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Growth in Pay TV and OTT Video Services Paving Way for Hybrid … · 2017-04-05 · Entry of new OTT platforms like Netflix and Amazon Prime Instant Video will garner stiff competition

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  • 1

    Growth in Pay TV and OTT Video Services

    Paving Way for Hybrid TV Viewing

    Produced by Conference Knowledge Partner

  • 2

    Table of Contents

    CONTENTS PAGE CONTENTS PAGE

    KEY FINDINGS

    TV MARKET ECOSYSTEM

    PAY TV MARKET OVERVIEW

    OTT VIDEO SERVICES

    3

    4

    5

    20

    34 TECHNOLOGY TRENDS IN

    BROADCAST INDUSTRY

    REGIONAL TRENDS FOR

    TECHNOLOGY INVESTMENTS

    THE LAST WORD

    53

    58

  • 3

    Key Findings

    The mobile revolution in MENA is among the fastest in the world. Penetration of smartphones has crossed 75% in

    markets like UAE and KSA. Yet, overall broadband infrastructure and digital readiness is disparate across the region, with

    only 50% of population in Egypt, Lebanon, Algeria having mobile connections against 100% penetration in KSA and UAE.

    Hence uptake of OTT and IPTV services is restricted to clusters within the region.

    Demand for live sports coverage is one of the driving forces for growth of OTT, IPTV and Pay TV services. The regional

    addiction to national and international football is popularizing subscriptions; OTT consumption is quick, convenient and

    enables on-the-go live streaming.

    The Pay TV market in MENA is expected to have a linear growth till 2020 despite a significant churn from two of the

    leading incumbents in the region- Al Majd and OSN. Since its foray into general entertainment, beIN MENA is positioned

    strategically for a substantial rise in market share. Further, there will be disruptions in the market with the launch of a new

    service in the region.

    Entry of new OTT platforms like Netflix and Amazon Prime Instant Video will garner stiff competition among local

    participants like STARZ Play, OSN GO, beIN Sports Connect, Shahid, Telly, Istikana, Icflix in an emerging market

    landscape. A rich content repository, competitive pricing strategy, compelling user interface will determine the key market

    stakeholders.

    The MENA Internet Protocol TV(IPTV) market is growing in United Arab Emirates (UAE), Kingdom of Saudi Arabia (KSA),

    Qatar, Oman and Kuwait, in terms of installations as it is bundled with high speed fiber broadband connectivity. However,

    the active usage fluctuates across the region. IPTV market has gained traction in UAE and Qatar and is expected to grow

    at a faster rate in Oman, KSA and Kuwait later over the forecast period.

    Source: Frost & Sullivan

  • 4

    TV Market Ecosystem

    Source:Frost & Sullivan

    DTH Pay TV Broadcasters Satellite Operators Pure OTT IPTV

    MBC SHAHID

    OSN GO

    ICFLIX

    ISTIKANA

    BEIN SPORTS CONNECT

    TELLY

    STARZ PLAY

    Broadcasters and local pay television participants leverage their footprint in the market to introduce OTT services to their existing

    customer base. They have a competitive advantage over new participants due to availability of rich content and infrastructure at their

    disposal. With regional expertise over the market, serving predominantly Arabic content, they position themselves strategically against

    global participants with such titles. Since OTT services are the future of TV, it is increasingly vital for the industry to deliver on-demand

    video alongside linear services.

    OSN

    beIN SPORTS

    ABU DHABI MEDIA MY-HD

    AL MAJD NETWORK

    MBC

    ROTANA

    NILE TV

    DUBAI TELEVISION

    ART

    AL JAZEERA

    ARABSAT

    NILESAT

    ES‟HAILSAT

    EUTELSAT

    DU

    ETISALAT

    OOREDOO MOBILY

    STC

    SELEVISION

  • 5 5

    Pay TV Market Overview

    Hamad Malik, Head of Marketing at beIN Media: “Pricing is the major lever to attract

    subscribers; bundling and co-marketing will help improve awareness. The biggest challenge in the Pay TV market is piracy - spill over of online piracy along with IPTV

    decoders and illegal set top boxes. Penetration of Pay TV is still in its nascent stage; it has

    a lot of scope but needs to be priced properly. The strategy for Pay TV operators to move

    forward is to focus not only on the number of channels and content people are familiar

    with, but also content people want to watch, which is not available on free-to-air channels.”

  • 6

    Key Trends

    1 Since the Pay TV penetration is low in MENA, Pay TV operators are leaving no stone

    unturned to improve both subscriber and revenue market share by offering quality content

    on various platforms. But monetizing content is still a major challenge.

    2

    In order to monetize content some of the international channels, for instance from Fox

    International (National Geographic), Discovery moved from FTA to Pay TV category in

    2016. Encrypting some of the FTA channels and gradually moving them to the paid

    category is a strategy actively deployed by key industry participants.

    3

    Satellite Pay TV operators have opted for all modes to reach the end consumers. From dealers to

    online usage for subscription and from cash to card for payment; all the methods are pursued to

    avoid any hassles in opting for Pay TV services. Some cards of Pay TV operators are receiver

    agnostic and the subscribers have the option of changing and/or using multiple Pay TV services.

    4 Genres such as children's content as well as expat content categories are still underserved in

    FTA. Pay TV service providers attempt to bridge the gap by offering exclusive content for these

    categories- such as OSN (for South Asians) and My-HD (with content for Filipinos)

    Source: Frost & Sullivan

  • 7

    Major Market Participants

    Source: Logos from Company Websites and Frost & Sullivan

    TOTAL Pay TV MARKET: MAJOR MARKET PARTICIPANTS, MENA, 2016

    The major satellite Pay TV operators have been listed below.

    Though the penetration of Pay TV is still low in MENA, all of

    these Pay TV operators are trying to gain market share in

    more than one country through their content, marketing and

    pricing strategies.

    Though fiber broadband is just 9% of the total fixed broadband

    subscribers in MENA, IPTV is being bundled with high speed

    fiber based fixed broadband services as a value add by all

    telecom operators deploying fiber in the region.

  • 8

    Satellite Pay TV Operators: Major Initiatives

    SATELLITE Pay TV (DTH) MARKET: MAJOR INITIATIVES, MENA, 2016

    HD Content Improve

    Features in STBs

    Regional Pricing

    Partnership with Foreign Language Content

    Providers

    Partnership with

    International Content

    providers

    Rights for International and Regional Sports and Movie Titles

    Encourage Local

    Production to Improve

    Arabic Library

    Establishment on all Video

    Viewing Platforms

    (OTT/IPTV)

    The major initiative that the satellite Pay TV operators in MENA are taking revolve

    around establishing themselves across all genres, countries and ethnic groups.

    • The initiatives in the adjacent exhibit are regarded as the most

    important to reach the underserved market and also improve the

    subscriber numbers.

    • HD content is one of the major activities that broadcasters are

    concentrating on and satellite Pay TV operators have been leveraging

    this trend by including ten to fifteen HD channels per quarter in the last

    one year.

    • Also, partnerships with major content networks will be important to

    sustain their portfolios. For instance, beIN in order to expand its

    entertainment portfolio acquired Miramax, and signed up with Fox International for exclusive Hollywood content.

    • OSN has applied for a loan in order to improve the content and

    technology aspects.

    • Similarly, in order to attract the Filipino and Asian consumers; satellite

    Pay TV operators like My-HD and OSN have developed packages.

