The MENA Region: In the Middle of Challenges Lie Opportunities
This October we will spend two weeks in Dubai at GITEX and Cabsat exhibitions. Anticipating these events, in this article we will try to express our view on why the MENA region is so attractive and challenging for OTT development.
Having spent more than a year without the opportunity to meet, media industry participants around the world were waiting for the second half of 2021. NAB Show in the USA and IBC in Europe promised to gather everyone again and open a new post-new-normal industrial era for video technologies.
However, NAB was already canceled, while IBC is holding up well.
In the current situation, the MENA region, centered in Dubai, has become a point of attraction for the world of video technology, which is ready to step over the boundaries set by the pandemic and move on.
The concentration of events here in October is record-breaking: the GITEX Technology Exhibition and the Cabsat telecommunications exhibition will be held amid the backdrop of the opening of Expo 2020, the largest event ever held in the Arab world.
It seems to us that the rest of the events that will take place before the end of the year are designed only to maintain the pace of networking set in Dubai.
That is why Telebreeze will spend the whole month in Dubai and will be present at all the most important events.
Having spent more than a year without the opportunity to meet, media industry participants around the world were waiting for the second half of 2021. NAB Show in the USA and IBC in Europe promised to gather everyone again and open a new post-new-normal industrial era for video technologies.
However, NAB was already canceled, while IBC is holding up well.
In the current situation, the MENA region, centered in Dubai, has become a point of attraction for the world of video technology, which is ready to step over the boundaries set by the pandemic and move on.
The concentration of events here in October is record-breaking: the GITEX Technology Exhibition and the Cabsat telecommunications exhibition will be held amid the backdrop of the opening of Expo 2020, the largest event ever held in the Arab world.
It seems to us that the rest of the events that will take place before the end of the year are designed only to maintain the pace of networking set in Dubai.
That is why Telebreeze will spend the whole month in Dubai and will be present at all the most important events.
The potential and distinctive features of the region
First of all, the MENA region is the most important connecting node and at the same time a transit territory for international communication traffic. Marine and land cables and related infrastructure are considered the most technologically advanced in the world.
According to PwC estimates, the region's media market value will amount to $70 bn by 2026 ($35 bn in 2020). The market growth rate is expected to be 12.79% CAGR (during 2019-2021 it was 5.4%).
It should be noted that Saudi Arabia according to a PwC global outlook report joins the five fastest-growing markets for the period of 2019-2024 — the fourth after India, Nigeria, and the Philippines. In this country, the growth of demand for data, stimulated by the demand for OTT services, compensates the decline of traditional revenues of mobile operators. The growth in the number of games, video content, OTT services, and digital advertising is generally considered as the main drivers of growth in the region.
According to PwC estimates, the region's media market value will amount to $70 bn by 2026 ($35 bn in 2020). The market growth rate is expected to be 12.79% CAGR (during 2019-2021 it was 5.4%).
It should be noted that Saudi Arabia according to a PwC global outlook report joins the five fastest-growing markets for the period of 2019-2024 — the fourth after India, Nigeria, and the Philippines. In this country, the growth of demand for data, stimulated by the demand for OTT services, compensates the decline of traditional revenues of mobile operators. The growth in the number of games, video content, OTT services, and digital advertising is generally considered as the main drivers of growth in the region.
The top 5 of the world's best-performing E&M consumer markets are in the MEASA region (CAGR 2019-2024). Source.
According to Digital TV Research, 27.16 mn SVOD subscribers are expected in the countries of the region (20 countries) by 2025. In 2019, this figure was 10.95 mn.
The first OTT service in the region was Starz Play Arabia, owned by Lionsgate, which crossed the borders of Saudi Arabia in 2014 and by 2017 had 29% of the SVOD MENA market. Netflix came to the region in 2016 and is currently the most popular service rushing to 10 million subscribers. Local services are also developing now. Success is also promised to the platform of the telecom giant SCT — Jawwy TV, which is building a strategy for the aggregator of services in the region.
