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Changing channels: How MENA CEOs are adapting to disruption

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      Home Case Studies OTT Features

      Changing channels: How MENA CEOs are adapting to disruption

      Keith J Fernandez by Keith J Fernandez
      February 5, 2024
      in OTT Features, TV Channels
      Changing channels: How MENA CEOs are adapting to disruption
      ShareTweetPostEmail

      How do broadcasters chart a steady course as turbulence and disruption become the new normal? Streaming, in particular, has upended broadcast business models in the region. In a special CEO panel discussion hosted by BroadcastPro Middle East, MENA M&E leaders share insights on navigating rough waters and successfully steering their organisations to positions of power. Keith J Fernandez sums up the discussion.

      As streaming services continue to gain traction and gain an edge over linear services, broadcasters need to not only contend with this situation but also cater to the new consumption patterns behind the shift. The trend has added a new wrinkle to an already diverse market, not least because free ad-supported television (FAST) is emerging as the new free-to-air (FTA) model. As advertisers have more options than ever, how do linear platforms redefine their value proposition?

      At the same time, more content is available than ever before. The tools to produce quality content have been widely available for some time now. Generative artificial intelligence (gen AI) is already democratising and accelerating that process, but with more content come demands for better quality across the board.

      Paul Edwards considers generative AI most valuable for content localisation.

      BroadcastPro ME recently brought together industry CEOs to tackle these questions, providing a compass for understanding the evolving media landscape ahead of what looks set to be another year of disruption.

      Focused on Managing Through Constant Disruption, the panel brought together Khalifa AlShamsi, CEO of e& life; Joe Kawkabani, CEO of OSN; Paul Edwards, GM of Asharq Discovery; and Nadim Samara, Chief Commercial Officer of MBC Media Solutions. Karim Sarkis, Partner at Strategy&, served as moderator and asked some tough questions on a range of topics.

      AlShamsi, who has been with the e& Group (formerly Etisalat) for more than three decades and its entertainment arm, evision, for the last 15, set the stage with an overview of the company and its reach across the MENA region, prefacing his comments with a description of the Middle East’s diversity in terms of both content and infrastructure. Although the region is known for FTA, there has been a shift towards SVOD, with some audience segments understanding the value of paying for premium content.

      “Our region is under-penetrated when it comes to paid subscription,” AlShamsi acknowledged. “Whether it’s pay TV in a traditional IPTV environment or other paid streaming services, I think a user on average in this region has access to around 2.8 OTT subscriptions.”

      Nevertheless, he emphasised the importance of complementing subscription-based models with AVOD, to cater to audience expectations for free content while providing an alternative avenue for monetising technology and content.

      The group straddles both markets, he remarked, speaking of how its OTT free-to-watch streaming platform, STARZ ON, is broadening the offering for consumers. The FAST/AVOD platform launched in November 2023.

      Nadim Samara stated that data is critical to tailoring content to attract advertisers and subscribers.

      A diverse region requires multi-platform solutions

      For Asharq News Network, the market is now multi-platform. Two new channels – Asharq Documentary and Asharq Discovery – launched in November last year, are available on TV, via streaming and through social media platforms.

      “These channels are very much multi-platform,” Edwards said. “We needed to launch them in those three ways because different markets in MENA require different approaches,” he added.

      “TV is still valuable and important in some of the markets in which we operate. But in some others, especially KSA, we are seeing large swathes of the audience rejecting TV at the moment. The challenge then is to bring them back within a FAST environment, because FAST offers a lean-back experience. It’s TV … [but] they are somewhat alienated from that type of experience. So we’re going to have quite a job addressing that. But TV is still very important and valuable in this marketplace.”

      Edwards also acknowledged the challenges around monetisation, but pointed to opportunities with enhanced ad sales offerings and programmatic advertising.

      Monetisation depends on content quality

      MBC’s Samara brought the conversation around to content. Monetisation depends on it, he said. Regardless of the distribution method – linear, VOD, SVOD, AVOD, social clippings, subscription-based – content remains of paramount importance to the industry and is crucial to determining a platform’s success.

      “It’s all about supply and demand. You supply great content and you demand the authority of the audience to actually enjoy that content,” he said, adding that delivery channels are secondary. “It all comes down to the quality of the content.”

      Khalifa AlShamsi remarked that at present, the real impact of generative AI lies in cost reduction, content curation and engagement strategies.

      An example is live events, whether sports or shows such as Who Wants to be a Millionaire?, which dominate viewership patterns. For such events, a five-inch mobile screen isn’t enough, he remarked. People prefer to watch them on larger screens, whether they are aired over connected TV, subscription models or linear broadcasting.

      FAST channels must compete with this deeply ingrained behaviour, he pointed out. Broadcasters looking to attract advertisers to FAST can habituate audiences to smaller screens by distributing content shorts on social media, and advertisers will follow the audience. “Ultimately, it’s about the demand that you can generate.”

