Despite solid IPTV infrastructure in many markets, satellite retains its dominance in the region. Claudia Vaccarone, head of market research and customer experience at Eutelsat, explains why.
Satellite in the MENA region remains the backbone of digital TV infrastructure, reaching into 56.1 million homes, according to a recent research report from Eutelsat Communications. The report, which focused on TV reception modes and trends across the Middle East and North Africa revealed that satellite represents more than 90% of the 61.1 million TV homes from Morocco to the Gulf States.
Three out of four of the 3.4 million homes in 14 Arab countries that have adopted satellite over the last three years have preferred the 7/8° West neighbourhood that hosts Eutelsat and Nilesat satellites, according to the research, which was released late last year.
For Claudia Vaccarone, head of market research and customer experience at Eutelsat, the research was reassuring confirmation of their opinion of the region: that satellite would continue to play a major role in the broadcast of TV content.
“Already in 2014 we had seen that satellite is the main television reception mode in the region serving 90% of the population, and this point was confirmed in 2016. When we analysed this satellite installed base we saw that 7/8° West is the most preferred orbital position for multi-channel viewing so on one hand it wasn’t surprising that we were hoping to find confirmation of the situation. But we have also seen growth, which was a little surprising: Despite the fact that we were already penetrating 90% of the satellite market 7/8° west has still grown by more than 7%, representing 2.4 million homes, in this second edition.”
Vaccarone said that Eutelsat attributes this growth to a few factors including the line-up of over 1,200 channels on Eutelsat-Nilesat 7/8° West. “These are mostly in FTA but we do also carry some of the most esteemed pay TV platforms in the region. We noticed there was an acceleration of the installed base of HD screens o when we look at the consumer homes and we linked it to the increased number of HD channels that have been made available throughout the region notably at 7/8° West.”
This bodes well for satellite operators such as Eutelsat who are keen to see growing demand for capacity. The research points towards a trend whereby a significant percentage of the MENA population may soon upgrade to HD, or even leapfrog straight from SD CRT TV sets to Ultra HD.
“50% of the TV homes throughout the region are still equipped with a tube and there are 43% that already have HD screens, so there’s a solid 24 million homes that are already HD-equipped but there are still millions of homes that are not equipped and still have the old generation TV sets,” Vaccarone says. “We expect that in the next 12-24 months the installed base [CRT owners] to upgrade their sets and then this will open up viewership for HD and perhaps even Ultra HD as the screens are becoming more affordable.”
Certainly, Eutelsat’s research shows a distinct rise in HD channels since the operator launched its Eutelsat 8 West B satellite, which also covers MENA, in the summer of 2015. “We see 7/8° West following some of the other mature orbital positions that we operate in other parts of the world.
“We launched Eutelsat 8 West B to accommodate demand for capacity in the region and ever since we are seeing the number of HD channels growing by 36%. There were 109 HD channels at 7/8° West last summer and there are 149 today so there is definitely momentum on both sides.”
In the MENA region the number of HD channels is around 500, which means the majority of channels in the region are still SD. However, Vaccarone says that the growth of HD channels at 7/8° West is far faster than the global market growth rate. “If you look at the comprehensive number factoring in the other orbital positions, the growth in the last 12 months was only 3% while at 7/8° West it was 36% so there is a definite trend at this position.”
Interestingly, this growth stems from across the region and is “pretty homogenous” in terms of channels, according to Vaccarone. “Obviously some of the Gulf markets like the UAE and Saudi Arabia are slightly ahead because there is an increased purchasing power but even in Egypt and Maghreb we see growth.”
It is also interesting to compare satellite with IPTV, which has enjoyed rapid growth in the Gulf countries but remains relatively small percentage-wise compared to satellite in the overall MENA region. “We saw how IPTV grew significantly here in the UAE and a little bit in Saudi Arabia but it remains quantitatively insignificant, less than a million homes market while the satellite is addressing 56 million-plus homes,” Vaccarone said. “It’s really confirming the crucial role of satellite. It’s something that is peculiar to the region, and we did this research in 51 markets. Europe is much more complicated and fragmented.”
So why is satellite such a dominant force in the region’s broadcast market? For Vaccarone the answer is relatively straightforward.
“One of the key assets of satellite distribution is the ubiquitous signal, and the fact that it’s a good investment that allows you to reach instantly 100% of the population which IPTV still doesn’t. Second is the bandwidth which can accommodate richer standards like HD and, hopefully, Ultra HD soon.”