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As long as TV is strong, online media will be weak in the Middle East

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June 12, 2011
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      Home Opinion

      As long as TV is strong, online media will be weak in the Middle East

      Vijaya Cherian by Vijaya Cherian
      June 12, 2011
      in Opinion
      ShareTweetPostEmail

      Despite all the good news that has been coming from the Middle East regarding next-generation networks, superfast broadband and greater competition, this provides only a skewed picture of the overall region. According to Informa, household broadband penetration of the Middle East is at a meagre 11.35% and more than half of those connections are either […]

      Ismail Patel.

      Despite all the good news that has been coming from the Middle East regarding next-generation networks, superfast broadband and greater competition, this provides only a skewed picture of the overall region.

      According to Informa, household broadband penetration of the Middle East is at a meagre 11.35% and more than half of those connections are either 1Mbps or below. Hardly broadband!

      In contrast, direct-to-home satellite TV (DTH) is, by far, the dominant means for the dissemination of media across the populace. Legal or illegal, free, pirated or paid, DTH has carved out for itself an irreplaceable position of mass media platform of choice for the vast majority of people in the local language, Arabic.

      A presentation by satellite broadcaster MBC at Informa’s Broadband World Forum in March revealed striking issues facing the regional online content industry, including:

      * A little over 1% of online content is in Arabic although Google maintains it is 2%

      * Poverty and illiteracy rates are high, rendering broadband unaffordable to many

      * Infrastructure is poor, resulting in lower penetration, across the region

      Even companies that sought to challenge the status quo in the relatively wealthy and educated markets of the UAE and Saudi Arabia have recognised that traditional multichannel TV – especially the free-to-air (FTA) segment – is here to stay in the long term.

      Broadband operators such as STC and Etisalat, for example, have acknowledged the dominance of satellite TV by developing hybrid set-top boxes that allow both DTH and IPTV content to be delivered over their networks to users.

      The TV industry is set to get even stronger with the ongoing switch from analogue to digital TV services. The governments of Saudi Arabia, Oman, Iraq, Bahrain and Qatar as well as countries in North Africa have outlined their strategies; some are already implementing them.

      There are multiple reasons given for why digital TV will strengthen the regional TV industry.

      One of them is that digital TV signals require less bandwidth, which means more channels can be delivered across a wider area. As a result, broadcasters can cater to the rural and more conservative segments of the Arab population as well as the outgoing westernised youth, with channels serving the needs of both. Another benefit of digital TV is that it can support more features than analogue, paving the way for interactive multimedia services.

      This has left providers of local online media engaged in an increasingly uphill battle to woo media consumers away from the big screen. With the Westernisation amongst the Arab youth growing far more rapidly than the development of Arabic content, the prospect of Arabic content winning is not the question that is being asked; rather it is whether investment in

      Arabic content can prove to be profitable in the long run at a pan-Arabian level.

      Current efforts in the Arabic-content production industry are going by largely unrecognised, which is unhealthy for the development of the local online market. Even then, the little activity that there is, remains fragmented, with individual start-ups popping up across the region, notably in the UAE and Jordan.

      But because there is no clear vision as to how this segment can be developed, it appears the status quo will not be significantly reformed anytime soon.

      All of this is coupled with the threat to the nascent industry from online video services from the likes of US Internet giants such as Amazon, Netflix and Hulu, which would undoubtedly buy up or at least undermine the little that is being offered by Arabic content studios.

      The failure of local online services is a sign of the overriding power of traditional TV in the Arab world. The biggest evidence for this is advertising: the nascent Arab ad market for online services is miniscule compared to TV advertising spending. Informa believes two significant factors are inhibiting online-ad spending: compared to TV, broadband has a smaller reach; and there is little online Arabic content to advertise.

      Thus with local content still overwhelmingly restricted to the big screen, it is no surprise that TV – not content per se – is still king in the Middle East region.

      Ismail Patel is a Broadband and Internet Analyst with Informa Telecoms & Media in London. He tracks operator performance, analyses regulatory issues and comments on other strategic developments in the MENA region.

      Tags: featuredopinion

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