For publishers, brands and media companies seeking opportunities for international expansion, the Middle East offers some intriguing possibilities.
The region is home to a large youth population, 65% of whom are under the age of 30. Meanwhile, Gulf nations such as Qatar, UAE and Kuwait enjoy some of the highest levels for smartphone penetration anywhere in the world.
A mobile boom
Compared to other emerging markets, Cisco has reported that mobile data traffic grew by 117 per cent in MEA (Middle East and Africa) in 2015, faster than both Asia Pacific (83 per cent) or Latin America (73 per cent), and faster than the global average (74 per cent).
By 2020, according to the GSMA – an association which represents the interests of mobile operators worldwide, nearly 800 mobile operators and 250 companies worldwide – 69 per cent of all mobile connections in the region will be 3/4/5G (up from 34 per cent in 2015).
However, these impressive statistics mask a more complex picture, with the region home to a number of pronounced digital divides. Affordability, quality of services and media literacy levels are all considerations for media companies in the region.
As Northwestern University in Qatar acknowledged in their 2016 study, Media Industries in the Middle East:
“…MENA’s share of global Internet users has grown by a factor of four in the past 15 years, and is now on par with its share of the world population (about 4 percent). But there is a perceptible digital divide across the region with Internet penetration in the GCC states at or near the levels of developed countries, and parts of North Africa lagging behind.”
Addressing this challenge will not be easy. A 2014 World Bank report, Broadband Networks in the Middle East and North Africa: Accelerating High–Speed Internet Access, suggested investment of at least $25bn is needed to fully develop fixed and wireless internet access in the Arab world, and that efforts needed to focus on both access (e.g. not-spots) and affordability.
Media Outlook 2016-18
It’s against this backdrop that the Dubai Press Club published their annual Arab Media Outlook. Exploring opportunities and projections across the region from 2016-2018, the study offers a range of useful insights into the development of the media sector across 14 Arab countries.
The report found that despite a challenging economic climate, there are many positives for media companies. By 2018, they predict, the overall media market in the region is expected to be worth US$ 12.4 billion.
Given the potential of this sizeable marketplace, here are six media trends from the region worth noting:
1. Middle East audiences spend 10+ hours a day with media
Media consumers in the Middle East are on a par with their peers in the US, UK and Australia. They are “among the most active media users globally,” the report notes.
Over 40 percent of media time is spent on digital platforms; with digital and television accounting for nearly three-quarters (71 percent) of all media hours. Since 2013, Digital, TV and Radio have all seen their share of media usage increase (albeit only by a small amount). In contrast, as a percentage of daily media hours, time spent with books, newspapers and magazines has fallen.
2. Print remains the largest market. But digital video is the fastest growing.
In line with trends in the USA identified by Mary Meeker, print revenues continue to punch above their weight compared to user hours.
Collectively, the markets for Print and TV represent around two-thirds of the total market size for the Middle East’s media industries, although their projected grow curve is much less pronounced than other media verticals.
Of these, the fastest growing markets are digital. Led by digital video (30 per cent CAGR) and closely followed by ad spend on both mobile and social media, this is where media attention (and $) are increasingly being spent in the Middle East.
3. Much of the region is already a mobile first market
Several years ago it was reported that 50 percent of YouTubeviews in Saudi Arabia, and 40 percent in UAE, were via mobile devices. As Robert Kyncl, Chief Business Officer at YouTube, noted at a 2014 event in Dubai, this represented “a first for any region on YouTube.”
“That kind of engagement,” he said at the time, “has led to the emergence of a number of digital content companies built on YouTube – companies like UTURN and Kharabeesh who recognise the momentum of the region.”
It’s momentum which shows no sign of abating.
The Media Outlook authors observe that the Middle East is home to “the ‘leap frogging’ phenomenon.” Much of the region, they state, is likely to “skip or jump ahead to new technology bypassing the route that matured markets had to take.”
With mobile broadband connections trumping domestic broadband in some Middle East nations, digital audiences are often by-passing desktop technologies to go straight to mobile.