    Source: Frost & Sullivan

  • 9

    Satellite Pay TV Index : GCC leads; Egypt offers opportunity

    Source: Frost & Sullivan

    SATELLITE Pay TV (DTH) MARKET: Pay TV INDEX, MENA, 2016

    0

    1

    2

    3

    4

    5

    6

    0 5000 10000 15000 20000 25000

    Egypt

    Kingdom of

    Saudi Arabia

    (KSA)

    United Arab

    Emirates

    (UAE) Qatar

    Kuwait

    Mauritania

    Morocco

    Algeria Libya Tunisia

    Sudan

    South

    Sudan

    Djibouti

    Eretria Ethiopia

    Jordan Lebanon

    Iraq

    Bahrain

    Oman

    Yemen

    Israel

    Syria

    West

    Bank and

    Gaza

    Pay TV services can gain traction in these countries due to the

    higher propensity to pay, presence of proper regulations and

    expat population

    With the highest number of TV

    households in the region, Egypt

    offers a great opportunity for Pay

    TV operators.

    Note : Pay TV index was calculated considering the

    Gross Domestic Product(GDP) per capita adjusted for

    purchasing power parity (PPP), political situation,

    regulatory situation, TV digitization and expat

    population.

    Pay TV Index

    Number of TV Households (in Thousands)

  • 10

    Competitive Analysis—Market Share

    Source: Frost & Sullivan

    THE PAY TV SERVICES MARKET IS RESTRAINED IN GROWTH FOR MAJORITY OF THE VENDORS AS

    THEY TRY TO FIND A BALANCE WITH THEIR PRICING AND CONTENT PACKAGE

    • The MENA satellite Pay TV market has two key players with a few shake-ups

    expected this year owing to the change in strategies by the leading operators.

    • My-HD which had low price packages that targeted the expats has introduced

    Arabic and special package for North Africa at lower prices and it expected to

    have greater than 5% growth rate till 2020.

    • Frost & Sullivan expects single digit growth for number of subscribers for the

    market till 2020. However in September 2016 GOBX, a new receiver (currently

    with FTA offerings) with MBC Pro Sports channels was launched in KSA. A high

    penetration of this service on a Pay TV platform could drive Pay TV adoption up

    in the region.

    • Al-Majd has a strong foothold in Kingdom of Saudi Arabia (KSA) with around 85%

    subscribers from the country, there are efforts to improve the market share in

    Islamic countries through the Halal content. While the company is an established

    incumbent, it faces pressure from other competitors. With no HD content at the

    moment and inadequate number of channels, the company stands to lose market

    share. It will mostly increase its penetration as a value added package to other

    service providers than a standalone service.

    • OSN continues to be a leader in revenue, but faces pricing pressure. With new

    leadership, the company is driving initiatives in new types of packages at

    attractive prices to sustain its base. However without a compelling offer of

    content variety, OSN will continue to face the heat in the region.

    Satellite Pay TV (DTH) Market: Active

    Subscription Market Share, MENA, 2016

    Al Majd 11%

    beIN Media 55%

    OSN 24%

    Others 10%

    Note: Subscriptions are not mutually exclusive

  • 11

    Fiber-to-the-Home/Building (FTTH/B) Landscape

    Source: FTTH Council and Frost & Sullivan

    IN COUNTRIES LIKE MOROCCO AND TUNISIA, THOUGH THERE ARE SIGNIFICANT DEVELOPMENTS

    IN TERMS OF BROADBAND SERVICE ROLL-OUT, COMMERCIALIZATION IS A MAJOR CHALLENGE.

    UAE : 1.52 million FTTH/B

    subs

    Saudi Arabia : >

    684K FTTH/B

    subs

    Qatar :279K

    FTTH/B subs

    Significant and dynamic markets (UAE, KSA,

    Qatar, Oman, Kuwait)

    High potential market (Iraq, Iran)

    Markets with significant announcements and/or progresses

    (Lebanon, Tunisia, Bahrain, Morocco)

    Steady markets with few evolution nor significant announcements

    (Jordan, Egypt, Palestine, Algeria)

    Opportunity for IPTV

    IPTV Pay TV Market: Fiber-to-the-Home/Building (FTTH/B) Landscape, MENA, 2016

  • 12

    Fiber-to-the-Home/Building (FTTH/B) Landscape (continued)

    Source: FTTH Council and Frost & Sullivan

    IPTV Pay TV MARKET: MAJOR FIBER DEPLOYMENT ACTIVITIES, MENA, 2016

    COUNTRY PROGRAM

    UAE

    Etisalat and du are involved in FTTH/FTTB deployment. Etisalat dominates the FTTH/B market with 87% market

    share. The two companies have covered the entire country, with 88.8% adoption rate (number of subscribers in the

    households covered), both companies have achieved growth in penetration. Majority of the subscribers have basic

    IPTV plans.

    KSA STC and Mobily are the only companies offering FTTH/B services. STC is the leader with market share of 68%

    followed by Mobily that owns 25% of the market.

    QATAR Due to Qatar National Broadband Network (QNBN) stimulation FTTH represents 95% of the total FBB connections.

    Ooredoo is also pushing its end users to switch to FTTH.

    OMAN Oman Broadband Company (OBC) is deploying a large neutral network, opened to all telcos.

    KUWAIT The Ministry of Communication (MoC) is in the process to extend Fiber coverage in more than 67K homes by 2018

    (phase 2 of the Program) and more of 100K homes in Phase 3.

  • 13

    Countries with IPTV Offerings

    Source: Arab Advisor Group and Frost & Sullivan

    IN 2015, THERE WERE AROUND 14 TELECOM OPERATORS PROVIDING

    IPTV SERVICE IN 9 COUNTRIES.

    IPTV Pay TV MARKET: SERVICE PROVIDERS, MENA, 2016

    UAE : Etisalat and Du

    Saudi Arabia :

    STC and

    Mobily

    Qatar :Ooredoo

    Bahrain :

    Batelco, Atyaf

    and Nuetal

    Egypt : LinkOne and

    TelTech Consortia Jordan : Orange Lebanon : Solidere Morocco : Maroc

    Telecom

    Oman : Omantel

  • 14

    Major Providers and their Subscriber Base

    THE INCUMBENTS WHO ARE INVOLVED IN DEPLOYING FIBER ACROSS THEIR COUNTRIES OFFER

    IPTV SERVICES AND OTT VIDEO AS A PART OF THEIR TRIPLE PLAY PACKAGE.

    IPTV Pay TV MARKET: SUBSCRIBERS OF MAJOR TELECOM OPERATORS , MENA, 2016

    Source: FTTH Council and Frost & Sullivan

    About 0.5 Million

    subscribers for IPTV and

    0.2 Million subscribers for

    OTT

    About 0.1 Million

    subscribers for IPTV

    Telecom operator agnostic

    service with the Batelco

    HD box

    About 0.05 Million

    subscribers for IPTV

    About 0.2 Million

    subscribers for IPTV and

    OTT

    About 0.26 Million

    subscribers for IPTV and

    OTT

  • 15 9AC1-70

    Drivers and Restraints

    SATELLITE Pay TV (DTH) MARKET: DRIVERS AND RESTRAINTS, THE MENA, 2016

    Impact: H High M Medium L Low

    Mar

    ket

    Dri

    vers

    M

    arke

    t R

    estr

    ain

    ts

    Focus on Community TV Viewing

    Interest in Varied Content (Hollywood and Arabic)

    Piracy

    Predominance of free-to-air (FTA) Channels

    H

    H

    H

    M

    H

    L

    H

    H

    H

    H

    M

    M

    Expat Population H H M

    Non – uniform Payment Mechanism H M L

    Note: Drivers & Restraints are ranked in order of impact. Source: Frost & Sullivan

    1-2 Years 3-4 Years 5 Years

  • 16

    Languages Across Packages

    LANGUAGES ACROSS PACKAGES DEPEND UPON THE TYPE OF TARGET AUDIENCE; BUT FOR A LONG TERM

    SUSTENANCE, IT IS NECESSARY TO HAVE QUALITY CHANNELS ON MULTIPLE LANGUAGES.

