The content arms race exposed by Covid-19, expert analysis

Published: 22 September 2020 - 11:50 a.m.

For years, the MENA broadcasting community has been debating how to launch and optimise streaming services in the region: Linear broadcasters have mulled the amount of content they can afford to release from core services onto cheaper or free streaming services.

There has also been the debate of commissioning originals versus relying on acquisitions, and how much to invest per episode on originals.

Streaming has always invited such complex questions, but Covid has exposed and amplified a simpler truth: this is an arms race. It’s about investment and scale.

Streaming platform investors don’t look for profitability, because it doesn’t drive the share price. They want to see exponential growth and market supremacy. As Netflix has demonstrated, the best way to achieve dominance is by continually placing huge bets in content, delivering ever more exclusive, high value (i.e. high cost) shows affordably to consumers. In each regional market there is room for perhaps three or four winners (whether regional or global) to share regional control whilst the rest will either be bought, close down or become niche players.

Last week, hosted a conversation with senior buying executives from three of the most successful businesses in the MENA content economy: Warner Media was joined by MBC Group (owners of both the MBC channels and Shahid) and Zee Entertainment (owners of the Zee channels and also both ZEE5 and Weyyak). All three companies are broadcasters, and all of them are backing streaming services to drive their future growth.

MBC Group in particular has recognised the importance of scale in its buying power and has centralised all acquisitions for its multichannel network and the Shahid streaming platform. Carlie Goode, group acquisitions director explained: “MBC now only wholesale buys. It’s a one stop shop, which is something that’s been accelerated as a result of Covid”. That consolidated content investment combined with a captive audience over the four months of lockdown has paid dividends. MBC CEO Marc-Antoine D’Halluin revealed to Variety in June that their SVOD service Shahid VIP started the year with 100k subscribers but had since rocketed to 1.4 million subscribers.

Of course content investment strategies also need to be long-term. The pandemic exposed the lack of ‘content banking’ in the content libraries of broadcasters across the region and other emerging markets compared with serious OTT platforms.

Zee Entertainment’s regional GM Manoj Mathew highlighted the issue. He said: “If you look at the OTT space, their content plan probably goes over a year. At ZEE5 we were pretty comfortable, but when it came to linear, that kind of struggled. We were lucky to have 6-8 months of content for Zee Alwan, but that was not the case for [our] pay channels: India had a maximum library bank of about three weeks.” [Going forward] “We’re planning to take the banking up to six months”.

Carlie Goode agreed with Manoj. She said: “That three-week time frame is echoed on our Arabic channels. Ramadan is always a really tight timeline — we’re talking days — and this year was even more challenging. Going forward we need to start baking in some more time”

It’s reassuring to see major regional players are learning from Covid-19, adapting to the difficulties they faced and even growing through the pandemic. Their shareholders must now be ready to inject ever more risk capital, despite uncertain economic times, if they are to keep pace with the extraordinary momentum, buying power and growth of the global streaming networks.

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