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Research

Report : GCC video industry sees revenues of $ 1.6bn in 2020
Media Partners Asia has
published its first report on
the Middle East region , GCC
Video & Broadband Distribution
2020 , providing analysis of the
current state and future outlook
for telecoms , online video and
pay-TV industries across the six
Gulf Cooperation Council ( GCC )
countries : Bahrain , Kuwait ,
Oman , Qatar , the Kingdom of
Saudi Arabia ( KSA ), and the
United Arab Emirates ( UAE ).
According to MPA , the GCC
video industry , comprising
free TV , pay-TV and online
video , will generate revenues
of $ 1.6 billion (€ 1.3bn ) in
2020 , representing a 13 %
Y / Y contraction with deep
declines in TV advertising &
subscription only partially offset
by the significant growth of
online video . Covid-19 related
macro issues have exacerbated
headwinds across the TV sector .
A rebound is expected in 2022
but the TV industry will continue
to face secular challenges in
the future . OTT video services
will continue to proliferate
as platforms reposition and
reinvent . GCC video industry
revenues are forecast by MPA to
increase to $ 2 billion by 2025 , a
CAGR of 5 % from 2020 . Online
video will surpass TV to account
for the lion ’ s share (> 60 %) of
total video industry revenue by
2025 with both pay-TV and free
TV in secular decline . Within the
GCC , KSA and UAE will continue
to contribute > 70 % to pay-TV
and online video revenues in
aggregate by 2025 .
MPA vice president Aravind
Venugopal said : “ The GCC ’ s
vibrant and highly competitive
video ecosystem has seen
some significant changes in
the past few years . Online
video services continue to
grow , driven by : ( 1 ) Low-cost
pricing ; ( 2 ) Telco partnerships ,
including hard bundles ; and
( 3 ) The availability of premium
local and global content online ,
including increased investment
into exclusive originals . Telco
partnerships are revenue accretive and help to broaden the customer funnel but the longer-term success of OTT platforms will rest on their ability to retain customers , manage subscriber acquisition costs ( SAC ) and increase lifetime value ( LTV ). Over the next five years , the focus will move to the acquisition of high LTV subscribers via D2C . Market consolidation is also likely as
the GCC region will be unable to support 15 + platforms with many competing in the same customer segments . New entrants into the market such as Disney + Hotstar and HBO Max , could provide further impetus to industry growth , competitive intensity and consolidation .”
“ Meanwhile , the slow pace of innovation by pay-TV operators combined with high prices of services ( vs . SVoD ) and the proliferation of broadband have contributed to the decline of pay-TV . IPTV has maintained subscriber growth , driven primarily by hard bundled triple-play services . However , as telcos re-examine their cost structures and investments in content and platforms , there remains an impending threat of the breaking of the hard bundle , which could further endanger pay-TV ,” added Venugopal .
As per the report , within the GCC online video sector , three business models have emerged in recent years : ( 1 )
Freemium operators , led by MBC-owned Shahid , PCCWowned Viu and Zee ’ s Weyyak ; ( 2 ) SVOD operators , led by Netflix , Amazon Prime Video , STARZPLAY , Jawwy TV , Watch iT and OSN Streaming ; and ( 3 ) AVOD operators , including YouTube and TikTok . Given the diverse demographics and large expat population in the region , several services targeted at specific language / ethnic groups
have also launched in recent years . These include the Indian and South Asian segment , which are key audiences for Zee5 , Sony Liv , Eros Now and YuppTV . As platforms seek to further expand their customer base and drive consumption , investment in Arabic originals has become a key battleground . While the Covid-19 pandemic and the economic / political crises in the region have impacted production activities , MPA forecasts that productions will return to normalcy by Q1 2021 as economies recover and new content production hubs ( i . e . UAE , KSA , Jordan ) are established .
In the telecoms sector , fixed broadband has been relatively insulated from economic woes given its utility-status in UAE and low penetration in KSA . However , mobile services , particularly prepaid , have experienced subscriber declines . The UAE and Qatar leads the region , both in
terms of fibre connectivity and
penetration with over 90 % of
homes having access to fixed
wired services via fibre . From
a mobile perspective , the
GCC is well connected , with a
highly competitive environment
( ex-UAE ) keeping retail prices
relatively affordable . Data
consumption remains fairly
high , driven primarily by video
services . There remains further
scope for growth , especially
in markets with low fixed
broadband penetration .
Analysis : MENA pay- TV continue to fall
Pay-TV revenues for the 20
countries in the Middle East
and North Africa region fell by
14 % between 2016 and 2020
to $ 2.74 billion , according
to the Middle East and North
Africa Pay TV Forecasts report
from analyst firm Digital
TV Research . Revenues will
continue to fall slowly – to
$ 2.52 billion in 2026 . The
2026 revenues will be 23 %
lower than 2016 .
“ Five countries will
contribute 78 per cent of the
region ’ s pay-TV revenues in
2026 ,” advises Simon Murray ,
principal analyst at Digital TV
Research . “ Turkey and Israel
together will supply nearly
half of the total . There are
few winners . Eight of the 20
countries will lose revenues
between 2020 and 2026 .”
Turkish pay-TV revenues
will reach $ 752m in 2026 ; 17 %
lower than the peak year of
2016 . However , the number of
pay-TV subscribers will grow
from 7.27m in 2020 to 7.64m
in 2026 .
Israel is experiencing cordcutting
. It will lose 28 % of its
pay-TV subs between 2020
to 2026 . Digital TV Research
forecasts that Israel ’ s pay TV
revenues will halve between
2016 and 2026 . Beyond these
figures , Israel ’ s OTT sector will
grow significantly .
For the 13 Arabic-speaking
countries , pay-TV revenues
will remain at about $ 1 billion
despite subscriber numbers
increasing by 18 % to 4m .
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