019s Omantel. The subscription cost for the Shahid Plus service can now be charged to Omantel customers\u2019 monthly post-paid bills, or debited from their prepaid accounts.<\/p>\n

Farther south in sub-Saharan Africa, where OTT is starting to take root, SVOD service Showmax relies on a voucher option as a useful way to give access to those without credit cards.\u00a0 Part of South Africa\u2019s Naspers group, which also owns pay-TV platform MultiChoice, Showmax reaches 36 countries in sub-Saharan Africa.<\/p>\n

\u201cI\u2019d say SVOD is taking root in sub-Saharan Africa, albeit slowly,\u201d says Chris Savides, the head of Showmax Africa. \u201cIn South Africa, the major change from a year ago is that SVOD is better understood and more mainstream. We\u2019re spending less time on basic explanations and are able to put more effort into highlighting new content. It would be a mistake to lump the rest of sub-Saharan Africa under a single description. The level of adoption varies by country, but in general, I\u2019d say it\u2019s still very much in the early stages.\u201d<\/p>\n

Malaysia-based iflix, which raised over $220 million to fund its emerging market growth plans last year, has entered a number of markets in Africa. To drive its regional expansion, it has aligned with Econet Media\u2019s Kwes\u00e9, which acquired a significant stake in iflix Africa.<\/p>\n

DATA CAPS
\n<\/strong>The cost and availability of affordable uncapped data is the single biggest factor holding back the adoption of SVOD ser\u00advices in Africa, Showmax\u2019s Savides says. \u201cOnce you get beyond the relatively small proportion of internet users who have fiber or other uncapped ADSL connections, then mobile is the key connectivity solution. We\u2019ve been working with a number of telcos to deliver discounted data packages designed for video use.\u201d<\/p>\n

Showmax last year teamed up with South African mobile operator Vodacom to offer a low-cost OTT TV service to the operator\u2019s customers.<\/p>\n

The growth of OTT might well bring about a change in the content market, according to Akash Bhatia, CFO and interim head of content at Showmax. He describes the new approach as \u201cgoing hyper-local.\u201d<\/p>\n

In South Africa, the first fruit of this approach is Tali\u2019s Wedding Diary<\/em>, a mockumentary series about a self-obsessed young woman who hires a documentary crew to film the buildup to her splashy wedding. The show stars Julia Anastasopoulos, who has become a local star via YouTube with her comic alter ego SuzelleDIY.<\/p>\n

A NEW BEAT
\n<\/strong>An OTT player in sub-Saharan Africa with a very different niche is TracePlay, a division of TRACE, the urban entertainment company founded in 2003. Until January of this year, TRACE was majority owned by Scandinavian media player MTG. The sale of its stake to TPG Growth, Evolution Media and Satya Capital valued the business at \u20ac40 million ($49 million).<\/p>\n

\u201cWe are focusing on exclusive original content in sync with our urban and music DNA,\u201d says TRACE co-founder, chairman and CEO Olivier Laouchez. \u201cWe are a niche. We don\u2019t aim to be generalist but to be a very edgy, precise complementary offer of the best of Afro-urban culture. We are trying to buy all rights so we can offer our viewers a customizable experience.\u201d<\/p>\n

TracePlay\u2019s original series and co-productions include Wives on Strike<\/em>, Crazy, Lovely, Cool<\/em> and Brothers with No Game<\/em>, with more in the works in France and the U.S.<\/p>\n

\u201cIt will be important to see how OTT content strategies will pan out,\u201d says Christophe Firth, a Dubai-based principal at A.T. Kearney. \u201cI take a broader view that content is only part of the picture. The user experience is critical. And so is the brand. And the triad of core elements of content, experience and brand needs to be supported by the right commercial models and advertising and distribution. But longer term, there is also the question of what capabilities you\u2019re developing for your platform. How are you doing data management and analytics and improving technology and doing all the things you need to be strong in the future? So there is the need for ongoing investment and investing the right way.\u201d<\/p>\n

Firth is a big believer in the aggregation model for OTT. \u201cThe market is being shaped by the drive for unbundling. I think what\u2019s overlooked is the fundamental economic logic of bundling. It\u2019s good for customers, it\u2019s good for content owners and it\u2019s good for the distribution platforms. The fundamental logic of bundling will survive.\u201d<\/p>\n

SUCCESS STRATEGIES
\n<\/strong>With more and more OTT choices, consumers will need to navigate a very crowded space. \u201cYou will need a suite of apps that will get you to what you want,\u201d Firth continues. \u201cIt\u2019s going to be a bit like pay TV, where the operator has offered various channels. But the flavor will be different, more personalized. This is the way things are going to develop in the Middle East and North Africa.\u201d<\/p>\n

OSN\u2019s Stewart observes, \u201cThe fragmentation of the content market makes it impossible for a single provider to satisfy most individual consumers, and certainly any household. Multiple subs are where the region is heading, and that\u2019s where the market is likely to be for quite some time, until there is some consolidation or an aggregating platform that becomes a one-stop shop. I believe that the media landscape in the Middle East is in need of rational consolidation. The threat of the multinationals, be it Netflix or Apple or Google or whoever, to organically grown businesses in the region will only increase. Players in the region should be cooperating more so that we can be relevant for the next ten years.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

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