Juan Fernandez Gonzalez | 08-09-2013
New initiatives in over the top (OTT) video services in the Arab world are being encouraged by the growing desire for multiscreen access to video content combined with renewed growth in both the telecommunications and traditional media markets, according to recent research.
Initiatives from content providers, local aggregators and telcos are helping to boost OTT in the Middle East and North Africa (MENA), say researchers from Pyramid and Analysys Mason.
In July 2013, Google launched a dedicated content hub on YouTube, bringing together over 500 Arabic TV shows tailored for viewers in MENA. Last year YouTube views in the region reportedly doubled year-on-year, reaching 167 million views a day – second only to the US.
Regional pay-TV platform OSN has also recently introduced video-on-demand (VOD) via smartphone for the first time in the Arab world, and a Dubai-based Netflix-like movie subscription service called icflix began offering Arabic, Indian and Western films to MENA viewers in June 2013.
“OTT video is a revitaliser that will create additional revenue sources while improving customer loyalty and lifetime value,” said Houda Bostanji, analyst at Pyramid Research and author of Middle East and North Africa: Broadband Growth and Local Content Boosting OTT Video.
“A tailored MENA strategy, combined with actions differentiating from competitors will drive success for market participants,” she added.
Increasing penetration of smartphones and fixed broadband connections in MENA will be a significant driver of OTT adoption. In MENA, fibre will provide 17% of fixed broadband connections by 2018, up from 8% in 2012, while smartphones’ share of handset connections will grow from 11% at the end of 2012 to 33% by 2018, says research group Analysys Mason.
While established media companies and smaller local OTT players have entered the market recently, very few telecommunication operators in MENA are yet engaged in the OTT video market, preferring instead to have multi-screen offerings to complement their IPTV services, say researchers.
“We believe that operators could play a more important role in this emerging market. They could offer a new distribution channel to established OTT players and facilitate payment with integrated billing. Mobile operators, in particular, could profit from OTT video by monetising the additional bandwidth that consumers use,” says Karim Yaici, analyst at Analysys Mason.
“Fixed operators should use their strengths in the broadband market and content rights ownership to determine how to position themselves in the OTT video market,” Yaici adds.
Fixed operators have four potential responses, he argues. They could restrict access to OTT content by limiting OTT traffic; launch multi-screen initiatives to strengthen pay-TV propositions – an approach adopted by Etisalat and STC; launch an OTT service, if the operator has exclusive content rights, and has the infrastructure and knowledge required to manage this service; or partner with an OTT player to access exclusive and compelling content. Telco Zain, for example, has signed an agreement with OSN to allow its broadband subscribers to register for OSN’s premium OTT video service, OSN Play.