The first OTT service in the region was Starz Play Arabia, owned by Lionsgate, which crossed the borders of Saudi Arabia in 2014 and by 2017 had 29% of the SVOD MENA market. Netflix came to the region in 2016 and is currently the most popular service rushing to 10 million subscribers. Local services are also developing now. Success is also promised to the platform of the telecom giant SCT — Jawwy TV, which is building a strategy for the aggregator of services in the region.
MENA SVOD subscribers by platform (000). Source.
The region's growth potential concerns the entire business as a whole, however, in addition to the positive dynamics of general digitalization and the growth of international players like Netflix, there are special prerequisites for the development of OTT:
1. According to GSMA, a relatively small number of people use the Internet, despite the developed infrastructure. According to ITU, 95% of the population is covered by a mobile network, 90.8% is within 3G reach and 61.9% is within LTE signal reach. However, only 54.6% of the population uses the Internet. The reasons refer mainly to the high cost of smartphones relative to average income and limited digital skills among rural and less literate populations.
2. Being an international transit communication hub, Middle East International Bandwidth Usage Annual Growth Rate is growing after 2019.
1. According to GSMA, a relatively small number of people use the Internet, despite the developed infrastructure. According to ITU, 95% of the population is covered by a mobile network, 90.8% is within 3G reach and 61.9% is within LTE signal reach. However, only 54.6% of the population uses the Internet. The reasons refer mainly to the high cost of smartphones relative to average income and limited digital skills among rural and less literate populations.
2. Being an international transit communication hub, Middle East International Bandwidth Usage Annual Growth Rate is growing after 2019.
MENA bandwidth annual growth rate (%). Source.
Currently, the international capacity of the flows is estimated at 83%. The share of flows that are produced within the region is small. This is a consequence of insufficient digitalization and development of OTT services. The expected increase in demand for games (up to 100 million active gamers) will only partially increase the domestic traffic load within the region.
Usually, traffic grows due to content providers and cloud services. It is their presence that increases the traffic load. In 2019, in MENA content providers only accounted for 4% of the bandwidth connected to the region. Compared to Europe and Asia, their share is still small. According to slightly outdated, but impressive World Bank data (2014), just 8% of businesses in MENA had a digital presence (in the US it is 80%), and only 1.5% of MENA's retail sales were online.
Usually, traffic grows due to content providers and cloud services. It is their presence that increases the traffic load. In 2019, in MENA content providers only accounted for 4% of the bandwidth connected to the region. Compared to Europe and Asia, their share is still small. According to slightly outdated, but impressive World Bank data (2014), just 8% of businesses in MENA had a digital presence (in the US it is 80%), and only 1.5% of MENA's retail sales were online.
OTT equips for growth
These two factors: the growth potential of the subscriber base due to the inevitable growth of digital literacy and the need for the development of the regional media industry and local content — suggest that OTT technologies will become the main tool that will be in demand in the communications sector in the near future.
This should be facilitated by further liberalization of the markets in the MENA region, and an increase in opportunities for regional media companies to be present in the Internet space.
For telecom operators, the use of OTT technologies is an opportunity to increase profitability (ARPUs) and find new growth opportunities. Large companies will focus on the development of their OTT services, attracting more and more resources to them.
Media companies will also need to take every opportunity for digital transformation. The distribution strategy of the content produced by them will either reach the OTT level, or will be absorbed by larger regional or international aggregators.
This should be facilitated by further liberalization of the markets in the MENA region, and an increase in opportunities for regional media companies to be present in the Internet space.
For telecom operators, the use of OTT technologies is an opportunity to increase profitability (ARPUs) and find new growth opportunities. Large companies will focus on the development of their OTT services, attracting more and more resources to them.
Media companies will also need to take every opportunity for digital transformation. The distribution strategy of the content produced by them will either reach the OTT level, or will be absorbed by larger regional or international aggregators.
Conclusion
One of the largest companies in the MENA region begins a story about itself with the words "Peace be upon you and Allah's mercy and blessings. In the middle of challenges lie opportunities". We at Telebreeze join the words to title this article and the discovery of "our MENA": we hope that our experience and products which we develop and implement with special care, will bring success to companies in the region. Indeed, a huge field of opportunities opens up for everyone in the region.
We will be happy to spend a whole month in the midst of MENA telecom events.
We will be happy to spend a whole month in the midst of MENA telecom events.