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    OSN beIN Al Majd My-HD

    Arabic Engliish French Hindi Malayalam Pinoy Urdu Bangla Kannada Tamil Telugu Others

    Others for OSN include Tamil, Telugu, Marathi, French, Canadian,

    Chinese, Turkish, Bengali and Kannada. Others for beIN include

    German, Italian and Spanish. Some channels are in multiple languages

    that have been accounted for the split.

    English channels dominate due to

    focus on Elite audience from Expat

    population

    Focus on attracting local Arabic

    audience who have subscribed for

    the sports services already

    Focus on attracting local Arabic audience

    with Halal entertainment

    Packages for all type of language and Ethnic

    groups and hence there are channel offerings

    across all prominent languages

    SATELLITE Pay TV (DTH) MARKET: LANGUAGE ACROSS PACKAGES, THE MENA, 2016

    Source: Frost & Sullivan

  • 17

    Genres Across Packages

    GENRES COVERED BY PAY TV PROVIDERS CLEARLY STATES THAT THESE PROVIDERS WANT

    TO ATTRACT THE FAMILY AUDIENCE WHO ARE INTERESTED IN VIEWING VARIED CONTENT

    IN MULTIPLE LANGUAGES.

    SATELLITE Pay TV (DTH) MARKET: GENRES ACROSS PACKAGES, THE MENA, 2016

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    OSN beIN Al Majd My-HD

    Documentary and News/ Factual GEC Kids Religion Lifestyle/Music Movies Sports Others

    Others for OSN include Radio and On-Demand Channels. Others for Al Majd include promotional channels.

    GEC for Focus on

    family audience

    Shifting from entire sports

    brand to GEC brand

    Lack of sports and movies

    genres since the focus is on

    halal entertainment

    GEC content available across

    many languages to attract the

    family audience

    Source: Frost & Sullivan

  • 18

    Future Trends

    Source: Frost & Sullivan

    1 For a MENA-wide market presence, content, packaging and pricing for various

    target markets in terms of countries and ethnic groups will be essential to gain

    market share.

    2 Pay TV providers will need to constantly update their content portfolio and retain

    the content partnerships to avoid churn in the highly competitive market.

    3 Pay TV operators should market the new packages and pricing periodically and

    also establish a good relationship with dealers and distributors to tap the first

    time Pay TV adopters.

  • 19 19

    OTT Video Services

    Jeroen Schlosser, Equinix Managing Director, MENA: “The OTT/On demand

    revolution has been the catalyst for a huge transformation in how content & digital media

    companies will architect their IT infrastructure both in the MENA region and across their

    relevant global footprint. With content being delivered to multiple users on multiple devices

    across a wide geographical area it cannot be handled from one central point.

    Interconnection POPs located at the edge of the network in carrier-neutral data centers

    are key to ensure low latency and consistent end-user experience”

  • 20

    Current and Future Scenarios for OTT Video Services

    Source: Frost & Sullivan

    Future Outlook (2021)

    Market

    Status

    Hybrid video viewing with TV as the main screen (for pay TV)

    and serving as the primary screen for OTT will become the

    norm. So a co-existence will occur with linear and OTT viewing

    as high speed internet proliferation kicks into the region.

    OTT video services are gaining steam in a few broadband-

    enabled markets. However, it is still nascent due to a

    multitude of infrastructural and economic limitations.

    Competition

    New entrants like Amazon Prime Instant Video, Ooredoo TV

    and Netflix will foster competitive spirit among local

    participants. They will adopt an aggressive content strategy

    to tackle incumbents.

    There will be strategic partnerships and collaborative services of

    in the long-run. International production houses will seize this

    opportunity to work with local OTT platforms to distribute

    content.

    Business

    Models

    Majority of the OTT video services are currently on an

    AVOD model due to slow uptake of subscriptions. Freemium

    models are evolving to offer a mix of free and premium

    content.

    A segmented market with varied patronage levels requires

    localization of packages to cater to each sub-region. GCC leads

    in the number of subscribers, but North Africa requires smaller,

    economic packages to gain popularity.

    Challenges

    Poor broadband coverage, smartphone penetration, digital

    payments, technological know-how is hindering growth and

    uptake of services.

    With National Broadband Plans(Egypt, Jordan, Qatar) and other

    digital transformation initiatives in the pipeline, OTT services to

    gain momentum and subscriptions by 2021.

    Value

    Proposition

    The consumption of videos over YouTube is a sign for OTT

    services to grow tenfold. The market is growing faster than

    any developed market in the world.

    OTT video services will become an affordable option with

    cheaper broadband and smartphone availability. Cord-nevers

    will adopt these services due to sheer convenience.

    Technology

    OTT platforms currently offer HD, UHD and 4K viewing on

    2G, 3G and 4G speeds. Adaptive bit rate streaming is

    available on most platforms.

    Personalization and customer recommendation will drive

    consumption with a targeted audience reach and more targeted

    playlists for the user.

    Current Outlook (2016)

  • 21

    OTT Platforms

    Source: Frost & Sullivan, Company Logos

    Besides local participants, there are global participants who have a strong footprint in the region. Netflix leads the pack with the

    launch of services in early 2016. Amazon Prime Instant Video is poised to disrupt the market and intensify the competition with

    attractive packages and compelling local content which Netflix does not offer.

    THERE ARE OVER 15 LOCAL OTT PLATFORMS OPERATING IN MENA, BESIDES INTERNATIONAL

    PARTICIPANTS WHO HAVE A PRESENCE HERE.

  • 22

    Will Cord Shaving be a Reality?

    Source: Frost & Sullivan

    TOTAL OTT VIDEO MARKET: DRIVERS FOR CORD SHAVING, MENA, 2016

    • Although the infrastructure and purchasing power in the GCC region are driving factors for OTT videos, the prevalence of FTA

    channels and the pricing of OTT services pose a threat to the growth of this industry.

    • Cord cutting may be a plausible concept in 2025 with cheaper services and a stronger millennial demography.

    • Although North Africa has a young demography favoring the uptake of OTT services, the underdeveloped infrastructure and low

    purchasing capacity hinders the growth of the industry.

    • Cord cutting could be a reality only if government initiatives for connectivity take off and the economies improve to a standard where

    these facilities are no more a luxury.

    Improved

    Purchasing

    Power

    Developed

    Network

    Infrastructure

    Growth of

    Millennials to

    Adults

    Affordable

    Broadband

    Rates

    Increased

    Demand for

    Premium

    Content Low cost offers

    for niche

    audience

    ALTHOUGH A GROWING NUMBER OF CORD-NEVERS ARE ADOPTING OTT SERVICES, A CORD-CUTTING SCENARIO IS NOT

    EXPECTED IN THE NEAR FUTURE. WITH SUBSCRIPTIONS MIGRATING AWAY FROM LINEAR TELEVISION, OTT CONSUMPTION WILL ENABLE CORD-SHAVING IN NEAR TERM.

  • 23

    Regional Video Viewing Trends

    North Africa KSA

    Kuwait

    UAE

    Qatar

    Source: Emarketer, Statista, Frost & Sullivan

    North

    Africa

    KSA

    Kuwait

    Qatar

    UAE

    Egypt has the

    highest number of

    online video

    viewers in North

    Africa

    Lebanon and

    Morocco have upto

    55% online video

    viewers

    They watch more

    Arabic content that

    international

    Some viewers have

    up to 3 subscriptions

    at a time

    190 Million

    YouTube views

    a day

    Ranked #1 globally

    for per capita

    YouTube views

    2 hours of content

    uploaded every

    minute

    World‟s highest per

    capita rate of video

    consumption on

    smartphones

    2.4 million

    internet users

    89% penetration

    75% of online videos

    are consumed from

    smartphones 85% of videos are

    watched on YouTube,

    15% on Vimeo

    #1 for online

    video viewing in

    the region

    40% of OTT users

    access sports

    content online

    57% of Qataris watched

    films online in 2016,

    against 44% in 2014

    53% of internet

    users watch

    music videos

    online

    Spend an average of 4.7

    hours weekly on

    smartphones watching

    online videos

    71% of internet

    users watch

    movies online

    48%

    watch TV

    shows

    Sports and

    Hollywood releases

    are the most

    watched videos

  • 24

    Glocal Business Models

    Source: Frost & Sullivan

    AVOD

    • Content rights holder and OTT

    platform pre-decide the ratio of

    revenue sharing.

