OTT opportunities abound in the Middle East, thanks to the high uptake of smartphones and tabs. Regional operators and broadcasters must avail of this before its too late, says Mohamed Hamed For operators and broadcasters exploring OTT options in the Middle East, there are some reassuring numbers out there. A recent report from Digital TV […]
OTT opportunities abound in the Middle East, thanks to the high uptake of smartphones and tabs. Regional operators and broadcasters must avail of this before its too late, says Mohamed Hamed
For operators and broadcasters exploring OTT options in the Middle East, there are some reassuring numbers out there. A recent report from Digital TV Research, for example, found that pay-TV revenues in the Middle East and North Africa will grow by more than 83% between 2010 and 2020, to USD5.60 billion. A closer look at the technology landscape and demographics in the region shows this should come as no surprise.
Smartphone ownership has exploded, fuelled by the influx of low-cost devices and widespread desire for internet access. In the Middle East especially, the thirst to connect with others and engage with issues of global and national significance has undoubtedly been the driving force. Along with increasing penetration of smartphones, growth of fixed broadband connections in MENA is likely to have a positive impact on OTT adoption. In MENA, fibre is expected to provide 17% of fixed broadband connections by 2018, up from 8% in 2012 (according to research from Analysys Mason Limited 2013).
Furthermore, with 83% of consumers using the internet on a daily basis, generally for upwards of 30 minutes, and 40% watching at least one video a day online, the opportunities for OTT services in the region are clear. People are spending more time online than they are watching linear television (according to research from the European Travel Commission Digital Portal, ETC-digital.org).
While free OTT video services are already gaining popularity among internet users,, the market has yet to be conquered by international OTT giants such as Hulu and Netflix, due to restrictive market challenges, leaving a welcome space for other regional players to come to the fore.
The challenges
There is fertile soil for OTT providers in the Middle East, but as with all markets, the region presents its own unique set of challenges to companies wishing to make their mark in the area. The same few obstacles are causing problems for all involved in the TV and media ecosystem, ranging from OTT service providers to telecom operators and content owners.
Largely due to the scale of the region and the diversity within it, operators need high quality and varied content, and licences come at a painfully high price. Online video solutions must cater to English- and Arabic-speakers in order to stay competitive, as well as serve an Asian population which has risen to over 10 million.
In light of this, operators and broadcasters need OTT solutions providers that can both cater to markets of this scale and keep costs as low as possible.
Piracy is also a key concern. It is rife throughout the Middle East, and has a detrimental effect on OTT service provider revenues. The hope is that, in time, consumers will become more amenable to paying for high quality content, instead of pirated videos that risk damaging devices through viruses and other malware. Early research supports this viewpoint, which is good news for the industry, but the U-turn on pirated content is not yet in full swing.
Bandwidth
Lastly, but arguably most importantly, bandwidth cost remains a major issue, due to the high bandwidth required for streaming video and consuming data in this quantity. As video becomes a bigger part of peoples lives and the costs required to keep up with consumer demand accelerate, the pressure on operators and broadcasters to solve the bandwidth conundrum increases. Companies that neglect to update their business model to address this tension may struggle in the years ahead.
Despite the shadow of costly bandwidth looming over the industry, this need not be a dead end for operators and broadcasters that are open to change and experimentation. In fact, the limitations can serve as an incentive to provide flexible offerings and create bundled packages for consumers, thereby keeping costs as low as possible.
Many operators and broadcasters are finding that distributing content from a centralised headend to an international audience can run up crippling costs, even though there are alternative options out there. SaaS-based solutions, for example, can build on existing infrastructure and connect content to local data centres for caching. By cutting out the back and forth, this solution could ease one of the biggest headaches facing operators right now.
For operators, one of the most encouraging prospects for the future has emerged from one of the most potent threats to the telecoms industry. When Skype and other VoIP services rose to popularity in the mid-2000s, they struck at the heart of operators revenues, which came entirely from SMS and call functions. In the years since, operators have been faced with a choice about how to use their valuable pipelines carry on delivering the services that are eating into their revenues, or create a new online offering and make their pipelines useful to them once again. By collaborating with broadcasters and media owners and branching out into OTT, operators can profit from the content flowing through their systems.
The future
Over time, weve seen operators and broadcasters shifting towards collaboration, as both industries find their way and learn as they go. Often, major considerations such as monetisation have fallen by the wayside in the race towards getting an OTT offering to market. Many evolving companies are still in the dark about which monetisation model will work best for them, and how to choose between free, part-paid or subscription-based service. As a result, operators and broadcasters can derive huge benefits from working with online video experts, who have an agile, modular solution and the ability to advise on the commercial framework at the core of their business.
In many ways, the Middle East is a green field for operators and broadcasters today if they decide to embrace the opportunities of online TV and video. With the right support from specialists who have deep broadcast and broadband heritage, who can assess the most appropriate business model and create great user experiences at scale, the industry can look forward to an exciting journey.
Mohamed Hamed is Head of Business Development & Sales at Piksel. He manages customer relationships and strategy in the Middle East and Africa.
