MENA Market Special 2018 MENA MARKET SPECIAL 2018 | Page 5

Analyst: Major SVoDs
struggle in MENA
According to Max Signorelli, research analyst,
home entertainment, IHS Markit, although
Netflix and Amazon Prime Video launched
subscription video services in the MENA
region in 2016, lacklustre offerings mean the
global giants will together comprise just 21%
of the market in 2017.
The Middle East and North Africa (MENA)
region is currently a relatively small market
for subscription video services, with just
1.3 million subscribers forecast by year-end
2017. But it is growing fast with a projected
compound annual growth rate (CAGR) of
35% from 2016 to 2021, according to IHS
Markit’s report, A slow start for MENA
subscription video.
Over 417 million people lived in MENA
in 2016 across more than 84 million
households, representing around 6% of the
global population. The region is home to an
extreme mix of very affluent countries such
as Qatar and Kuwait and those with much
less disposable income such as Syria and
Yemen. Similarly, North African markets
are considerably different from those in the
Middle East — and pay-TV, Internet and
indeed subscription video penetration varies
accordingly between them.
Wealth is perhaps the most fundamental
point when it comes to a country’s affinity
for a subscription video platform, but other
socioeconomic factors such as content
preferences, payment and language have
their impact as well. This, then, boils down to
two main issues: accessibility and value.
Customers from wealthy Gulf States are
much more able to afford expensive premium
subscription packages that offer the most
exclusive and highest quality content. In
addition, they are more likely to purchase
subscription video packages to access a
greater variety of content as a complementary
service to both free/pay TV and to other
subscription services.
Such a collection of premium services is
less likely to happen in MENA, according to
Signorelli, where people are more likely to
pirate their content than they are to pay for it.
These factors, combined with low bankcard
penetration, have resulted in subscription
video services struggling to make a significant
impact in the region.
Netflix and Amazon have grown
substantially to become recognised household
brands around the world — a direct result
of both global ambition and vast arrays
of high-quality shows and movies. The
companies launched in the MENA region
in 2016, but a lack of localisation resulted
in a relatively weak entrance, leaving the
giants with just a fifth of the market in 2017.
Established players, too, are struggling to
rack up subscribers despite some impressive
integration practices with the local
telecommunication companies.
The current market leaders in the MENA
subscription video market are regional
broadcaster MBC’s Shahid Plus and Starz
Play. Local brands Icflix and Seevii, global
incomers iflix and Viu, and pay-TV operator
OSN’s WAVO are also competing for share.
In its current state, the MENA subscription
video market is anticipated to grow relatively
rapidly through 2021, but with only 4.2
million subscribers by then, it will still not
stand out globally with just over 1% of global
standalone subscriptions.
No single player currently has the
optimal portfolio to address the key
issues of accessibility and value. A greater
investment in local Arabic content as well as
addressing the income disparities between
MENA countries will be vitally important
if subscription service providers are to
effectively combat piracy and gain the upper
hand.
MENA Q3 SVoD
1.6m subs
According to analyst firm Dataxis’s latest
research, 1.6 million people subscribed to an
SVoD platform in the third quarter of 2017 in
Middle-East and North Africa. This represents
a growth of 19% compared to the previous
quarter.
Among the elements driving the growth are
Netflix arrival, which helped raise awareness
of the SVoD model in the region, as well as the
multiplication of bundled offers from telecom
operators.
However, strong disparities persist within
the countries in the zone, the growth being
mainly driven by GCC countries, namely Saudi
Arabia, UAE and Kuwait. Although the market
is still at an early stage, Dataxis’s forecasts
are positive provided that the necessary
components for a sustainable growth, such
as partnerships with telecom operators and
investments in attractive content, are met in
the years to come.
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