      FAST comes with greater audience loyalty

      Content remains king, but broadcasters can now reach audiences in new ways across different devices. That brings a whole new set of benefits, Edwards pointed out – FAST viewers spend more time on the platform and are more loyal than those accustomed to traditional TV.

      “With normal TV, you’d be happy with a 20-minute duration. When you look at FAST, you’re talking about two to three hours … Your advertisers know that your users are spending an inordinate amount of time watching that content. [With FAST], you’ve got a very loyal audience, which I don’t think you had before with TV.”

      Depending on the kind of offering, advertisers also benefit from personalisation and targeting, though frictionless services offer fewer audience insights.

      Advertising expands the funnel

      Content is a particular differential for platforms that charge access fees. Pay-TV network OSN, for example, has traditionally provided a bouquet of premium local and international shows for a fee. The formula works for the network and the business isn’t looking to advertising, OSN’s Kawkabani said.

      “It’s all about supply and demand. You supply great content and you demand the authority of the audience to actually enjoy that content.” – Nadim Samara, Chief Commercial Officer of MBC Media Solutions

      “Our strategy has been initially about maintaining our position in the premium subscription space. And when you want to ask your clients to pay money to watch your service, they expect a certain quality of content. And this is what we’re providing right now.”

      As decreasing streaming fees affect what viewers are willing to pay, however, even traditional subscription platforms may move to advertising-supported models, supporting the transition from a ‘pay now’ to a ‘pay less’ approach, he remarked. For now, where advertising does come into the picture for players such as OSN is in terms of expanding the funnel by enabling access to newer audiences and markets with lower subscription penetration. OSN demonstrated this strategy to expand the funnel by announcing a tie-up with Anghami recently to serve their combined user base with ad-supported and paid content.

      Joe Kawkabani highlighted that a successful merger can help consolidate different parts of a business and drive profitability.

      “If you look at the price of the subscriptions today on streaming services, it’s one fourth or one fifth of what we used to charge. Now you don’t think in terms of owning the whole wallet of a customer – you want to be one of the services that the customer has,” he said. “But that also opened up the market. So while pay TV’s penetration was actually minimal compared to the number of households in the region, I think SVOD would be much higher because of the affordability.”

      Balancing content investments for engagement and acquisitions

      With content creating the differential, understanding where to invest can be difficult. As the market has shifted from linear TV to OTT services, content needs have changed in response, Kawkabani pointed out. A deeper library is now required to meet the preferences of binge watchers, who look to full box sets and later-season episodes. But, as he pointed out, is having 18,000 hours of content necessary? Or should networks take a more focused approach around the top one hundred titles that garner over 90% of views?

      OSN typically separates content investments into two types: content that drives acquisitions, and filler content that drives engagement. With streaming, customer acquisition becomes easier but maintaining engagement is harder, because of what he called the “washing machine effect” – a significant percentage of customers are lost annually due to the flexibility of streaming subscriptions.

      “You can disconnect at the end of the month. We can no longer hide behind 12-month contracts, satellite, cable, dish and so on. Now we must earn the loyalty of our customers every single month. The best way to do that, and numbers prove it, is by engagement,” he remarked.

      “If you look at the price of the subscriptions today on streaming services, it’s one fourth or one fifth of what we used to charge.” – Joe Kawkabani, CEO of OSN

      Unlike traditional models, streaming platforms must consistently earn customer loyalty by offering engaging content and personalised services with easily discoverable content – crucial for combating high churn rates. Overall, determining the value and impact of content investments in the streaming landscape requires balancing the depth of the library, audience personalisation and the overarching goal of achieving profitability, Kawkabani said.

      “When we look at a deal with any global schedule, we try to find enough balance in our platform between titles that we know will drive acquisitions, and we need enough of those and enough cadence throughout the year,” he added. The challenge lies in predicting the impact of each content deal and its potential halo effect on the platform.

      Karim Sarkis elicited insightful responses by asking CEOs incisive questions about their business strategies.

      Linear TV in a three-pronged market

      Although lower barriers to entry are bringing new entrants to market and causing consumer behaviour to shift and fragment, the market remains three-pronged for now.

      “Double-screening is a given now, especially for those aged 13 to 19, even though the purchasing power is with the older target audience,” Samara said.

      Speaking about the Saudi market in particular, he said: “In general, what we’re seeing is that, whether it is Nielsen’s data, Ipsos’ or our own, people spend around 3-3.2 hours on linear, augmented by binge-watching on VOD, whether it’s subscription or AVOD.”

      This three-pronged approach remains essential to serving diverse audiences, he stated, but hinted at the possibility of certain countries making the transition to a digital-first approach over the next few years – when that happens, advertising performance will become more important.

      For Asharq, linear TV remains the key platform, despite having had the opportunity to innovate as a relatively recent market entrant. “The core audience and the value are still on linear for us,” Edwards remarked. “We’re obviously very new and are trying to build up that brand awareness of the channels. It’s going to take some time, as we’re building up credibility with a non-scripted network.”