    • Ads can include pre-roll, post-roll ad

    streams embedded with the video;

    standard banner ads; or rich media.

    • Some content owners charge a

    minimum guarantee in views as an

    advance or surety apart from

    revenue sharing arrangements.

    • Consumers watch the content free

    of cost. They do however encounter

    ads between their videos.

    SVOD

    • SVOD commands a subscription

    price for a period of time. This can

    range from a week to a month to a

    year.

    • SVOD packages are prices

    between $5-$15 and under $5

    deals for North Africa.

    • Newer and content (less than 3

    years old) typically are priced at a

    premium.

    • SVOD will become a common

    business model across most OTT

    participants, however retention of

    subscribers will be a challenge.

    • Subscription prices vary based on

    duration, content, languages

    offered, etc.

    TVOD

    • Transactional VOD when the

    consumer pays for the content

    to view the content once, or

    repeatedly within a stipulated period.

    • Transactional VOD could see growth

    in revenue if well marketed, and if

    priced reasonably for the MENA

    market.

    • However the availability of highly

    „subsidized‟ or free content

    repositories through AVOD and

    SVOD is challenging for pricing in

    TVOD models.

    • TVOD content includes premium

    titles, latest releases which can be

    „rented‟ for a stipulated period at a

    minimum price of $2.

    THERE IS NEED FOR MICRO SEGMENTATION AND LOCALISATION OF BUSINESS MODELS TO TARGET PRICING

    MODELS TO A DIVERSE, FRAGMENTED MARKET WITH A WIDE PURCHASING POWER PARITY, LOW CREDIT CARD

    PENETRATION AND BANKING FACILITIES.

  • 25

    Drivers and Restraints – Middle East

    Source: Frost & Sullivan

    Mobile

    device

    penetration

    High speed

    internet

    connectivity

    High

    purchasing

    power

    among

    consumers

    Dearth of

    western

    content

    on linear

    television

    High appetite

    for Live Sports

    Coverage

    Predominance

    of FTA

    Piracy in online and

    television markets

    Low adoption of

    mobile payments

    High price of

    data packages

    High cost of

    original

    content

    production

  • 26

    Drivers and Restraints – North Africa

    Source: Frost & Sullivan

    Significant

    youth

    demography

    Growing

    government

    initiatives

    Prevalence of

    vernacular

    content online

    Increased

    spending

    among

    consumers

    Development

    in telecom

    services

    Low bandwidth

    infrastructure

    Poor digital

    readiness

    Predominance

    of FTA and piracy

    Political

    uncertainty

    Poor

    regulatory

    framework

  • 27

    Government Initiatives to Boost Connectivity Based on the financial capability, social stability, and technological know-how, there are national plans made for

    establishing robust broadband connectivity in order to compete more effectively with the rest of the world.

    Source:eMisr, QNBN, MICT, Frost & Sullivan.

    QATAR EGYPT JORDAN

    • ictQATAR plans $550 million to be

    invested to accelerate nationwide

    high-speed open and accessible

    broadband FTTH (fiber to the home

    network).

    • Qatar National Broadband Network

    launched a high capacity

    communication satellite with denser

    submarine cables in 2013 to boost

    bandwidth coverage and speed and

    offer free internet in public spaces.

    • Qatar Digital Agenda‟s 5-year plan

    aims to achieve 95% high-speed

    broadband access to homes and

    businesses across industries.

    The National Broadband Plan is a two-

    stage plan envisaged to create a robust

    broadband ecosystem of the twenty-first

    century.

    • Investment worth $350 million will be

    required for a successful broadband

    expansion. This is projected to

    contribute more than $4 billion to the

    GDP merely by developing ICT and its

    spillover effects on employment.

    • The mission for 2021 is to have more

    than 90% of the population covered by

    4G/LTE, 100% Egyptian communities

    connected to 25 Mbps, and every third-

    level Sheyakha and village body to have

    at least one public access point with 25

    Mbps.

    • The Government of Jordan has

    established a national broadband

    network (NBN) for the proliferation

    of broadband access in Jordan.

    • The Telecommunication Regulatory

    Commission (TRC) allocated 4G

    spectrum to Zain, Orange Jordan, and

    Unmiah and is looking for more providers

    for Fixed Broadband Wireless Access

    (FBWA).

    • The plan would set up a network in the

    southern part of Jordan for $31 million by

    the end of 2017, connecting 800 public

    entities of 3 cities.

    • The expansion in the rest of the country

    was planned to take off in 2016 with

    funding from the Saudi Fund for

    Development. This will provide high-

    speed internet for public facilities,

    schools, hospitals, and government

    establishments.

  • 28

    Consumption Preference by Devices OTT video is consumed most from tablets as opposed to the general belief of mobile phones leading the consumption

    traffic.

    Source:GSMA, Mideastmedia, Frost & Sullivan

    DEVICE DISTRIBUTION BASED ON TRAFFIC, MENA, 2016

    46% 42%

    7% 5% 0%

    5%

    10%

    15%

    20%

    25%

    30%

    35%

    40%

    45%

    50%

    Tablets Smartphones Smart TVs Others

    • There is a 60% increase in mobile phone

    activity due to consumption of online videos.

    • Mobile phone is the focus of content creation

    and delivery for better compatibility and

    interface.

    • There is a shortage of short-form content

    tailored for this platform, although large TV

    networks are investing in this digital space.

    • High bandwidth regions such as GCC record

    the highest traffic on OTT platforms.

    • User interface and end-user experience are key

    for seamless viewing across devices.

    • The mobile revolution is a major driver for the

    growth of online videos.

    • 80% of the online content is consumed from

    mobile devices.

    • KSA has the highest per capita mobile video

    consumer globally.

  • 29

    Sports Dominance MENA as a region is passionate about football and other sports in a way that it is likened to a religious following. This

    profound frenzy has played a persistent role in shaping the society over centuries.

    Source: Bein Media Group, ESPN, Frost & Sullivan

    TOP 3 SPORTS WATCHED, MENA, 2016

    55%

    16% 13%

    56%

    21% 20%

    63%

    22%

    10%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    Football Swimming Motorsports

    GCC Levant North Africa

    Major clubs in Europe are owned

    by Qatar or the UAE residents.

    Growing professionalism of football

    and emerging interest in healthy

    lifestyles are driving forces behind

    this craze.

    There is a 40% surge in online

    video traffic during tournaments

    and leagues, especially on beIN

    Sports Connect. Subscriptions also

    rise during this season, as people

    are willing to pay any price to

    watch the sports events live.

    Upcoming

    Events

    2019 World

    Athletics

    Championships

    2022 FIFA World

    Cup

    2023 World

    Aquatics

    Championships

  • 30

    KSA Saudi Arabia has the most number of YouTube users per capita in the world. The potential for this to grow exponentially

    is why OTT platforms test their products in such markets.

    Source:GSMA, Mideastmedia, Frost & Sullivan

    • 49% of the time spent on watching videos is

    via smartphones.

    • YouTube globally is predominantly consumed

    by men, but in the KSA it is women who

    contribute more to the traffic.

    • This trend indicates a more holistic transition

    of the nation, inclusive of

    women and embracing technology for daily

    activities.

    • As education is easily accessible on videos

    online, empowerment through youth

    education and interconnectivity is further

    amplifying the modernization in the region.

