The Abu Dhabi Media Company (ADMC) has emerged as a leading player in the development of online content distribution services in the Middle East.
In recent months, the company has signed a billion dollar deal with Warner Brothers, launched a national daily paper in the UAE, and introduced an online content distribution platform. John Parnell spoke to Ricky Ghai, executive director of Digital Media at ADMC, about the company's ambitions in the digital space.
Created from the assets of Emirates Media Incorporated, ADMC comprised of a trio of free-to-air (FTA) channels, the Al Ittihad newspaper, a host of radio stations and a small collection of magazines. Since ADMC's creation last June, the company has taken an ambitious and contemporary approach to its expansion.
"Most consumers will opt for a cost-effective legal download website over an illegal file sharing portal. The best way to deal with piracy is to offer consumers a great product for next to nothing."
Part of this growth has been an all-embracing digital media strategy that includes the company's traditional media activities as well as its new offerings. In April of 2008, ADMC launched The National, an English-language daily newspaper distributed across the UAE.
"The National clearly demonstrates what ADMC is becoming. Our digital media department is working to develop digital media components for all of the company's properties," says Ricky Ghai, executive director of digital media at ADMC.
"These can take the form of a dedicated website or syndication of content to other sites. In the case of The National, we have developed a full, online edition incorporating the newspaper's content.
"We are looking to develop multimedia content in the future."
Currently the website of The National is fairly basic in terms of functionality with features limited to polls, notice boards, RSS feeds, the e-edition (which is identical in appearance and layout to the daily hard copy) and picture libraries.
"The current offering represents phase one of our plans. Phase two will see us introduce multimedia capabilities as well as a mobile edition," says Ghai.
"There is a tendency to over-engineer digital products. When you look at the consumer you have to ask are they ready for it and do they want it. There is a danger of developing new services simply because you feel you ought to.
"Readers will see some advancement with the site and hopefully by the end of this year we will have established a strong digital presence with both the website and on mobile."
Creating news content in a mobile phone friendly format raises a number of challenges, particularly in regards to displaying this content on handsets.
"We are still conducting market research to work out exactly how we are going to approach these issues," says Ghai. "If you look at the digital edition online you get the full paper. With mobile however, I think the key service will be top-line news."
ADMC will also be looking to exploit its experience in traditional media sectors when it comes to content creation for the next generation of the paper's web presence.
"We have a whole team of journalists, including broadcast journalists trained for this particular task. Phase two will require a very steady evaluation of what multimedia elements are relevant to this region," says Ghai. "You could overkill a site and make it very content heavy. It's already a very image-based website.
"The key is to go out and produce multimedia content that supplements the news content. The fundamental nature of multimedia content means it may not necessarily have to abide by the strict editorial policies of the newspaper itself."
With newspaper circulation rates declining in most established markets and online advertising revenues growing worldwide, could it be possible that one day The National's website could generate more ad revenue than its hard-copy sibling?
"We'd love to think so," says Ghai. "More and more consumers are accessing news content across a number of devices. There is a disproportionate relationship here between the number of people going online for their news versus the number of advertisers that are willing to pay for space.
"We have to quantify and highlight the value of this for advertising clients at the moment or we will just see a shrinking of [hard-copy] distribution and no stimulation of [online] ad spend. That is easy for us to illustrate and we think we will soon see healthy margins generated online.
ADMC recently launched a significant addition to its digital content distribution network under the GETMO Arabia brand. The joint venture with Arvato Middle East Sales offers subscribers a variety of content from mobile phone ringtones and wallpapers to albums and full-length feature films.
Part of the GETMO model will see major brands offer credit for the service with purchases of their products. This will be exchanged for content that is relevant to that brand. The service will separate content into tiers with premium movies for example, available on a 'download to rent' basis and other levels available for permanent download.
"In simple terms, GETMO is a free media suite that offers access to a variety of music genres; European, Arabic and Bollywood, through to niche content. It also offers top-tier films and TV programmes that we will make available either for free via an advertising sponsorship arrangement, or for a price that is consistent with market rates," says Ghai.
"In the former case, it's a win-win situation. Consumers are provided with free movies and clients get to advertise their products and services. This kind of deal is standard fare in Europe," says Ghai.
The GETMO platform is based on technology developed by Arvato with ADMC modifying it for local users.
"In simple terms, GETMO is a free media suite that offers access to a variety of music genres; European, Arabic and Bollywood, through to niche content. It also offers top-tier films and TV programmes that we will make available either for free via an advertising sponsorship arrangement, or for a price that is consistent with market rates."
"To simply roll out a standard download portal at this point would be futile because of the piracy problem in the Middle East. Most people will opt for a cost-effective legal download website over an illegal file sharing portal," says Ghai. "The best way to deal with piracy is to offer consumers a great product for next to nothing."
In addition to offering sought-after mainstream music and films, Ghai also hopes to create a marketplace for niche content not currently sold by the region's major media retailers. As the GETMO platform is a P2P-based offering, unsigned bands and other artists will eventually be provided the opportunity to distribute their content to consumers using the platform.
"This platform has the potential to create a sense of community among users," claims Ghai. "The technology for uploading is already in place. The reason we are not really highlighting this capability from the outset is because of the potential for the uploading of illegal material, which is contrary to what this project is trying to achieve. Yes, you should be able to upload your own content, but we will wait until the service is more established before introducing this feature," says Ghai.
