Key Outcomes of Arab Media Outlook 2011-2015

April 30, 2012

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The fourth edition of the Arab Media Outlook (2011-2015) offers an overview of the current status, key trends and projections for the media sector in the region.

Download the Launching Presentation of the Arab Media Outlook 2011-2015

ADVERTISING SPEND

Several of the markets impacted by the recent political turmoil are rebuilding their media industry with a greater emphasis on freedom of expression and encouraging private ownership in the print and broadcasting sectors.
Pan-Arab advertising spend decreased by 12% in 2011. The erosion in advertising spend between 2010 and 2011 was greater in markets such as Egypt (-30%), Bahrain (-45%) and Libya (-45%). “Fringe markets” such as Iraq saw advertising spend grow by more than 85% in 2011.
Advertising spend for the region is anticipated to grow at a CAGR of 5.9% between 2011 and 2015, boosted by the eminent recovery of the advertising market in Egypt after 2012 and a strong showing by the digital platform in the years to come.

Print:

Newspaper circulation recorded its lowest growth in 2011.
The pace of migration to online has been relatively slower than other parts of the world; however, some large newspaper groups are positioning themselves for digital migration by leveraging the reach and strong segment focus of specific online properties.
The sustained yet gradual decline in the contribution of print to total advertising spend, since 2007, is expected to continue.
Magazines, despite their relatively smaller contribution to total print advertising spend, enjoy a Pan-Arab footprint with new titles emerging in the lifestyle and women’s genres.

Television:

The Arab television industry is dominated by Free-to-Air satellite (540 free-to-air FTA channels).
However, audience and advertising revenues are concentrated around a small number of Pan-Arab FTA channels (new channel launches were largely under the umbrella of large Pan-Arab broadcasting groups such as MBC and Rotana).
Pay-TV providers are combating piracy through the replacement of set-top boxes and lobbying with local governments.
Nevertheless, penetration of Pay TV across the Arab region continues to remain low given the widespread use of illegal decoders and the quantity of premium content already available on Free-to-Air pan-Arab satellite TV channels.
The region is also seeing international investment in home-grown content through joint ventures, partnerships or organic initiatives.
Over-the-Top (OTT) TV and other non-linear platforms are still fairly nascent in the region.

Digital:

The digital platform has the highest potential for growth given the favourable demographics of the region (i.e. more than 50% of the population is below the age of 25) and the strong uptake of smartphones and tablets.
Some of the verticals in the online space that have seen the most activity include e-commerce and online gaming.
The regional landscape of incubators, venture capital funds and technology parks has undergone a significant change with the second wave of successes emerging from these initiatives.
The region is also seeing the emergence of regional hubs as “centres of excellence” for some verticals of the online space as in the case of Jordan.
The region still faces a mismatch between the share of digital advertising in total advertising spend vis-à-vis the relative importance of the platform from a media consumption angle. This distortion is expected to be corrected to a certain extent in the years to come.

Radio:

Unlike more mature markets, the radio platform has only recently emerged as an important platform in the region with the number of radio stations increasing at a CAGR of 37% between 2009 and 2011.
The liberalisation of the sector in many Arab countries and its strong segmentation potential will continue to drive radio advertising spend in the years to come.

Out-of-home:

Out-of-home advertising including cinema advertising remains a stable part of the overall advertising market, with variations in its significance across markets.
Within out-of-home, indoor advertising (e.g. shopping mall advertisements), which is at a fairly nascent stage has been spurred by new entrants in a few markets such as the UAE that are likely to fuel the growth of this sub-segment.
Cinema advertising, largely driven by the number of screens available, remains a small fraction of the total advertising spend given the low number of cinema screens per capita across the region.

CONTENT GENERATION
The third edition of the Arab Media Outlook highlighted the importance of stimulation and development of local content in the Arab media industry. The fourth AMO analyses the trends in local content development from a platform perspective (i.e. TV, Movies, Sports, Music).

Television

On the one-hand, consumers are increasingly turning to “ultra local” content in the aftermath of the regional uprisings (i.e. country specific as opposed to Pan-Arab), particularly in countries such as Egypt and Tunisia. On the other, content producers in the TV, movie and music industries realise the importance of catering to the common tastes of a region-wide audience in order to optimise their monetisation potential.
Local content is indeed becoming a strong focus for Pan-Arab broadcasters and there is an increasing trend towards the development of original content for the region.
Animation is indicating promising signs of growth.
However, imports continue to dominate the Arab TV landscape with Turkish series notching high popularity and the success of local versions of international talent shows such as Arab Idol.
Geographic hubs for TV series production are expanding across the region, with some of the Gulf States making the most of the recent unrest in traditional markets for content production such as Egypt and Syria.

Films

As regards to film production, the number of home-grown Arabic films is on the rise with some recent success stories in Emirati and Lebanese productions, and increased interaction with the international stage through film festivals and film funds.
However, the industry as a whole continues to face challenges with regard to monetisation as a result of the limited number of cinema screens in the region (aside from Egypt), widespread illegal downloading of movies and illegal TV movie channels.

Music

As in other geographies, the music industry in the Arab region is seeing increasing fragmentation of genres.
Some high profile Pan-Arab artists (particularly Egyptian and Lebanese) remain popular, while there is an increasingly large market for artists catering to local tastes in different Arab countries.
From a monetisation point of view, recorded music sales are already low in the region and will continue to decline in the short-term.
Going forward, the music industry will need to rely on digital revenues for growth with the gradual introduction of legal music download sites in the region.
Live entertainment is likely to provide a significant revenue stream for the industry going forward, while some significant changes need to happen in intellectual property rights regulation and enforcement to see growth in music publishing revenues.

Sports

Sports viewership on TV remains particularly high in the region; however the maturity of the sports industry, in terms of monetization of broadcast rights, currently lags behind markets such as the US, Europe or India.
Monetisation of broadcasts rights for domestic leagues across the region is still relatively low as compared to international leagues, despite the popularity of the local leagues which has been strongly evidenced by market research.
Further, while some countries in the region and the GCC in particular are becoming hubs for international sports events, there is still a need to invest in sports infrastructure and academies in order to foster the development of local leagues. To best leverage the impact and legacy of Qatar World Cup 2022, the region still needs to harness its local talent and develop champions who will drive the interest for sports across the Arab world.

Read about the launch of the Arab Media Outlook

Arab Media Outlook 2011-2015