The data shows that pay-TV is now received in 4.2 million homes in MENA, from a base of over five million in 2016. Online video subscriptions fared far better, reaching 1.38 million at the end of 2017 – in a rise of 48% on 2016, said the analysts. Notably, this marks the first time online video has attracted over one million customers in the Arab world.

The region’s pay-TV market overall, however, has been hit by the ban on new subscriptions to Qatar’s beIN Media pay-TV platform in Saudi Arabia, Egypt and Bahrain after these three countries severed political ties with Qatar in June 2017. The UAE, which also implemented a blockade on Qatar, later reopened the market for beIN Media pay-TV packages.

“While the precise amount of revenue damage to beIN Media from this blockade is unclear, IHS Markit estimates that it may have cost the company as much as US$200 million in lost subscriptions last year, especially because Saudi Arabia and Egypt were the two largest markets for beIN Media satellite TV packages,” said Constantinos Papavassilopoulos, principal research analyst, IHS Markit. “If the beIN Media blockade continues, it could seriously affect the future growth prospects of pay TV in the region.

MENA subscriptions to over-the-top (OTT) services are forecast to grow at a compound annual growth rate (CAGR) of 34.4% over six years, reaching five million in 2022. In 2017, the number of OTT subscriptions was one-third of the number of pay-TV subscriptions. This share will increase to 50% in 2020 and 67% in 2022, believes the analyst.

Online video revenue grew 44% year on year, exceeding $100 million in 2017 for the first time. Revenue is expected to reach $500 million in 2022, growing at a CAGR of 36.6%.

Yet despite the recent growth in the online video sector, IHS Markit believes that subscription video-on-demand (SVOD) is currently a complement to pay-TV, rather than a direct competitor.

“The pattern of growth will be determined by the decisions of the main players — primarily by their strategies for content, localisation, partnerships and pricing. Starz Play was the online subscription services market leader, in both subscriptions and revenue, followed by local service Shahid Plus [from MBC] and Netflix,” Papavassilopoulos added.

“Starz Play’s success was based on a smartly implemented policy of partnering with local telcos and IPTV networks, to offer payment solutions accessible to the vast majority of people in the region. This policy aligned the pricing regime in relation to the average disposable income in each country, while providing attractive content with high relevance to some MENA regions.”

There were other positive developments in MENA’s entertainment markets, most notably the reform of the media ecosystem in Saudi Arabia, said IHS. The reform package includes the reopening of cinemas across the Kingdom, and a planned $64 billion investment of state and private funds in the country’s entertainment sector over the next ten years.