    • Mobile broadband subscribers outnumber

    fixed-line connections, indicating a social

    transition from a family viewing to a more

    personal, individual screening.

    • More than 100% mobile internet penetration

    will continue to grow as people have more

    than one subscription at a given point of time.

    32 MILLION

    Population

    20.8 MILLION

    (64.7%)

    Active Internet

    Users

    11 MILLION

    Active social

    media accounts

    WOMEN

    Majority Online

    Video Viewers

  • 31

    UAE The UAE has a robust OTT ecosystem owing to high speed internet, overall affluence, high adoption of smartphones,

    and a fluid population with a large expatriate community.

    Source: GSMA, Internetworldstats, Go Gulf, Frost & Sullivan

    31.9 million

    Population 20.3 million

    Active Internet Users

    11 million

    Active social

    media accounts Women

    Majority Online

    Video Viewers

    9.6 MILLION

    Population

    7.2 MILLION

    (76%)

    Mobile Internet

    Users

    45%

    POPULATION

    Watch online

    videos on

    mobiles

    8.8 MILLION

    Active Internet

    Users

    Daily Use of

    Mobile Internet

    Daily Use of

    Social Media

    Daily Use of

    PC/Tablet

    Internet

    3 hours 45

    minutes

    3 hours

    35

    minutes

    5 hours 6

    minutes

    44% Use

    internet on

    LAPTOPS

    and

    Desktops

    50% Use

    internet on

    MOBILE

    PHONES

    6% Use

    internet on

    TABLETS

  • 32

    Trends to watch in 2017 OTT video services are poised to be the next-game changer in the industry due to its dynamic user experience and alternative to pay

    television services. Market to evolve based on the broadband expansion and government initiatives in the region.

    01

    02

    04

    03

    06

    05

    Source: Frost & Sullivan

    OTT video subscriptions touted to grow at 38%

    CAGR, encompassing about 8% of the television

    market in MENA. At an optimistic rate it could

    grow at 47% CAGR covering 25% of the

    television market. Jordan, Egypt, KSA, UAE are the fastest growing markets

    within MENA (uploads growing at 200%). Broadband

    proliferation and adoption of technology will ensure uptake

    of services.

    Amalgamations between telecom operators,

    broadcasters and local media houses to provide

    stiff competition to global incumbents like Amazon

    Prime Instant Video, Netflix.

    Live sports to drive consumption in the region, with its

    seamless streaming and catch-up options vital for the

    predominant sport fraternity. Amazon Prime Instant Video

    is exploring this category to capitalize on the passionate

    sport culture. Development and popularization of mobile

    payments ( payment gateways, online credit card

    transaction, bank transfers and e-wallets)

    fundamental for the ecosystem to gain acceptance

    and adoption. Countries with poor pay television penetration looking to

    adopt OTT services and skip linear subscriptions as a

    more economic, comprehensive, convenient

    entertainment avenue.

  • 33 33

    Technology Trends in MENA Broadcast Industry

    Jan Lange, Regional Sales Director, AVID: “IP workflows give media companies better

    agility and flexibility and lower cost, paving way for better tech like UHD/4K. MENA region

    is following markets like Europe with little delay, full adoption of HD with most customers,

    4K and IP are just starting especially production companies are doing 4k for Hollywood

    and others. It‟s slowly coming, this shift in the next 3 years. Production industry moving

    towards cloud based collaboration model; the creative people in the field have access to

    full production workflows in their iPads, mobile devices and laptops. “

  • 34

    Key Technology Trends in MENA

    Source: Frost & Sullivan

    Watermarking and

    CAS, DRM

    Content Protection

    H.265

    Video Compression

    Standards

    4K TV

    and UHD

    Video Quality

    Cloud Computing

    Storage

    IP workflows

    OTHER KEY TRENDS TO TRACK INCLUDE SYSTEM INTEGRATORS, PAY PER VIEW (LIVE

    STREAMING), VIDEO ON DEMAND, MIDDLEWARE SOLUTIONS, BANDWIDTH FOR QOS AND QOE,

    SOCIAL MEDIA INTEGRATION, TRANSCODING SOLUTIONS.

  • 35

    Future Trends

    Source: Frost & Sullivan

    ARTIFICIAL INTELLIGENCE

    SOFTWARE

    DEFINED

    NETWORKS

    VIRTUAL

    REALITY

    &

    AUGMENTED

    REALITY

    3D/360 VIDEO 5G

    BIG DATA AND

    ANALYTICS

  • 36

    The Piracy Menace Piracy costs the industry about US$500 million (Dh1.8 billion) each year and with online streaming this is on the rise. A

    stringent regulatory system coupled with proactive punitive measures will help curb this rampant issue.

    Source: Irdeto, Harmonic, Frost & Sullivan

    • Pirate satellite channels, which air

    premium content without the rights

    or license from the content owner,

    broadcaster.

    • While rights to premium content are

    a heavy investment to broadcasters,

    this is completely negated when they

    are released on television before the

    first pay window. This diminishes

    their opportunity to recover their

    investment or make revenue from it.

    • These illegal versions manage to

    earn advertising revenue as well, by

    sheer lack of knowledge or

    awareness from the advertisers

    about their illegal content offering.

    PIRACY IN SATELLITE TELEVISION

    • Owing to the large expatriate

    population from the Indian

    subcontinent there is an influx of

    local set top boxes which provide

    hundreds of free channels, or are

    paid in the local region where it

    was purchased.

    • There are satellite engineers who

    install these devices illegally in

    the region for a nominal fee and

    hence this customer base is

    satisfied with their vernacular

    content leaving no room to

    subscribe to a pay television

    operator in the region.

    • As the content is illegally

    acquired and broadcasted

    on television, there is a

    parallel streaming that

    occurs in the OTT space.

    • Some of the content

    owners are unaware of

    their content being

    available online and that

    digital rights need to be

    acquired for the same.

    • Live sports is a major

    traffic generator in the

    region and there are live

    streaming options

    available mirroring linear

    television.

    ILLEGAL SET TOP BOXES

    ONLINE STREAMING PLATFORMS

  • 37

    Efforts to Curb Piracy

    Source : arabianbusiness.com and Frost & Sullivan

    OSN HAS BEEN CAMPAIGNING AGAINST PIRACY WITH THEIR ‘DO THE RIGHT THING’ CAMPAIGN

    TO PROTECT THE IP RIGHTS AND HAVE ALSO STARTED TO IMPLEMENT PROCEDURES

    TO MONITOR AND REMOVE ALL FORMS OF PIRACY.

    SATELLITE PAY TV (DTH) MARKET: EFFORTS OF OSN TO COMBAT PIRACY, MENA, 2016

    Conducted more than 316 raids of illegal Pay TV dealers with the support of government authorities in UAE, Saudi Arabia, Bahrain, Kuwait, Qatar Oman, Egypt and Jordan.

    Over 86,487 illegal videos were removed from YouTube/Dailymotion, and over 2,272 advertisements of pirated boxes were removed from online markets.

    Works with authorities in all GCC countries to crackdown on satellite and IPTV piracy.

    Obtained first time a court in the region has issued a conviction on TV piracy involving the unlicensed and unauthorized distribution of IPTV services in the UAE

    29 FTA (Free to Air) channel copyright infringements were detected and reported back to the satellite operators and distributors.

    Illegal decoders have been confiscated and shops shut down in anti-piracy raids jointly staged by the Sharjah Economic Development Department (SEDD) and OSN.

  • 38

    Anti Piracy Coalition and Arabian Anti-Piracy Alliance

    Source: AAA,Frost & Sullivan

    ANTI-PIRACY COALITION

    • Convened to develop strategies to minimize infringements and pirate channel perpetrators, content

    owners, distributors, satellite owners and service providers joined hands to raise awareness about

    the implications of piracy in the region.

