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IPTV is a booming business for the Middle East
Analysis, Broadcast Business

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IPTV is a booming business for the Middle East. With progressive growth over the past couple of years, Digital Broadcast ME looks at where the lucrative prospects lie, which players are taking them and the reasons that are inhibiting growth within the region by Vanessa Haarhoff

Few regions around the world hold as much potential as the Middle East and North Africa. Indeed the region is predicted to reach 1.6 million IPTV subscribers this year, according to analysts at Informa Media & Telecoms.

Furthermore, research by SNL Kagan shows that the region holds just 0.5% of the global IPTV market share, but is the fastest growing in terms of IPTV uptake with countries like Saudi Arabia, Qatar and the UAE showing the highest demand for such services.

Steve Christian, VP of marketing at Verimatrix, says that the insatiable demand for OTT services, combined with IP services, delivered on multiple platforms is driving the way for IPTV in the Middle East, especially the Gulf region which holds a very high-end market.

Saudi Arabia for example has the highest per capita user of YouTube globally, says Nathan Taylor, GM IPTV technology at Intigral, showing that “consumers are enamoured by ease of finding content through the Internet, and the different ways that they can consume content through IP capable delivery systems such as IPTV”.

As it stands the classical IPTV services are owned by the big telecoms such as Etisalat and du in UAE, STC in KSA, Balteco in Bahrain and Ooredoo in Qatar, with many satellite and cable based Pay-TV companies like OSN, ADM, My-HD Media and beIN Sports distributing their content on these networks, as well as distributing their linear channels via their cable networks.

Since most of the classical IPTV platforms are primarily owned by the big telecom operators, who are able to offer multiple services at a superior level because of the nature of their triple-play set-up, many cable operators have been seen upgrading their service with IPTV capabilities, in a bid to keep abreast with market demand for quality and speed of services, says Sumantra Dutta (Sumo), country head, Middle East, Africa & Pakistan at the Star Group.

With the exception of Lebanon, all cable operators in the region have either moved to IPTV or are in the process of converting their platform to IPTV. Some platforms are currently upgrading to their IPTV platform for the 3rd time since their initial IPTV offering.

Many ISPs and Telcos are now considering OTTtv as an additional option to enjoy Multi-Screen, TV anywhere, VOD and SVOD options, explains Ali Ajouz, managing partner at SAWA Media.

“Content providers and traditional Pay-TV providers in the region, have the same technical abilities to provide consumers with the similar services of the classical IPTV providers,” says Sumo, who adds that DTH is still very much in demand, with subscription numbers increasing at the same rates as the IPTV operators, making it a competitive market for IPTV services.

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Samer Geissah, VP of innovation at du, says that EPG technology is a core part of their subscription service, as it allows consumers to instantly view content that has been shown at any point over the past seven days as well as record content up to seven days in the future on personal devices other than their STB.

He says although it is quite a simple technology it remains an attractive service tool for their subscribers, as it allows them to gain control over their viewing practices, and gives the operator an advantage over stand alone third party OTT services.

Geissah says that the provider is also looking to incorporate extended features within this EPG service that will link content to internet related reviews such as IMBD or Rotten Tomatoes for example, in order to offer a more “converged” viewing experience.

Sumo says that while EPG is typical to classical IPTV providers, DTH providers are also able to provide this service to their subscribers, although not always to the technologically high standard of classical IPTV providers.

Ajouz believes that the introduction of High Efficiency Coding (HEVC) could be the most important “game changer” in the Middle Eastern IPTV landscape over the next couple of years, if adopted by manufacturers as it will allow Ultra HD (UHD) video to be transported to the consumer at half the bandwidth required by traditional codecs. 

He adds that HEVC is not just for convenience of UHD, but will see an upsurge of OTT services and players within the MENA region, “because the codec reduces the bandwidth required, making OTT services financially feasible for delivering SD and HD content, which at the moment, is extremely high for providers”. 

While it might take four to eight years for satellite receivers with HEVC compatible chipsets to proliferate the market, OTT devices will come onto the market fairly quickly allowing IPTV and OTT providers to deliver Live Channels and VOD services at a third of the cost, he explains.

