The giant awakes

How Saudi Arabia could transform the region's broadcast and production industry
Broadcast, Hassan Ghoul, Icflix, KSA, OTT, PricewaterhouseCoopers, PwC, Saudi Arabia, TV, UTURN, Vision 2030, Analysis, Broadcast Business


Saudi Arabia has long been the sleeping giant of the Middle East’s broadcast industry. While the UAE and Qatar have become hubs for broadcast and production, offering a balance to the traditional production centres of countries such as Egypt and Lebanon, Saudi Arabia’s broadcast sector has been largely restricted to the state-owned entity, Saudi Broadcast Corporation (SBC).

But with a fast-growing population of more than 30 million people, of which about 50% is below the age of 25, Saudi Arabia is ripe for media consumption and production. This is reflected in social media use, with the country consistently topping polls that track YouTube views per number of internet users globally.

While Saudi Arabia has access to the Arabic and English channels enjoyed by the rest of the region, including from providers such as MBC, Al Jazeera, beIN and OSN, its home-grown channels are mainly restricted to those provided by state-run broadcaster, SBC, which runs channels including Al Saudiya for news and entertainment; Saudi 2 for English news and entertainment; Al Ekhbariya for news and current affairs; and sports channels Al Riyadiah 1 and 2.

However, with the government’s commitment to modernise and diversify the economy through its Vision 2030 plan, the broadcast and production industries are set to benefit.

Indeed, there have already been signs of change. In February it was announced that Saudi Arabia will soon have a new ‘media city’ that provides technical facilities, amongst others, for local and international journalists operating in the country.

The minister of culture and information, Abed Al-Turaifi, said the media houses would be given “flexibility” to operate within the rules and regulations of the kingdom, according to local media.

He said the move was part of Saudi Arabia’s plan to strengthen its media presence abroad. “We have lagged behind... We are trying to deal with it skilfully,” he said.

The minister added that the new media houses are not part of established media operating in the country or abroad, but that they would help communicate religious and national issues to the public. He insisted that they would have to obey the country’s rules and regulations.

While regulations may have lagged behind other parts of the region, the new generation has not. Saudi Arabia has earned a reputation for heavy social media use, with huge volumes of video content being posted on sites such as YouTube and Facebook. In terms of social video production and consumption, Saudi Arabia can make claims as a world capital.

This is a phenomenon that Jayant Bhargava, who leads the media practice for the Middle East at research firm PwC, is familiar with. “I think the content production industry is the only one in the media space that is flourishing,” he says.

“While there is pressure on the TV budgets on the FTA side because of the advertising there is demand being created by the OTT players with their original production. I know that Netflix has been on the lookout for commissioning for local content. Even on the free side, the phenomenon that is happening with the multi-channel networks (MTNs) like YouTube is pretty phenomenal,” he adds. “The whole volume of content that is being produced in new content genres is quite amazing and that is pretty much in line with what we are seeing around the world. The kind of content they are producing is short form, made up entertainment, political satire, comedy and people playing games. This type of content was never available on mainstream television before.”

While it is difficult to judge the revenue that is being derived from user-generated content, it is clear that it has scale.

A growing number of young Saudi Arabians are also joining the fray and creating content on sites such as YouTube and Kharabeesh. Bhargavi adds that some of these content producers could move into the mainstream in the future, judging by patterns in other markets. “This has happened in other countries. There are examples from India and Australia where the young amateur producers have found their way on a slot on mainstream television. That would be huge for the Saudi production industry, and to me that’s a game changer if it happens. That will be production that happens inherently in Saudi Arabia,” he says.

Kaswar Alkhatib, chairman and CEO of the popular KSA-based OTT channel UTURN, has an upbeat view of the country’s content production sector. With UTURN aggregating quality, edgy content on its YouTube channel, the brand sits somewhere between user-generated and mainstream production, giving Alkhatib a solid overview of where the industry is heading.

“The Saudi content scene is big in general. You have the networks that are creating quality content – usually shows - that tend to be in a studio with show format such as intro, logo, segments, host and fixed timing, and you’ve got the other trend is what we call Vloggers. These are content creators who are sort of a one-man show. They would film, edit and publish. Another big scene is the gamers who play a certain game and comment on it at the same times. We also started seeing a rise in influencers on SnapChat where they cover events and share moments of their personal life.

Alkhatib sees significant potential in premium short form content in the form of drama series, sitcoms, and short films. “I see potential in better collaboration between advertising agencies and content creators and networks,” he adds.

“I see opportunities in three main areas; firstly in other verticals that are not well developed yet such as kids, women and sports. The second opportunity lies in establishing a platform, which is what we doing in UTURN by launching our own App on Android and IOS smartphones and Samsung smart TVs. Thirdly, by empowering content creators and establishing a hub for them, similar to what UTURN is doing with In5 media Incubator and Dubai Film commission to establish Space for the content creators to gather, collaborate and create amazing content.

At the more mainstream level, production is relatively small scale in Saudi Arabia compared with countries such as the UAE, Qatar and Lebanon. This is partly because movie making in the Arab world has always suffered from a lack of theatres in the biggest market. “Most of the content is not produced in KSA. Much of the content from MBC is produced between Dubai and Beirut. Generally, outside of movies what is really left is TV production, be it reality or drama,” Bhargavi says.

In terms of trends in TV, free-to-air remains under pressure, as it does in many other parts of the world, while Pay-TV makes gains. “On the mainstream side it’s continuous pressure on television, which continues to be slow on the advertising side because it is predominantly free to air,” Bhargavi says. “The scale of pay TV is not enough to reduce the pressure on FTA. I think the pressure is more around the size of FTA advertising market and the ability of the number-two and number-three players of broadcast networks to make money. They can only make money if there is a significant correction in the FTA market, otherwise the content industry will remain under pressure. They will not be able to experiment with a whole lot of stuff, he adds.

