Pay TV holds the key to HDTV

    The regional proliferation of satellite free-to-air (FTA) channels is sapping the television advertising market.
    Comment, Broadcast Business


    Despite the collective wishful thinking of a small band of opportunistic flat screen television retailers, the wholesale introduction of high definition services in the UAE remains a far-flung fantasy. This situation extends across the GCC and beyond.

    The proliferation of satellite free-to-air (FTA) channels is sapping the television advertising market and forcing the industry's major players to shore up their positions and consolidate their revenue streams.

    While any launch of HDTV services could provide these FTA organisations with a point of difference in the marketplace, the cost of implementation and the associated logistical issues ensures the prospect remains too challenging in the short-term.

    This situation extends to the pay TV sector, whereby the main stakeholders operate under the slimmest of profit margins, contend with rampant piracy and struggle to address single-digit percentile subscription rates in most markets across the region.

    In this commercial landscape, the potential for launching costly HDTV services across satellite and cable platforms - at least in the short-term - remains an unlikely prospect. As a well-placed source at a major pay TV operator recently noted, given the current challenges, "the sums simply don't add up".

    Despite this fact, pay TV operators such as Orbit and Showtime remain the most likely to introduce HDTV services to the Middle East in the long-term. Showtime already has access to premium HD content in the form of English Premier League matches, while Orbit has previously expressed a desire to launch premium HD video-on-demand services, most likely in the form of first-run films.

    Assuming this is the case, these organisations could learn a great deal from their European pay TV counterparts, who mostly thrive in a challenging media landscape characterised by multi-platform distribution channels and fragmented audience demographics.

    The European television broadcasting market remains largely defined along national boundaries and a conservative approach to market liberalisation, unlike the Middle East, which is united by a common language and a satellite broadcasting environment that has allowed FTA channel operators to thrive.

    In recent years, European pay TV operators have established vital new revenue streams by diversifying their service offerings to include premium subscription services, such as VOD and HDTV.

    To offset the high cost of investment, increase ARPU and reduce churn, most European operators have implemented a strategy largely proven in the mobile comms space: offer subscribers an 'exclusive' service at a premium rate and ensure the subscriber absorbs the cost of infrastructure investment by charging for HD-enabled set-top-box (STBs) and related technology.

    Middle East pay TV operators are well-placed to reap the benefits of this experience and should be encouraged to cast off their conservatism when it comes to implementing HDTV services.

    Aaron Greenwood is the senior group editor of ITP Publishing Group's IT, broadcast & communications magazines.

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