With everyone rushing to deliver On Demand and OTT services and the imminent arrival of more OTT service providers, IPTV providers are working on creating networks that allow subscribers to access quality VoD from their homes and more generally in the region to remain competitive and seamless.

Christian explains how Etisalat has added OTT technology on top of it’s ‘managed’ RF delivery system, that is compatible with DASH and HLS (adaptive bitrate streaming technology), which Thierry Fautier, VP, solutions marketing, Harmonic, says is a powerful technology that makes content accessible on multiple devices.

Ajouz says that because of a mostly young tech-savvy and upwardly mobile Middle Eastern demographic the technological facilities and devices available to access IPTV is encouraging positive growth of IPTV generated services.

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The demand of high quality video content is a critical driver of growth within the IPTV/Pay-TV Middle Eastern market which has 750 FTA channels, “Pay-TV platforms need to continue to offer exclusive, premium content that is in demand and unavailable on the FTA channels, otherwise there will be little subscriber interest and growth will be limited”, explains Ajouz.

The market is made up of hundreds of different cultural, language and interest groups that all need to be addressed by IPTV providers within the various regions of the Middle East.

Taylor adds that that one of the most popular ways service providers are creating monetary value within their subscription packages in the region is by providing premium content, especially premium VoD as part of a transactional or subscription plan.

“This is a lucrative option for service providers because it opens a new revenue opportunity that was previously inaccessible to them before”. 

He says that because the Saudi Arabian market does not have movie theatres, it makes it a unique opportunity for players like Intigral, to offer this content to their customers so that they can enjoy Hollywood movies at the same time as other markets that are viewing them in the cinema. 

David Hanson, director of digital at OSN believes that a challenging factor faced by IPTV/Pay-TV providers within region is the rise of pirated content and the proliferation of VPNs that allow users within their networks to access third party providers like Netflix and I-Tunes, services that are available at fairly low rates and accessible on multiple platforms. 

Geissah says that even for classical IPTV players like du, it is difficult stopping the illegal use of content on their VPNs.

“Over the past couple of years, we have rolled out millions of dollars worth of CDN cable and high speed fibre optic capabilities in a bid to service around a 10-15% share of the UAE market and our bandwidth is being used for these international OTT services, despite efforts to curb it”.

“We just have to be competitive within the market, by providing our customers with a streaming quality On Demand and OTT service that these OTT international services cannot achieve through VDN”, says Medea Nocentini, VP of corporate development at OSN.

She adds that part of their strategy is to keep up to date with the latest content so it is available to all their clients: ”when House of Cards, or American Idol is aired in the US for example, we make sure we distribute it to our clients at the same time”.

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Taylor explains that another major challenge for many IPTV providers and IPTV growth in the region continues to be the reliable bandwidth available to deliver video services to customers.

The UAE and some other Gulf countries have IPTV-positive infrastructure to host hybrid IPTV solutions and other OTT content, but other Middle Eastern markets have a significant amount of customers in Oman and Egypt who are still reliant on ADSL based broadband technology which does not adequately support high bandwidth content. 

“Greater penetration of fibre connectivity, network capacity investment and development of reliable CDN services within the region is vital to allow consumers to access the flexibility of IPTV multiscreen services, and also enjoy a more reliable and higher quality video experience than having content delivered using satellite,” says Taylor.

Broadband and telecoms analyst Russell Southwood, Balancing Act, explains that most networks with the ability to host IPTV services are owned by the incumbent telecom operators, which means that getting licenses to roll out fibre is limited.

“The market needs to be liberalized because the protection of both state telecoms and broadcasting monopolies cuts across the rapid development of these kinds of IPTV-positive infrastructure”. 

Egypt has only let very modest licenses (geographically specific) for people wanting to build this kind of fibre infrastructure and as a result IPTV has not really taken off. Only head on competition for Telecom Egypt will encourage this kind of investment but there is little sign that this will occur any time soon, says Southwood.

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