      Scope for consolidation in region’s broadcast sector

      The last part of the panel discussion focused on media consolidation in the region. With so many alternatives competing for advertising dollars, are we set to see platforms merge to create a viable alternative?

      “There is room to consolidate,” AlShamsi said, adding that it could be beneficial for survival in a rapidly evolving technological landscape. Each local broadcaster has its own OTT app, with several alternatives available in each of the region’s countries. “Moving forward, a lot of the investment will continue to be on content and rights [as well as] the technology and user experience. Not every player will be able to sustain that moving forward.”

      Consolidation could lead to better monetisation and broader regional reach, addressing both geographical and technological challenges, he pointed out.

      Such consolidation could take one of three forms, Kawkabani said: content sharing, bundling, or mergers and acquisitions. For example, bringing FAST channels onto AVOD platforms could be one way forward. Exploiting complementary aspects – such as combining one platform’s content strengths with another’s brand awareness – could offer mutual benefits.

      However, the biggest business gains will come from mergers.

      “When you consolidate properly, you consolidate your back end, your tech costs and your content acquisitions. And this is where you can drive profitability. That’s undoubtedly the trend, not just in the region but globally,” Kawkabani said.

      There remains a challenge around consolidation, however, Samara pointed out. For him, the challenges come down to a reliance on different technologies and the desire of each platform to own its technology and data. Drawing on his agency experience, he highlighted the significance of understanding audience data and preferences, asserting that data is critical to tailoring content to attract advertisers and subscribers. Drawing a parallel with Chinese platforms, he suggested that compartmentalisation might be more effective for consumer familiarity.

      Perhaps the way forward is testing. “You start with testing, and the data still shows that this is a good test. The data shows that there’s benefit for audiences to jump from channel to channel within a platform rather than another platform. But in terms of scale, it’s yet to be seen, as it’s still early days. I think that’s where the FAST channels have a role to play as well.”

      Feeling the impact of generative AI

      Perhaps the most visible disruption over the past year has been generative AI. A much-discussed example at the summit was how broadcaster and biologist David Attenborough’s voice, generated autonomously from keyboard inputs, has been used to narrate videos.

      Mainstream AI-generated actors and voiceovers appear to be some distance away. However, the panel’s consensus was that the industry is already seeing substantial tangible benefits from deploying the technology in practical applications such as natural language processing and recommendation engines.

      The integration of gen AI into recommendation engines can help enhance content tagging, enrich metadata and throw up deeper insights into user behaviour. As a result, algorithms can be further personalised.

      “With normal TV, you’d be happy with a 20-minute duration. When you look at FAST, you’re talking about two to three hours.” – Paul Edwards, GM of Asharq Discovery

      “Gen AI is not a dream, it’s a reality. With platforms like Vertex AI, we’ve integrated gen AI into our recommendation engine, significantly impacting churn rates,” Kawkabani said. Vertex AI is a Google Cloud tool that can help developers build and fine tune gen AI models.

      Similarly, MBC uses gen AI commercially in a self-serve application on its MBC Media Solutions (MMS) ad platform, commented Samara, where advertisers can script ads and refine campaigns. The solution was built using Microsoft’s AI platform.

      “If [an advertiser] is booking an audio campaign with radio stations in Saudi and they don’t have an audio ad, they can actually script it out. And they can choose a certain dialect and have an ad up immediately. Those are two things that were massive barriers to entry,” he said. A future use case will be creating video advertisements. “Hopefully, [soon the] platform will be fully AI-enabled, which will allow people to not only select what sort of campaign they want to run but also ensure that they have the best content behind it.”

      At Asharq, gen AI could potentially help with localising content, Edwards said. However, he highlighted the need for continued development to match the quality of human work. “I don’t like to necessarily envisage that my production team … are going to be gen AI bots. But I do see how the application can potentially impact us in a positive way.”

      Over at e&, the group soft-launched an AI consumer assistant at GITEX Technology Week last October. Also built using Microsoft tools, it can join voice calls to verbally communicate with customers and help with tasks such as getting directions and weather or news updates. The group also uses a similar assistant to manage renewals and help cut costs.

      Flashier use cases such as scripting are some distance away, AlShamsi said – the real impact of gen AI lies in cost reduction, content curation and engagement strategies, and a future use case could be using gen AI to combat piracy.

      While fighting piracy continues to be a challenge, broadcasters will need to future-proof their operations to successfully combat the constant stream of disruptive forces affecting the industry. As the panellists agreed, both challenges and opportunities lie ahead.

      Tags: Asharq DiscoveryAsharq DocumentaryAsharq News Networkaudio campaignAVODAVOD platformBroadcastPro MEe-lifeFASTFAST channelsfeaturedpostFTA modelGITEX Technology WeekGoogle Cloud toolJoe KawkabaniKarim SarkisKhalifa AlShamsiMBC Media SolutionsMBC’s SamaraNadim SamaraOSNOTT appOTT subscriptionsPaul Edwardspay-tvsocial clippingsStarz ONStrategy&streaming servicesSVODVertex AIVoD

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