    • Noorsat, Gulfsat,Viewsat, STN, JMC, Etisalat, Du, Nilesat, Arabsat, Eutelsat, Rotana, Art, OSN,

    MediaGates, Motion Picture Association,and MBC are some of the members of this coalition.

    ARABIAN ANTI-PIRACY ALLIANCE

    • Established almost 20 years ago, they are the market leaders in combating piracy in GCC, not only to

    identify outlaws but also investigate the modus operandi and preventive measures for protecting

    rights of their clients.

    • They protect the interests of copyright and trademark owners, manage infringement cases, campaign

    for effective enforcements, conduct training seminars and crackdown counterfeit content in the

    broadcast industry.

    Chrys Poulain, Sales Director at NexGuard, Kudelski Group: "While Egypt, Iran, Jordan and Lebanon have a longstanding

    tradition of producing high quality content, the pay TV industry is growing throughout the rest of MENA – with the Gulf States leading

    the charge. Yet, to counter the ongoing piracy challenge, the region needs more initiatives to change mentalities: on the first week of

    January 2017, the Anti-Piracy Coalition in the UAE has found a like-minded peer in the Saudi Arabia General Entertainment

    Authority, showing that the fight against piracy is coming to the fore in mature countries. By combining these organizations with

    innovative and affordable services that leverage social media channels like YouTube, Facebook and Twitter, the Middle Eastern TV &

    Media industry can ensure that it provides a perfect environment to support the creativity of the content industry, while enabling

    consumers to access content in a legal and user-friendly way.”

  • 39

    Content Protection Technologies - Watermarking and Encryption

    Source: Verimatrix, NewGuard, Frost & Sullivan

    CSA3

    WATERMARKING

    • Common Scrambling Algorithm is an encryption for DVB compression standards to

    encrypt digital content up to 4K/UHD resolution. This will become the need of the hour

    as 4K content is on the rise, with piracy evolving simultaneously and posing a threat

    to the industry.

    • Irdeto and Harmonic have launched the first integrated solutions for protecting

    premium content as the earlier CSA1 and CSA2 versions are insufficient and not

    future-proof for protecting newer video formats.

    • Watermarking technology embeds a digital watermark in audio or

    video content at the time of production or broadcast so that it can be monitored and

    identified when an illegal distribution occurs.

    • They evaluate the true reach of media assets, verify contractual compliance and

    identify misappropriation of assets.

    • Upon detection of a watermark, the authenticity is checked and any infringement is

    reported to the content owner for further actions.

    • Forensic watermarking is deployed in set top boxes, and integrates with various

    content delivery networks like satellite, cable, IPTV, OTT.

  • 40

    Video Compression and Transmission

    Source: DVB Broadcasting, Frost & Sullivan

    HEVC MPEG-H (H.265)

    • HEVC is an extension of standards like H.264/AVC, improving pattern comparison, difference-coding areas, filtering, computation.

    • 50% higher efficiency compared to MPEG4/H.264/AVC standard.

    • Can transmit UHD videos from 4K up to 8K

    • Video material of the same quality will at 25% lesser bit rate.

    • It can support data compression ratio of up to 1000:1

    • Besides higher resolution video, it also improves parallel processing methods.

    • HEVC along with DVB-S2X satellite modulation technology will achieve greater compression and transmission efficiencies.

    DVB-S2X

    • An open standard capable of delivering the same performance as other expensive technologies in the market.

    • Extends the functionality and efficiency of DVB-S2 to DTH, DSNG, VSAT applications and related services.

    • 51% higher efficiency than DVB-S2

    • Boosts satellite throughput up to 20% in DTH.

    • Benefits include channel bonding of up to 3 channel, advanced filtering of carrier spacing, wideband technology, finer granularity of modulation due to higher number of new MODCODs.

    • Improves service robustness and flexibility in DTH networks.

    • Silicon chip compliant of DVB-S2X is key for market success of Ultra High Definition TVs.

    • The cost of replacing equipment is offset by the significant increase in throughput.

  • 41

    Adoption and Evolution of Video Codecs

    Source: Frost & Sullivan

    • MENA broadcasters, telecom operators, content distributors are trying to adopt advanced codecs and transmission

    solutions. However, the investment required and the uncertain monetization schemes are hindering faster uptake.

    • Some of the solutions providers in the region include Rohde Schwarz, Arris, Yahsat, Newtec, Ericsson, etc.

    • Early adopters are upgrading their systems to maximize bandwidth utility and cost-effective solutions to service

    partners and end consumers.

    EVOLUTION OF VIDEO STANDARDS AND CODECS

    DVB-S

    1994

    DVB-DSNG

    1999

    DVB-S2

    2005

    DVB-S2X

    2014

    H.261

    1992

    H.263

    1998

    H.264

    2005

    H.265

    2014

  • 42

    4K and UHD Although global TV sales are declining, the sale of 4K TVs has tripled in unit sales since 2015 driving the television

    business

    Source: Gfk, Du, Etisalat, Sony, Huawei, Frost & Sullivan

    4K technology and Ultra High Definition TV are touted to be the future of the Television Industry

    • 3840x2160 pixels - approximately four times higher definition than full HD (UHD = 4x HD).

    • Superior image quality without distortion or loss of quality on big screens.

    • Vivid colors, sharper image, more details (color, contrast, clarity).

    • Ultra HD screen sales show that by 2020, 70% of TV sales in the MENA region will be UltraHD.

    TV SALES IN MENA, 2020 TV RESOLUTION CHART

    UHD 70%

    HD 20%

    SD 10%

  • 43

    Adoption of 4K Technology in MENA

    • MENA has been slower to adopt 4K technology compared to the global consumption. However, sales grew from

    200,000 units to nearly a million between 2014 and 2015, and it is expected to cross three million in 2017.

    • UAE leads in sales and adoption of 4K TVs, owing to a large expatriate population with high purchasing power.

    • The initial sluggish growth was due to concerns in pricing and absence od high quality video. This scenario has

    changed considerably with local and global content producers‟ backend solutions evolving to cater to this rising

    demand.

    Source: Frost & Sullivan

    4K TV SALES 4K TV SALES, UAE

    31.1

    51.9

    73

    0.8 1.9 3

    0

    20

    40

    60

    80

    2015 2016 2017

    Mil

    lio

    n U

    nit

    s Global

    MENA

    106,000

    138,000

    172,000

    0

    50,000

    100,000

    150,000

    200,000

    2015 2016 2017

  • 44

    What needs to be upgraded next?

    Source: Frost & Sullivan

    IP, UHD post production conversion and Workflow

    HDMI Interconnection standards

    DVB-S2X Broadcast transmission standards

    HEVC Compression Codecs

    4K and UHD Studio Production

    For a truly UHD viewing experience, an overhaul of legacy systems and infrastructure is required to enjoy the intended quality and definition of the video.

    For a truly UHD viewing experience, an overhaul of legacy systems and

    infrastructure is required to enjoy the intended quality and definition of the video.

    From production to final delivery, new technology across the value chain must be

    adopted to ensure high quality video broadcast.

  • 45

    Local Providers Telecom operators and content producers are under growing pressure to introduce new 4K content to deal with the

    untapped opportunity of TV sales and 4K OTT services from OTT providers like Netflix, Amazon, icFlix and Starz

    Source: Frost & Sullivan

    1

    2

    3

    ETISALAT

    BEIN MEDIA

    DU

    • Launched 4K UHD IPTV with Huawei in UAE in 2015

    • 4K Linear Channel and VOD can be viewed through a compatible UHD set-top-box

    • UEFA Euro 2016 final matches broadcasted in 4K in MENA

    • Integrated Technicolor‟s 4K media server set-top-box with beIN 4K UHD receiver on a dedicated channel called beIN 4K.

