focus
MENA broadcasting
S
atellite delivery remains the dominant
transmission model over the Middle
East, and while cable/IP supply is
growing in importance, it is still Direct-To-
Home (DTH) free-to-air transmission that
provides the absolute backbone for channels
and programming.
But there are problems, some of which
are major. For example, satellite revenues
from broadcasters are falling. Nilesat, a
long-established channel supplier, suffered
a thumping 20.45% fall in profits last year.
Nilesat registered a net profit of $42.53
million for 2019. This is dramatically down
on the previous year’s (2018) numbers when
it reported $53.46 million. Revenues last
year tumbled to $130.71 million (down 9.9%)
compared to $145.12 million in the previous
year.
The good news is that Nilesat has
contracted with SpaceX to launch its
Nilesat-301 craft in 2022. The contract means
that the new satellite will sit alongside the
operator’s existing Nilesat 201 craft at 7
degrees West. The launch contract was signed
in Cairo on January 21st. Thales-Alenia Space
is building the new satellite.
COMPETITION. Having this extra capacity
on station sounds like good news, but it
also means greater competition between
the region’s ‘big three’ operators (Arabsat,
Eutelsat and Nilesat). A recent report from
investment bank Exane/BNPP said that there’s
a very real threat to Eutelsat’s revenues with
a couple of challenges. First, the availability
of improved compression/modulation ratios
for existing broadcasters. The second is
broadcasters switching to HD – which is good
news for viewers – and the closing down of the
broadcaster’s Standard Definition signals.
Indeed, these threats apply to all satellite
operators. The bank said: “In 2017, Eutelsat
HotBird volume trends were impacted by the
‘purge’ [of channels from Hot Bird’]. In 2018,
OTT will match pay-
TV soon in the Middle
East, but piracy remains
a problem, notes Chris
Forrester in his annual
examination of the state of
the market.
the satellite reverted to good growth driven by
the take up of HD channels but trends have
returned into negative territory in H2/19 and
remain challenging in January 2020.”
Eutelsat’s 7/8 degrees West slot (which it
operates alongside Nilesat) represents 24% of
the operator’s total Video Broadcast revenues
(HotBird is 36%). Overall, for the complete
Eutelsat fleet, the bank’s report suggests that
its current (February 2020) 7,092 channels
on air will shrink to 5,902 by 2029. This
is a 17% fall-off in channels. But add in
digital compression and a switch to DVBS2
modulation and this results in a 25% decline if
Mb/s consumed are the measure.
CHANGE. In fact, Arabsat’s president and
CEO Khalid Balkheyour says that the MENA
broadcasting market is far from healthy.
“Currently the market is undergoing many
multiple forces. The pay-TV broadcasters are
almost driven out of business with subscribers
opting to alternative OTT services given
the falling cost of connectivity, improved
broadband speeds and desirable content.
These factors are driving the subscription base
with the OTT sector is forecast to overtake the
pay-TV within the next two years.”
“On the other hand, the FTA market still
dominates with more than 90 per cent of
MENA satellite TV market positioned for
it,” says Balkheyour. “However, for the past
four years, broadcaster’s ad revenues have
been falling, which has negatively impacted
broadcasters’ budgets and strained their
finances. The falling revenues have led to a
stagnant market where no sensible growth is
foreseeable in the near future unless those ad
revenues bounce back. Some forecasts suggest
this could happen and would help drive the
industry growth.”
Balkheyour stresses that not all is doom
“Localisation of channels
plays a major part in
shifting SD to HD” - Khalid
Balkheyour, Arabsat
8 EUROMEDIA MENA Special
and gloom. “These pressures have
led to market segmentation and
localisation of programming and it
looks like broadcasters are refocusing
their business strategy towards their
native domestic market and not
targeting the whole MENA region for
viewers. Arabsat’s future expectation
on the FTA market is that it will
continue to be the largest segment in
MENA broadcasting industry despite
the current setbacks.”
COMMITTED. “Year over year,
Arabsat is committed to provide full
spectrum of broadcasting services
tailored to the broadcaster’s needs
by understanding our customers’
markets dynamic and providing best
fit solutions,” advises Balkheyour.
“By working with our customers, we
implemented a number of initiatives
to help them refocus their business
and gear up for growth in future.
We have worked with a Lebanese
consortium of channels to shift
them exclusively to Arabsat. We
have Sudanese broadcasters today
exclusively on Arabsat and we are
working towards building more
partnerships in MENA to drive the
market for growth.”
For some years, there has been a
trend towards the adoption by most
leading broadcasters of HDTV. “The
consumer TV and STB devices at
home are more and more offering HD
as standard, with the TV sets leading
and STBs are not far behind. Our
customers understand this and we
are closely working together to drive
HD and the number of channels by
enabling their transition to HD from
SD. However, this transition will have
to be very carefully driven to ensure
that all viewers across MENA are
included and they will not miss their
favourite programming on Arabsat.
The localisation of channels plays
a major part in shifting SD to HD
transition, as well as the broadcaster’s
financial capability, where cash needs
to be optimally spent on content and
operations to deliver the best TV
experience to their viewers base,”
Balkheyour agrees.
Of course, the availability – and
extra bandwidth needed for Ultra-
HDTV would have provided a very