Media players in the Middle East yet to make use of new digital platforms

According to Value Partners, the leading management consultancy firm in the Middle East, there is a significant role that digital platforms and new technology can play in the development of local content in the region. This includes the localization of content, experimenting with ‘freemium’ models and the collaboration of broadcasters and telco players.

“The MENA region displays a very strong demand potential for digital content and we expect substantial growth in digital platforms going forward,” said Santino Saguto, Partner, Value Partners. “For instance, Saudi Arabia is the third largest market for YouTube playbacks on mobiles worldwide, behind only the US and the UK. Furthermore, our research confirms that the usage of social media is particularly high in the region, with nearly 70% of consumers in key Arab markets using social networking sites.”

Value Partners state that a wide digital space offers plentiful opportunities for media players in the region to both extend their existing content to new platforms and to develop new content for those platforms. According to Saguto, online and mobile devices provide new platforms for the exploitation of existing content owned by producers and broadcasters. Referring to the online VOD service known as ‘Hulu’ in the USA, Saguto said: “The joint venture between NBC Universal, Fox and ABC is the most successful example of a collaborative online VOD concept, boasting around 40 million unique users per month, nearly 1 billion videos viewed every month and around US$100m in advertising revenues last year.”

He suggests that a ‘freemium’ model, which includes a mix of both free and paid content, including a nominal subscription fee, could work well in the region and that the industry could benefit from players experimenting with this model further on digital platforms: “On one hand, there has always been a sense of prerogative to content largely due to the abundance of piracy; on the other hand, there is an urgent need to find the ‘right’ content, that consumers will be willing to pay for – that is, providing a premium to the consumer that is worth the extra cash,” added Saguto.

Value Partners encourages the collaboration between rights owners and network providers in the Middle East for funding of digital content – both online and mobile. Telecom operators are urgently looking for broadcasters to partner with on digital content. At present, most telco players not only lack the skills to produce content themselves, but also to market that content effectively. Meanwhile, broadcasters feel that given market conditions and due to the balance of power between themselves and the operators that they are in a difficult position and are not comfortable taking the risk and investing in digital content.

Value Partners research exhibits strong growth in mobile broadband, particularly in some of the GCC markets such as the United Arab Emirates, Saudi Arabia and Qatar. As mobile broadband penetration increases in the region, revenues from mobile content look set to rise. However, in spite of the potential opportunities, revenues from content today still constitute a very small portion of overall revenues.

“Although there are some strong differences in perspectives between various players in the value chain, there seems to be a strong opportunity for partnerships between content providers and telco operators, however, this is not without risk. If the region is to increase the revenues generated from mobile content and identify the best model for revenue sharing, it may require some initial experimentation by innovative players, as has been seen in other markets.” concluded Saguto.

Value Partners is divided into two sister companies: Value Partners Management Consulting and Value Team IT Consulting and Solutions. It draws on nearly 50 partners and 3,300 professionals of 25 nationalities.

Value Partners Management Consulting was founded in 1993 and has built its strong international reputation by assisting clients in over 40 countries. It has offices in Milan Rome, London, Munich, Helsinki, Istanbul, Dubai, Sao Paulo, Rio de Janeiro, Buenos Aires, Mumbai, Beijing, Hong Kong and Singapore.

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