    • Partnership with content providers and sports entities to amp up 4K content library.

    • Launched 4K broadcast service in 2016.

    • Tie-ups with studios to upgrade content to 4K.

    • Will offer TV series and movies in 4K initially.

  • 46

    Challenges for 4K adoption

    PRICE OF 4K TV SETS

    One of the major challenges for 4K TV to become mainstream is the cost factor. It is a huge investment to the consumer, since it involves other solutions and subscriptions to be upgraded to enjoy the total 4K experience. However, this will gradually become more economic as demand rises.

    LACK OF 4K CONTENT

    The broadcast industry is playing catch up, not only produce new content in UHD to cater to the rising demand, but also convert older titles into a 4K resolution. This is an expensive proposition for content owners and requires strategic planning to compete with global incumbents who have already adopted this technology.

    HDR Although 4K is touted as the future of TV, High Dynamic Range is one of the most important developments of UHD TV to the erstwhile Standard Dynamic Range, which will further boost the adoption of 4K TVs. HDR is a new video signal format which can deliver wider range of brightness and color. OTT services like Netflix and Amazon provide HDR programming, the onus is on the producers now to deliver content to truly make 4K experience mainstream.

    Coding and Delivery Requirements As the resolution improves, there is rising concern about the data consumed and storage required for broadcasting such high quality videos. Video compression solutions will become vital for reducing video sizes into efficient delivery formats which can be transmitted at the lowest possible data connectivity.

    Source: Frost & Sullivan

  • 47

    Analogue Switch-off (ASO)

    Source: Frost & Sullivan

    • Analogue to digital migration of television

    broadcasting has been endorsed for a long

    time due to its compelling benefits.

    • Although most countries in the MENA region

    have kicked off this monumental undertaking,

    the progress varies in each country based on

    governmental support, agreements with

    broadcasters and content owners, viewers

    adaptability, etc.

    • Although the Geneva Agreement has

    mandated countries to digitize broadcasting by

    2020 in the region , a total switch over will only

    take place if analogue services are no longer

    protected thereby incentivizing the transition.

    • Countries with a high reliance on terrestrial

    broadcasting have started trial phases in low

    population areas before implementing it on a

    large scale.

    • However, at the end of the transition period

    there will not be a complete shutdown of

    analogue services but merely restricted to

    areas within the country.

    BENEFITS OF DIGITAL TV BROADCASTING

    SPECTRUM EFFICIENCY

    FUTURE PROOFING TERRESTRIAL BROADCASTING

    ECONOMIC FEASIBILITY

    HIGHER VIDEO QUALITY

  • 48

    How many Countries have Actually Migrated to Digital

    Broadcasting?

    Source: ITU, Digitag, Frost & Sullivan

    STATUS OF ANALOGUE SWITCH OFF IN SELECT COUNTRIES, MENA, 2016

    Country Start Year Projected

    Completion Status

    Saudi Arabia 2006 2013 Complete

    United Arab

    Emirates

    2014 Aug 2014 Complete

    Bahrain 2015 June 2015 Ongoing

    Qatar 2011 2013 Complete

    Oman - June 2015 Ongoing

    Jordan - 2015 Ongoing

    Syria - 2020 Not started

    Lebanon - 2015 Not started

    Algeria 2010 2015 Ongoing

    Libya - 2015 Not started

    Morocco 2007 June 2015 Complete

    Tunisia 2010 2015 Ongoing

    Israel 2009 2011 Complete

    Egypt 2015 2020 Ongoing

    0

    1

    2

    3

    4

    5

    6

    7

    Complete Ongoing Not started Unknown

  • 49

    Benefits of Cloud Deployment in Broadcasting Frost & Sullivan expects that gradually over the next ten years, broadcasters and Pay TV networks will start creating

    unified workflows for all-media distribution and leverage cloud-based platforms.

    Enables rapid roll out of multiscreen broadcasting with high-quality video processing solutions, cloud-based streaming and storage capabilities in a unified process with

    higher efficiency and low latency. IP-based workflows further enhance this with higher output and leaner processes.

    Cloud services allow seamless scaling of resources based on the requirements and repository of video assets. It deploys IP-workflows and integrated solutions depending on whether it is a live event or a high-quality streaming and utilizes advanced VoD and OTT delivery packages ensuring no interruptions or failures in video processing and delivery.

    Economize workflows with virtual resources enabling a low OPEX business. These services mitigate expenses of maintaining large data centers in multiple geographies and allow a virtual operations on the cloud. However, the cost of migration of workflow from hardware to cloud solutions will be a significant investment.

    Enhances video assets by monetizing consumption with value-added features like targeting advertising, personalization and

    recommendations, offline viewing, and content protection and integration with social media for higher reach and collaboration.

    Source: Frost & Sullivan

    Multilayer security systems to protect data with dedicated deployment for each client, thereby ensuring no leakage or compromise on content security and privacy. Access to the cloud is restricted by stringent authorization and identification of personnel to avoid security threats or infringements leading to data loss.

    Hybrid cloud deployment enables strategic mix of private and public cloud services for various processes in video editing and delivery, which ensures maximum utilization of resources at the most optimum costs. This is bringing local and international content providers closer and enabling partnerships on a global level.

  • 50

    Challenges to Cloud

    Source: Frost & Sullivan

    • One of the major concerns of national broadcaster and service providers is the loss of control over their data storage by migrating to cloud services.

    • The physical absence of data in their facility poses a threat to their invaluable assets and potentially relinquishes their control over it.

    • This apprehension is gradually changing since data centers are offering platforms for interaction and complete control over local and international content owners and distributors.

    • The rise in regional data centers is also creating some level of confidence and higher adoption of cloud services.

    Loss of

    Control

    Cyber

    security • Although cloud services are

    subject to complex security layers, imminent concerns over transparency and espionage from service providers hinder overhauling of the ecosystem.

    • Lack of trust and fear affects skeptic clients to adopt cloud services which is not governed by robust regulatory and judiciary guidelines yet.

    Limited

    connectivity

    • Since the region is non-uniform in broadband services, only a few economies can envision a migration to cloud services. Limited connectivity or slow bandwidth speeds deter cloud deployment.

    • Low digital awareness further threaten the adoption of cloud services in technologically weaker economies.

    Capital

    Intensive

    • The cost of migration of workflow from a hardware to cloud solutions is an expensive proposition that many broadcasters cannot afford.

    • Adequate training for employees and skilled technicians are required for this transformation, which also makes this an investment-heavy migration.

  • 51

    Players with MENA operations Local broadcasters and producers like MBC, Dubai Media, Istikana, icFlix, Stargate Studios have adopted cloud services to

    streamline their workflows to boost efficiency and optimize time, costs and effort for global content delivery

    Source: Frost & Sullivan

    IMAGINE COMMUNICATIONS

    • Offers IP-enabled integrated playout platform to manage all video operations virtually over cloud.

    • Both private and public clouds, or hybrid deployment for higher reach, scalability to penetrate global markets seamlessly and maximize investments.

    • Provides technologies to maximize content delivery for linear television and OTT streaming with multiple distribution capabilities and end-to-end solutions entirely using cloud.

    • Besides content distribution and playout services, they provide solutions for encoding, transcoding, asset management, dynamic ad insertion and packaging formats.

    • Solutions for next generation requirements in broadcasting are already in place with their comprehensive technologies over cloud.

    ELEMENTAL

    • Offers broadcasters a unique platform for multiscreen video delivery both time-shifted and live streaming.

    • Live streaming of sports and other events are processed efficiently over cloud.

    • It provides solutions for content processing, storage and delivery.

    • Enables pay TV operators, OTT platforms to integrate with cloud for easy deployment and seamless scaling of operations based on current requirements.

    • Allows for faster expansion into newer markets by virtual presence of videos.

    • Their platform as a service (PaaS) is built on AWS cloud.