The content being uploaded will be monitored to ensure that it is both appropriate for the region and does not infringe copyright.
"We don't want the site to become so content heavy that it can't be indexed efficiently, because when that happens, the service becomes irrelevant," says Ghai.
The lack of broadband penetration is often blamed for the lack of commercial online distribution services in the region. Ghai is not willing to accept this as an excuse for shying away from establishing digital content delivery services such as GETMO.
"I think it is really a chicken and egg situation. If there is no incentive for consumers to subscribe to broadband internet services, they won't," claims Ghai. "For music downloads, broadband penetration is not particularly a problem, but for feature-length movies it is going to be an issue. It is difficult to get an exact understanding of the quality of broadband service in the region, so we have to collaborate with the telcos.
We are in negotiations both commercially and strategically with most of the major players. But there will be some pain to go through. There will be some deficit financing for a while but someone has to make that first step."
Ghai stresses that while ADMC is a content provider and aggregator first and foremost, it recognises the importance of relationships with partners operating in vertical markets.
"We should heed the lessons learned in Europe and beware the challenges facing other media platforms in the Middle East," he says.
"I previously worked for Showtime and Orbit and I appreciate the challenges both operators face. In the 15 years or so they've been in business, pay TV has struggled to make significant headway in the Middle East.
"Our goal is to remove as much financial risk as possible from the equation. We are committed to developing binding relationships with content providers, telcos and device developers... that way, each party has a vested interest in ensuring the success of the project," states Ghai.
"The recent MECOM show in Abu Dhabi was a good illustration of this convergence. We were the only TV media network present in what was otherwise a comms market and I was quite impressed by the number of people that came to talk about content. A lot of these companies are usually looking at copper wires and thinking about networks.
Now they are taking notice of customer retention programmes, marketing and of course, content. All of us need a distinguisher and once consumers have got the connectivity they want to know what they can get from it, so naturally it's a content driven business.
While the old mantra of content is king stands true, consumers are becoming more important in the equation!"
Given the rate of convergence occurring in international markets, could we soon see telcos pursuing media acquisitions in the Middle East?
It is conceivable that a media company could acquire a telco operation or vice versa with the aim of consolidating their interests in both markets," claims Ghai. "But we have no ambition to pursue this path at this point in time."
With the GETMO platform in place, the next great challenge for ADMC is sourcing content. With an agreement already in place with Sony BMG, negotiations are also under way with several major Hollywood and Bollywood studios.
While Ghai remains wary of the minimum guarantees demanded by international content owners, he notes that on the positive side, such demands have resulted in the increased development of local content.
"We simply can't meet the financial demands of international content suppliers at times," says Ghai. "So instead, we might ramp up our local content production. This way, we can produce anything from a national soap opera to must-have mobile episodes, instead of occasionally receiving business from consumers downloading a first-run film for example.
"There is only a small amount of international content that is highly sought-after in this region. The successful American series, such as Desperate Housewives, Lost and 24, although popular, don't produce the kind of numbers financially that you can base a business case on," claims Ghai.
With that in mind, Ghai believes that tailored content for mobiles such as news services and lifestyle offerings are more suitable and relevant, than reams of expensive, unmodified full-length content. As such, ADMC will be working with some unorthodox partners for content creation from the world of healthcare, education and public services. This group of new content developers, which includes some telcos, aims to bypass traditional broadcast and content aggregation markets.
"An increasing number of telcos have expressed a desire to produce content for distribution on their respective mobile platforms," claims Ghai. "But one thing that is often lost is the fact that this content must present consumers with a unique proposition. The claim that people will consume everything on a mobile is a myth."
"It's difficult dealing with a new platform such as IPTV for example, which is in its embryonic stages in the region and is not really that well-developed in Europe. The BT Vision project which I worked on in the UK attracted 100,000 customers after 12 months of service in what remains a very sophisticated market.
To provide something like a VOD or a web streaming service is all the more difficult to do in the Middle East when consumers can so easily source content for free illegally."
...The challenges facing Pay TV operators
"Pay TV operators continue to struggle to attract new subscribers. I won't speculate on exact subscription rates but I know the numbers are not huge at present. I think this is because pay TV appeals to a certain kind of customer, it's expensive and they have massive rates of piracy to contend with.
Now Orbit and Showtime are trapped in that space, which offers rivals the opportunity through FTA and digital distribution methods to make pay TV an unnecessary entrance point. The people that won't allow it to disappear are the content owners. The studios have an advantage; the more windows of opportunity there are for them the better."
...Sourcing international content
"Acquring content is challenging because the financial expectations of content providers are based on their experiences working in well-organised markets elsewhere. It is our job to convince them to adapt their expectations to the commercial dynamics of this market.
Then we can both benefit from that in the future. If they come to the market demanding huge minimum guarantees for every single deal then they won't find many organisations willing or able to work with them. We are engaged in negotiations with most of the major studios at the moment. It's looking quite interesting."
...Regional advertising spend
"Ad spend remains disproportionate to the GDP of this region and other comparable markets. The TV, radio and print markets are pretty much saturated. So the challenge lies in creating more advertising real estate for clients. Not just new space for adverts, but space that guarantees exposure via a quantifiable platform."