Following is information and insight from IHS Markit analyzing the subscription video market in the Middle East and North Africa.
- Political shockwaves have reversed pay TV growth in the Middle East and North Africa (MENA), as pay TV subscriptions fell 21 percent to 4.2 million in 2017.
- Online video subscriptions in MENA exceeded 1 million in 2017 for the first time, up 48 percent over the previous year. Subscriptions are forecast to grow at a compound annual growth rate (CAGR) of 34.4 percent, over six years, reaching 5 million in 2022.
- Online video revenue grew 44 percent, year over year, exceeding $100 million for the first time.
- The over-the-top (OTT) market in the MENA region also grew, with online video subscriptions reaching 1.4 million at the end of 2017. However, so far subscription video on demand (SVoD) appears to be a complement to pay TV, rather than a direct competitor.
There was a reversal in pay TV growth in the MENA region at the end of 2017. As Saudi Arabia, Egypt and Bahrain severed political ties with Qatar, the three nations subsequently also blocked beIN Media Group from their markets. A similar decision was taken in the United Arab Emirates, but the market was later reopened to beIN Media pay TV packages. While the precise amount of revenue damage to beIN Media from this blockade is unclear, IHS Markit estimates that it may have cost the company as much as $200 million in lost subscriptions last year, especially because Saudi Arabia and Egypt were the two largest markets for beIN Media satellite TV packages. If the beIN Media blockade continues, it could seriously affect the future growth prospects of pay TV in the region.
Even as pay TV subscriptions declined, there were other positive developments for entertainment markets in the MENA region. Principal among them was a reform of the media ecosystem in Saudi Arabia, which included the reopening of cinema theaters in the country, and a planned $64 billion investment of state and private funds in the country’s entertainment sector over the next 10 years.
The OTT subscription video market in MENA grew 48 percent in 2017, compared to the previous year. OTT subscriptions reached 1.38 million, which is the first time the market exceeded 1 million subscriptions. Also for the first time, revenue exceeded $100 million, growing 44 percent over the same period. Revenue is expected to reach $500 million in 2022, growing at a CAGR of 36.6 percent. In 2017, the number of OTT subscriptions were one-third of the number of pay TV subscriptions. This share will increase to 50 percent in 2020 and 67 percent in 2022.
The pattern of growth will be determined by the decisions of the main players — primarily by their strategies for content, localization, partnerships and pricing. STARZ Play was the online subscription services market leader, in both subscriptions and revenue, followed by local service Shahid Plus and Netflix. STARZ Play’s success was based on a smartly implemented policy of partnering with local telcos and IPTV networks, to offer payment solutions accessible to the vast majority of people in the region. This policy aligned the pricing regime in relation to the average disposable income in each country, while providing attractive content with high relevance to some MENA regions.
MENA Pay TV and Online Subscription Video Market Monitor
This report provides a fully updated, comprehensive and analytical description of the state of the pay TV and the online subscription video markets in the MENA region.