TV’s golden age heads to the Middle East

Published: 24 June 2017 - 6:31 a.m.
By: Digital Studio Middle East Staff

The internet has proven to be the equivalent of a loud and disruptive house guest for much of the media industry. Whether its music, TV, film, magazines, newspapers or books, the web has brought bedlam; tearing up established norms, tipping executives out of their comfortable chairs and telling everybody who would listen that the world had changed and it was time to move on.

The writing was on the wall in the late ‘90s when the music industry’s record sales collapsed in the face of rampant music file sharing sites, most notably Napster. Although the music industry united to win the ensuing legal battles, it lost the war. Napster proved two things one; people love free stuff and two the internet is a distribution channel without limit.

Unfortunately, almost nobody in media paid any attention.

So while the music industry dithered, lodging one legal case after another, Apple took the initiative and launched iTunes in 2001, bringing digital distribution into the mainstream and showing content creators that all was not lost. Artists could still make some money from record royalties, just not as much as before.

The music industry isn’t alone in its doddering attitude to the internet: traditional media companies appear to have happily surrendered responsibility to tech companies to come up with internet business models. Que Apple and Amazon ably assisted by other digital streaming sites, adding TV, film, books and magazine to the list of digital content.

The initial phases of market transformation started on a stage far removed from the Middle East. For much of the last 16 years, if consumers wanted to view the latest TVs, music, movies or sport they had limited options. Sign up for expensive satellite services, live with low quality free to air TV, or buy or rent loads of DVDs.

Unsurprisingly, some enterprising individuals either downloaded content illegally or subscribed to ‘grey market’ satellite services that were typically cheaper. Most people did a combination of all of the above.

All the time, local content service providers invested millions updating set-top boxes, improving encryption and blocking websites, in an effort to prop up an outdated business model.

But the focus on prevention, obscured efforts to find a cure. Or at least find an alternative business model. It’s a legacy that has left local content distributors playing catch up as competition intensified.

In March 2016, Netflix rolled out its UAE content streaming app. Pre-existing distribution agreements meant the local app was missing flagship content, but such constraints haven’t hindered its rapid global expansion; launching in 190 countries and surpassing 100 million subscribers, viewing 125 million hours of content, per day.

Global streaming platforms have been joined by local telecoms service providers which have bundled content with broadband internet connection to drive adoption.

Squeezed from above and below, free to air and satellite content providers haven’t been idle. They have rolled out their own network streaming apps, offered flexible cost models, secured ‘premium’ content and made it available simultaneously with the key international markets, and started creating local content.

However, the economies of scale mean that the streaming players, such as Netflix, Amazon Prime, Hulu, Tubi and others, are still able to offer greater depth of content, cheaper. For instance, some sources estimate that Netflix’s content budget for 2017 is US$6 billion.

US-cable TV companies are already feeling the competitive pain. According to MoffettNathanson, in the first quarter of this year 762,000 subscribers abandoned their cable subscriptions, resulting in the worst ever Q1 decline in pay TV subscribers.

It is a simply reality that content distribution is being centralised at a global level and it will be the owners of big internet platforms and networks that will emerge as the giants on the broadcast landscape. The seismic shift in content distribution networks, is in turn creating a demand for local content.

The challenge for local media companies is to create high quality, local content (TV, film, newspapers, magazines) that resonates at a local and international level. Given the current content industry in the Middle East is defined by its low budgets and conservative nature, it is an ambitious leap.

Netflix’s provides an interesting case study. From its origins as a DVD mail rental service, it has reinvented itself into a content production house. In the last 20 years it has literally gone from mailing Brad Pitt’s latest movie to funding it.

Historically, content production in the GCC has been slow; stymied by a lack of funding, technical skills, and a bagful of social, cultural and political reasons. While there are more international quality films emerging from the region their impact is at best fleeting.

TV content on the other hand creates a frequent and durable relationship with the audience and tellingly has lower distribution and production costs. Although there has been a spate of Arabic-language TV dramas commanding bigger budgets, there still needs to be a greater a volume of quality content.

The streaming platforms are likely to contribute to the library of local content. Netflix has already proven willing – in other markets at least — to invest in local language content as part of its expansion strategy. Indeed Netflix’s future roadmap calls for more content creation, and less licensing. The acquisition of Ali Mostafa’s The Worthy by Netflix is definitely a start.

In May Asian streaming platform iFlix also announced plans to open a UAE office in Dubai. It’s has also committed to generating local content.

There are further intriguing possibilities if local telecoms decide to mirror the recent move by US giant AT&T and invest in a film studio. Given the company culture at most telecoms companies in the region, it is a stretch to see this happening anytime soon. Even if their content strategies face the same challenge as existing free to air or pay TV players.

With advertising revenue models coming under pressure and competition from other platforms mounting, content is materialising as the one constant where local media companies can stand apart from the competition. 

It is far easier said than done of course, but it is far better than the alternative.

Click here to add your comment

Please add your comment below
Name
Country
Email
Your email address will not be published
Captcha