    HARMONIC

    • End-to-end video cloud service engineered exclusively for media and broadcast industry to augment video production and delivery.

    • Offers a software as a service (SaaS) to transform legacy video production and distribution to a cloud-native ecosystem for multiscreen broadcasting. Their software allows ingest, playout, graphics, transcoding, encryption and delivery on a single user interface.

    • Linear and OTT delivery is enabled with higher efficiency and optimizes delivery periods. Live and on-demand streaming solutions are available for multiple platforms.

  • 52 52

    Regional Trends for Technology Investments

    Fabio Murra, SVP Product & Marketing at V-Nova Ltd: “The main challenge in the MENA region is

    the discrepancy between consumer appetite for content and bandwidth available. On the one hand, the

    Arab world ranks among the world‟s most avid mobile video consumers. On the other, the bulk of the

    region still relies on broadband speeds under 10Mbps, proving incredibly challenging for IP-based

    services like IPTV and OTT. To reconcile these two extremes, operators in the region need solutions

    that drastically reduce the bandwidth requirements for services in order to be able to launch Ultra HD

    initiatives for live sports and Virtual Reality, two areas that require high quality and low latency to deliver

    the immersive experiences that consumers want.”

  • 53

    Technology Adoption Index There is an inherent lead by the GCC countries owing to high investment, access to technology and adoption. But Levant

    nations score fairly well in this index with high growth rates and influx of funds for upgrading technology

    Source: Frost & Sullivan

    BROADCAST INDUSTRY:TECHNOLOGY ADOPTION INDEX, MENA, 2016

    0

    0.5

    1

    1.5

    2

    2.5

    3

    3.5

    4

    4.5

    5

    0 1 2 3 4 5 6

    Technology Investment

    UAE

    Qatar

    Kuwait

    Bahrain Oman

    Jordan

    Morocco KSA

    Egypt

    Algeria

    Tunisia

    Libya

    Yemen

    Palestine

    Technology Access

    The growth of technology investments in these

    countries is rising with proliferation of national

    broadband initiatives, thereby supporting new age

    services like OTT video, IPTV services and 4K

    transmission in linear broadcasting. State supported

    schemes to digitize broadcasting and switch-off legacy

    systems has given a fillip to these efforts.

    The parameters for evaluating the countries on the

    index include adoption of HD TV, average national

    broadband speeds, exposure to cloud services,

    government initiatives, digitization of broadcast, use of

    content protection solutions, investments in broadcast

    technology(in $million) like asset management, playout

    services, video compression standards, etc.

  • 54

    What are broadcasters spending on?

    Source: Frost & Sullivan

    Content Acquisition 4%

    Content Production 2%

    Post Production Editing 22%

    Network Infrastructure

    12% Storage

    42%

    Workflow Automation

    18%

    Sales TOTAL BROADCAST SPEND: SPLIT BY PROCESS, MENA, 2016

    • Cloud services are being considered by

    major broadcasters to migrate their storage

    and workflow automation. This could be a

    sizeable chunk of their investments in the

    next 5 years.

    • With the rising demand for more local

    premium as well as marquee international

    content on demand, acquiring content

    requires big bucks to keep the audience

    engaged and loyal.

    • Resolving bandwidth issues is the need of

    the hour to make multiscreen delivery a

    mainstream product. This entails high

    compression standards, low latency

    streaming technology and bandwidth-

    adaptive video quality to ensure

    uninterrupted, seamless streaming.

  • 55

    Broadcast Technology Investment in the GCC The region is fragmented in the adoption and investments based on multiple socio-economic factors. The GCC

    spearheads the digital transformation drive in most cases

    Source: Frost & Sullivan

    PAST

    • Launch of several OTT platforms

    • Higher uptake of HDTV

    • Remote production for live feeds and instant broadcast

    • IP-based workflows tested for mass deployment

    • Digitization and transition to automation via cloud services

    CURRENT

    • Live streaming to be the focus for major broadcasters

    • Multiscreen video delivery the need of the hour

    • Use of hybrid cloud to become more rampant

    • Digital advertising to be more targeted for higher reach and conversion

    • Personalization of playlists a driver for data analytics and enhanced user experience.

    FUTURE

    • Cloud to be the primary storage center for broadcasters

    • High automation and IP-fication of workflows to dominate operations

    • 8K to pave the way for higher resolution standards and better compression

    • On demand TV will be the norm for majority of the consumption

  • 56 56

    The Last Word

    Sarah Kavanagh, Senior Public Relations Manager at Harmonic:

    “We see adoption of IT technology for storage, content acquisition and post-production for

    cost effective solutions. Cloud infrastructure opens up appetite for more speculative

    business opportunities or use cases. Now we can use cloud for infrastructure, you can

    license with technology players on OPEX/web share basis. Economic barriers to entry is

    lower for new entrants, for established players the movement from CAPEX to OPEX will

    potentially change business models. “

  • 57 9AC1-70

    The Last Word

    Source: Frost & Sullivan

    1 The satellite Pay TV market is expected to grow at a growth rate of 5% till 2020. This will be largely

    driven by the inquisitiveness created by new packages in terms of content and price. In the IPTV market,

    the commercialization of FTTH broadband will drive the adoption.

    2

    3 Sports will remain the major driver for uptake of paid services in MENA. But for the long run content in

    multiple genres and on multiple languages based on the target audience will be essential to sustain in

    the market.

    TOTAL BROADCAST INDUSTRY: 5 PREDICTIONS, MENA, 2017

    4

    5 OTT service providers need to constantly update their content portfolio and retain the content

    partnerships to avoid churn in the highly competitive market.

    Broadcasters must adopt advanced technologies to rise productivity and encourage optimization of

    workflows through IP-enabled automation solutions. Cloud services set to disrupt the industry in the

    next 3-5 years.

    Targeted advertising and building personalization and audience-based recommendations is the key to

    achieve higher viewership and subscriptions. A sophisticated, yet pragmatic User interface is vital for

    the success of these services.

  • 58 9AC1-70

    Acknowledgements

    LIST OF INDUSTRY PARTICIPANTS FOR THIS RESEARCH

    Frost & Sullivan acknowledges the participants for the study and extends its appreciation for their insights and valuable findings. The research was conducted across a number of technology and product vendors, broadcasters, Pay TV networks, online video portals and satellite companies.

    • beIN Media Group • Harmonic • Telestream • Vnova • NexGuard • ART TV • Equinix • STARZ Play • Irdeto • Arabsat • Wowza Media

    • Avid • Belden Grass Valley • Al Jazeera • Du • Istikana • Telly • MBC • Imagine Communications • Intigral • NewTek

  • 59 59

    For more information, Contact

    Vidya S Nath Research Director,

    Digital Media Practice,

    Frost & Sullivan

    P: +91.44.6160 6666

    E: vnath@frost.com

    W: www.frost.com

    Anita Chandhoke Team Leader, Corporate Communications,

    Middle East and North Africa

    Frost & Sullivan

    P: +91.80.67028020

    E: achandhoke@frost.com

    W: www.frost.com

  • 60 60

    © 2017 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

    Disclaimer

    Frost & Sullivan is not responsible for any incorrect information supplied to us by manufacturers or users. Quantitative market information is based primarily on interviews and therefore is subject to fluctuation. Frost & Sullivan research services are limited publications containing valuable market information provided to a select group of customers. Our customers acknowledge, when ordering or downloading, that Frost & Sullivan research services are for customers’ internal use and not for general publication or disclosure to third parties. No part of this research service may be given, lent, resold or disclosed to noncustomers without written permission. Furthermore, no part may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the permission of the publisher. For information regarding permission, write to:

    Anita Chandhoke Team Leader, Corporate Communications, Middle East and North Africa

    P: +91.80.67028020

    E: achandhoke@frost.com

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