One government-led initiative that could help to transform the fortunes of the linear TV market is the peoplemeter project. The project has been rumoured to be happening for two or three years now, and it would almost certainly have a profound impact on the industry by giving FTA channels and their advertisers a far clearer idea of the number of people tuning in to different channels at all different times of day.

“I’ve heard the talk about peoplemeters for the past few years but they’ve never been as strong as they are now; I do see light at the end of the tunnel,” Bhargavi adds. “It is a tough thing to roll out from an operational standpoint but it will have a huge impact on broadcast and production.”

From research conducted by PwC on mainstream television and published as part of its annual Entertainment and Media Outlook, it appears that series, reality shows and then movies are the most popular linear content in KSA. “Series account for about a third of the viewership, followed by reality which is growing, and then movies. Talk shows are increasing in terms of viewership. Movies are declining because you can see a shift towards non-linear formats,” Bhargavi says.

As regional director for MENA at IABM, Hassan Ghoul has a good overview of the current state of the broadcast industry in the region. He notes that Saudi Arabia, like the rest of the GCC and wider Middle East, has experienced “softness in the business environment” in the past 18 months to two years. Thankfully, this phase appears to giving way to growth in the coming months, according to many of the executives Ghoul has spoken to recently. “It looks like everybody has the feeling that the worst is behind us and everybody is looking at a more positive outlook for 2017 and onwards. This is linked to the regional economies being more adept at dealing with the lower price of oil and readjusting their priorities and their budget decisions based on this new environment,” he says. “I was able to see this at IBC where I met some of the Saudi broadcast organisations and others from the rest of the region and they all indicated that the worst is behind and 2017 will see renewed growth.”

The low oil prices may have been blamed for having a knock-on effect on the wider economy, affecting most industries including broadcast but there may also be a silver lining. Indeed, waning oil revenues have also reminded governments in the GCC of the urgent need to diversify their economies and continue to develop sectors including broadcast.

Saudi Arabia is diversifying its economy under the banner ‘Vision 2030’. The government has also announced the National Transformation Plan (NTP) which should be mostly implemented between now and 2020. “In this plan they have a lot of initiatives which are aimed at diversifying their sources of income, putting more emphasis on certain sectors,” Ghoul says. “There is a general drive to increase the participation of the private sector and this is one of the main drivers of the NTP.”

One of the most exciting aspects of the NTP is the call to develop a Media City in Saudi Arabia. “This highlights a unique opportunity for the media industry for everybody,” Ghoul says.

He adds that the plan also includes a big focus on developing the education sector, which also happens to be a big user of broadcast and media technology.

In terms of challenges facing the broadcast and content production sector in Saudi Arabia, Ghoul points to the need for companies to upgrade to the latest technologies. “The content producers in general and broadcasters in particular need to update their technology in order to keep up with the big shifts that are taking place currently in the technology in the broadcast field. Developments in IT and the move to cloud are playing major parts in every content production organisation. One of the main challenges is to update the sector within the Kingdom to keep up with those advancements,” he says.

Kaswar Alkhatib sees another challenge, which is a lack of film industry and schools. This makes it difficult for young talent to gain the professional experience and education necessary. Another challenge is monetisation of content, whether from YouTube or from inshore advertising.

In the spotlight

Carlos Tibi, CEO of ICFLIX, offers his insights into OTT in the kingdom of saudi arabia

DS: What are the main trends you are seeing in KSA in terms of consumption?

From our audience viewing habits we have seen that drama, comedy, thrillers and romance tend to the most popular genres. The number of connected devices such as tablets and smart TV’s has also fuelled demand because consumers love the convenience and accessibility of being able to watch what they want, when they want and where they want. Also the expansion of our native app on gaming consoles such as PS3, PS4 and Xbox One as well as Apple TV, Android TV and Roku set top boxes, has made viewing much more accessible especially catering to the needs of younger audiences.

DS: Does KSA account for a significant proportion of your business?

Over 60% of the subscriber base comes from the UAE, Saudi Arabia and Morocco closely followed by Egypt.

DS: What are the main opportunities presented by the Saudi market?

KSA has the largest Internet user population in the Arab world. The surge of smartphone penetration has driven Internet use across the Kingdom. Consumers have now embraced mobile technology as a basic necessity in their daily lives, where the average Saudi consumer owns 2.3 connected devices, with 89% of consumers using their smartphones to watch TV content. This is why KSA will continue to be a priority market for ICFLIX.

Winning with OTT

UTURN, a producer and aggregator of edgy content that lives primarily on YouTube, offers a prime example of Saudi Arabia’s love of social video.

The company, which originally launched in 2010 has grown have 50+ channels with 120 million views monthly and more than 35 million followers and subscribers, according to Kaswar Alkhatib, chairman and CEO.

Alkhatib shared a few of the company’s content success stories to date: “UTURN was the first to launch a drama series (Takki) and now we are preparing for Season 3. Eish Elly which now is season 5 and it longest show that is still running in the ME with more than 3 million subscribers making it the most subscribed entertainment channel in the Middle East.

“We have Siwar Shuaib which is the number 1 show in Kuwait. We have Cartoon Daniya with was the most watched channel in YouTube in 2015. We have the number-one gamer in the ME Da7oomi with more than 2 million subscribers. We’re launching Noon Alniswa Season 3 which is the first women targeting show hosted by a female Saudi presenter.”

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