Market Insight

OSN slashes its package prices to reverse decline in subscribers

February 16, 2017  | Subscribers Only

Constantinos Papavassilopoulos Constantinos Papavassilopoulos Principal Research Analyst, Service Providers & Platforms

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OSN, the Dubai-based satellite pay TV operator, has launched new packages with new prices for the 24 MENA countries that form the base of its operations. The operator said the move represents the first steps of a new OSN, an operator that wants to ensure its customers that they will get access to the most premium content  at the most affordable prices, and said that further initiatives are planned. 

OSN has launched a new introductory package, called The Entertainment GetStarted Pack, consisting of 32 channels including eight Arabic channels, the OSN box office, and children's, news and factual channels. Channel providers include Viacom, Disney, Discovery and Fox. The package costs $21 in the Gulf States and around $16 in countries outside the Gulf like Jordan, Lebanon, Iraq, Morocco and Algeria.

OSN said it carried out extensive market research among 40,000 households across the region. The company has also introduced a new packaging policy which allows subscribers to customise what they want to watch and to pay only for the content they have chosen.  

Our analysis

The new pricing and packaging policy is long-awaited move from OSN. The Dubai-based operator has been losing subscribers since the end of 2015. According to IHS Markit TV Media Intelligence, between Q2 2015 and Q4 2016, OSN lost around 12% of its customer base in the MENA region. Churn rates have reached unacceptably high levels during the past year, almost doubling from 16% in 2013 to 30% in the first half of 2016. The drop in revenues was much less pronounced, at around 5%. This was primarily because OSN hiked the prices of its packages in 2015.

In essence, OSN has been losing steam from the end of 2013, after the acquisition of Pehla Media & Entertainment. Pehla was an Asian channel provider catering for the needs of the sizeable Filipino and South Asian expat communities in the Gulf States. From the last quarter of 2013 to the end of 2014, over 50% of OSN’s net additions in subscribers were former Pehla customers. OSN had navigated the murky waters of pay TV in MENA quite successfully as it had managed to grow its subscriber base almost 2.5 times between 2009 (the year of merger between Orbit and Showtime to form OSN) and 2014.

However, this growth was organic as well as inorganic (the result of mergers and acquisitions). OSN itself is the result of a merger and went on to acquire the movie channels of ART (a former pay TV operator) and Pehla and in 2014 signed a carriage deal for the Abu Dhabi Media Sports channels on its satellite platform. The main criticism that OSN was facing was related to the cost of its packages which was considered to be beyond the reach of the average TV viewer in the MENA region. The issue of expensive packages was further accentuated in November 2015 when BeIn Media launched its own entertainment packages at a cost which was roughly 40% cheaper than those of OSN.

The new OSN packages are priced competitively with those of BeIn Media, while offering more attractive content due to the fact that OSN has long-term first window deals with all major US studios. In some cases like Jordan, OSN packages are even cheaper than the BeIn Media equivalents. Another important feature of OSN’s new packaging is the customisation of packages based on the preferences of the subscriber. That practically means that OSN has given its subscribers the flexibility to top up the introductory package with any other package of their choice.

Addressing markets where pay TV penetration is very low is also a priority for OSN. Markets like the Maghreb (Algeria, Morocco, Tunisia), like Egypt and even like Iraq and Jordan, are an attractive target for any MENA pay TV operator. However, content tastes differ across the region. Currently, the new OSN packages are not available in Egypt as the operator is negotiating the acquisition of Egyptian content and is planning the introduction of Egyptian channels. Egypt has long been described as an insular market, a market where only locally-produced content is popular and pay TV operators from other MENA countries have faced difficulties in penetrating.

OSN wants also to address demographic groups with a known reluctance towards paying to watch TV. The biggest demographic group with these characteristics is young people under the age of 35, who form around 65% of the total population in MENA. OSN is planning a full revamp of its OTT SVoD service, OSN Go, which has till now failed to make any significant inroads in the market: according to IHS Markit Digital Media Intelligence, OSN Go had less than 35,000 subs at the end of 2016 in the whole of the MENA region. OSN is planning to launch a new OTT SVoD service, leveraging its rich content portfolio both in US and Arabic premium content. Other value-added services like a hybrid set-top box and the launch of UHD channels will also, the operator hopes, grow its appeal and, subsequently, its subscriber base. 

Research by Market
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