GCC video revenues set for annual fall in 2020 | Media Analysis | Business
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In its first analysis of the prospects and future opportunities across pay-TV and online video in six Gulf Cooperation Council (GCC) Countries, Media Partners Asia (MPA) is projecting that the region will generate revenues of US$1.6 billion in 2020, a decline of 13% year-on-year as online video’s significant growth is unable to offset deep declines across the TV industry.
ionoco 12Oct2020
The GCC Video & Broadband Distribution 2020 report investigated market conditions across Bahrain, Kuwait, Oman, Qatar, the Kingdom of Saudi Arabia (KSA), and the United Arab Emirates (UAE).
Fundamentally, the study suggests that Covid-19 related macro issues have exacerbated headwinds across the TV sector but with a rebound in 2022 despite the TV industry continuing to face secular challenges in the future. OTT video services are forecast to will continue to proliferate as platforms reposition and reinvent. GCC video industry revenues are forecast by MPA to increase to US$2.0 billion by 2025, a CAGR of 5% since 2020.

The study also predicts that online video will surpass TV to account for the lion’s share of over 60% of total video industry revenue by 2025 with both pay-TV and free TV in secular decline. Within the GCC, KSA and UAE is on target to continue to contribute over 70% of pay-TV and online video revenues in aggregate by 2025.

“The GCC’s vibrant and highly competitive video ecosystem has seen some significant changes in the past few years,” said MPA VP Aravind Venugopal commenting on the report. “Online video services continue to grow, driven by low-cost pricing; telco partnerships, including hard bundles; and the availability of premium local and global content online, including increased investment into exclusive originals. Telco partnerships are revenue accretive and help to broaden the customer funnel but the longer-term success of OTT platforms will rest on their ability to retain customers, manage subscriber acquisition costs (SAC) and increase lifetime value (LTV).”

The report also suggest that over the next five years, the market’s focus will move to the acquisition of high LTV subscribers via D2C. it also predicts market consolidation as also likely as the GCC region will be unable to support over 15 platforms with many competing in the same customer segments. MPA believes that new entrants into the market such as Disney+ Hotstar and HBO Max, could provide further impetus to industry growth, competitive intensity and consolidation.

“The slow pace of innovation by pay-TV operators combined with high prices of services (vs. SVOD) and the proliferation of broadband have contributed to the decline of pay-TV. IPTV has maintained subscriber growth, driven primarily by hard bundled triple-play services,” Venugopal added. “However, as telcos re-examine their cost structures and investments in content and platforms, there remains an impending threat of the breaking of the hard bundle, which could further endanger pay-TV.”

While the Covid-19 pandemic and the economic/political crises in the region have impacted production activities, MPA forecasts that productions will return to normalcy by Q1 2021 as economies recover and new content production hubs in countries such as the UAE, KSA and Jordan are established.