Fragmented market

Experts discussed key problems in the Middle East's content industry at last month's Broadcast Forum
Broadcast Forum 2015, Icflix, MENA, Middle East, Original content, OTT, TV advertising, Analysis, Broadcast Business


Broadcast and content professionals discussed challenges – and possible solutions – to some key problems in the Middle East’s content industry during the Broadcast Forum last month.

Among the key issues discussed was the lack of relevant, locally produced content and the fragmentation of the broadcast industry in the region.

The panel discussion was the first of three sessions moderated by broadcaster and journalist Richard Dean at the 2015 edition of the Broadcast Forum.

Dean: Advertising rates here are among the lowest in the world for TV, it’s a massively fragmented market, difficult to gauge who the audiences are, and there’s the issue of piracy as well. Nick what’s your take?

Grande: There is a big divide between high budget content and everything else in this region and if you happen to be in the stable of MBC1, Rotana, Fox Channels and so forth, you are in a position to really cash in, but I think for everyone else it is a pretty tough choice to get the audience and get the advertisers’ attention.

It is very important to have an access point for the advertisers and practically speaking that makes the media biased. Having that relationship in this market is absolutely critical.

Alasad: The advertisers are really smart now. They are involved with producing content, they are not only sponsoring or putting their brand inside; they are giving the content creators the money. This shows that broadcasters will be more than happy to broadcast and they will have a deal with them for less on advertising but more on creating content.

Dean: Jean Claude, you understand TV very well, buying in and developing local content. What’s your perspective?
Torbey: Sincerely, if we have a look at the production scene in the Middle East, we are anchored in the 1970s and we forget that we have a Y-generation: almost 60% of our population in the Middle East are young and nobody is addressing them with any programmes. This is a big problem and a challenge.

Grande: In an atmosphere where there is no information, broadcasters don’t take any risks. The only people that take risks are YouTube producers, because they have a far lower cost base than TV producers…someone hits on a good formula that gets good viewership and you have the potential for another U-turn or Qsoft.

Making high quality TV shows costs money, and at the moment there isn’t really a great way of predicting the success or failure of formats, so safe is good. It’s the same buying industry, so it’s very hard to break the mould.

Dean: Bassam, what kind of discussions do you guys have?

Alasad: The line between content creator and satellite is going steeply up but there is a new line we are looking at, and we are really excited to see it going: the internet and OTT. Icflix is trying to break the mould in the region. Youtube is getting better and better in the Arab region. There is a lot of original content, as was mentioned earlier, U-turn and Qsoft and many others.

So our relationship is stable with the satellite operators and with the normal traffic TV but the broadcaster is still working on the demand of the advertiser. I was reading research Digital TV Research which said by 2020 there will be 36 million households using FTA TV, and only 1.6 million using pay TV - that’s 1.6m for OSN and 600,000 for Beinsports.

Advertisers they are thinking and planning how to spend money on FTA or on pay TV or on OTT. In the end it will be competition.

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Dean: Nick one of the challenges you pointed out was a hugely fragmented television market?
Grande: Here in MENA we have got over a thousand FTA TV stations and yet as we all know, 50% of the advertising spend is on one network, then there are another three of four networks that take the next 20-25%. There is a tiny amount of money being shared by hundreds of TV stations.

Because of the work we have been doing in terms of getting all these channels licenced for IPTV we have got to know them. The perception of the industry is that they are all useless, but that is just not true. There are some seriously good TV stations in the mix.

They fight to get any exposure with the agencies, getting representation from Choueiri, Adline or IMS for example - forget about it. They can’t show the TRPs, there’s no research that can support their case so they end up having to knock on the advertisers’ doors and hope.

That is the reality from the small broadcaster point of view, so my view is ‘yeah, if you’re one channel it’s a nightmare, but if there’s 20 of you, then it’s a different situation - Then you’ve got a story to tell’. So consolidation, whether it’s in the form of co-operation or acquisition or whatever, that is the key for the would-be MBCs and OSNs.

Jean Claude: It’s 100% the consolidation. Look at Europe, only the big groups can survive, small TV stations cannot have revenue, the same thing here, are they all commercially driven? No.

Dean: So these are vanity projects for governments or billionaires?
Torbey: Yeah sometimes, you have different models. Coming back to the production, and having product placements in programmes.

As you know, all product placements in programmes in US and Europe are banned now, so even in the Voice you cannot have a Coca Cola on the table in front of the judge now, so all this will happen here where the agency will not accept to go on air with a programme which is sponsored by Pepsi and then within the programme there is a product placement for Coca Cola. You have to be aware about what is the future.

The future in my view is simple, creating a good programme, that everyone will want to see, even on a small network. Take Fatafeat for instance. It is a small TV station that was owned by Discovery: why? Because they have nice content and they look after small programmes and it can grow.

Grande: Fatafeat is a great example, they have their own demographic, but there are other channels like that, for example, DMTV. It’s male skewed. They’ve got Madmen, Sopranos, and Seinfeld. This is a channel that has managed to get penetration with Pepsi and Mercedes.

Audience question: A critical point…is there a hope for solid data that advertisers can use?
Grande: There are two key projects. In the UAE, there is tview, which recently published its second audit results. First set were not very successful but they were completely transparent about it. That set them in a very nice position for their second audit result. Both audits were conducted by an independent French auditor.

They came back extremely positive. I believe the auditor is forecasting that tview’s data will officially be able to be recognised as a currency for the UAE advertising industry for television by Q3 2015. That’s great, but the UAE is not the core advertising market: what about Saudi? Saudi is now in the execution phase of its audience measurement system, and they expect to have their first numbers out in about September or October.

So what we expect by the end of 2015 is a people meter currency recognised by independent not-for-profit entity by the end of the year. The Saudi project is particularly interesting because the advertisers themselves have a stakeholder say in the running of the organisation.

Torbey: These improved measurements are very important for the industry. It creates trust. At the moment you have successful programmes which don’t get a chance for the advertisers because they think it is not a nice programme. But decisions should be based on real figures.

Dean: Bassam, the internet of course is the ultimate measurement tool isn’t it?
Alasad: Yes, exactly, when you have your programme on Youtube you can go to the advertiser and say we have 1 million views on this and on TV it was on say Forbes and reached 6 million households, so we have a general number and a specific number for the internet.

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