4. Traditional habits are rapidly eroding in some genres
The impact of these digital developments will take some time to play out, but the Media Outlook offers us some indication of where we may be heading, highlighting the volume of time spent by smartphone users on social networks and mobile videos.
With digital constituting around 40 percent of daily media activity, on average 80 minutes are spent on social media each day and 28 minutes watching videos.
A separate study, the annual Arab Youth Survey, offers us insights into what this means for a specific vertical: news media. Their conclusions will make media execs sweat, as their research shows behaviours changing at a rapid pace.
Discernible developments in the past few years include:
– In 2011, 79 percent of Arab youth reported that they got their news from television. Five years later, that figure has dropped to 63 percent.
– 17 percent of young Arabs aged 18-24 use newspapers as a source for news. In 2011, nearly two-thirds of Arab youth (62 percent) claimed newspapers were part of their news media consumption.
– Use of newspapers for news is now on a par with radio, and some way behind family and friends (30 percent), social media (32 percent), online news channels (45 percent) and television (63 percent).
“Whichever way you look at it, this decline – from 62 percent to 17 percent in just five years – represents a phenomenal loss of [newspaper] audience.”
– Damian Radcliffe, essay on “The Age of Social,” 2016 Arab Youth Survey
5. Digital influencers are increasingly powerful
This analysis of news consumption should be a wake-up call for other media and entertainment verticals, highlighting the need to pivot to digital, as well as the continued power of influencers (both in real life and on social networks) in shaping media attitudes and behaviours.
The Arab Media Outlook comments how the role of “Social Media Influencers, a community largely dominated by Arab Youth, is becoming an integral part of any marketing campaign in the region.”
Besides having a marketing impact, this group is also a publishing phenomenon, dominating the growth of digital video, often enjoying larger audiences on social networks – like YouTube – than leading broadcasters in the region.
“On the video side,” the report observes, “the fastest growing segment is short-form (few minuteslong), amateur digital content – curated by Arab youth and distributed on video platforms, such as YouTube.”
Building relationships with these social media influencers is therefore going to be essential – if it isn’t already – for most media organisations.
6. Pay TV has room for growth
Just as developing these relationships – and embracing mobile – offers potential opportunities for media companies in the region, so too does Pay TV. It’s a market which is described as “highly underpenetrated” compared to other emerging markets.
“The Pay TV industry in the region remained at 10 percent in 2015 – much lower than comparable markets such as Latin America and Asia Pacific where it was higher than 55 percent,” the study reports.
Even the affluent GCC market is expected to reach a penetration rate of 50 percent by 2018, compared to North America and Europe where it is at nearly 80 percent and 70 percent respectively. Historically, the bottlenecks have been rich premium local content available on Free to Air (FTA) channels and piracy.
With Pay TV at such a low starting point, no wonder there’s some cause for optimism. Adding more premium content, tackling piracy and offering good mobile viewing experiences, may all help to unlock some of the potential of this market.
Alongside this, the popularity of pay-to-play games – part of a gaming vertical expected to top $1 billion in revenues p.a. across the Middle East in 2018 – may also aid the establishment of new digital norms. Gaming in the region is “now a digitised process vs. going to a store to buy a gaming DVD,” a behavioural model which could be applicable to other entertainment genres.
“The digital activity in the region is catching the attention of the global digital giants,” noted Jayant Bhargava, Partner & Head of Digital Media & Entertainment Middle East Strategy, in his contribution to the report foreword, adding:
“While most major traditional international media companies have operated in the region from a distance, many of the international digital media players are intimately investing in the region.”
Growth in mobile broadband, in particular, will present some clear opportunities for media companies who want to expand their footprint.The GSMA predicts that smartphone penetration across North Africa and the Gulf will be “almost equal by 2020”, despite the fact that there is currently a huge disparity between these two sub-regions.
That growth, combined with a sizeable digitally savvy and hungry youth population, as well as conscious efforts to grow digital industries in the region, are all laying some interesting foundations.
Markets in the Middle East– by both content vertical and technology – will continue to grow at very different speeds, but for many publishers this remains a region to keep an eye on.