Competition Bites for MENA Pay TV

Competition bites for MENA pay TV

Pay TV revenues for the 20 countries covered in the eighth edition of the Middle East and North Africa Pay TV Forecasts report will reach $3.62 billion in 2023 – up by only 7.8% on 2017. Pay TV revenues will fall in 2018. They will be flat in 2019 before starting a slow recovery.

Concentrating just on the 13 Arabic-speaking countries, pay TV revenues will grow by 24% from $1.18 billion in 2017 to $1.46 billion in 2023, despite pay TV subscriptions rising by 47% over the same period to 5.84 million. If subscriptions are growing faster than revenues, then ARPUs must be falling.

Simon Murray, Principal Analyst at Digital TV Research, said: “The region has always been difficult for pay TV, with many homes receiving many FTA channels and rampant piracy being commonplace. beIN is shaking up the market with its strong slate of exclusive sports rights. beIN is now providing more entertainment content.” beIN’s moves have hit long-established rival OSN. OSN benefits from exclusive long-term deals with all of the Hollywood studios. However, OSN has struggled to push its subscriber base much beyond 1 million subscribers.

Murray explained: “Competition is increasing – not only from beIN, but also from the multitude of SVOD platforms that have launched in recent years. These platforms compete more directly against OSN than beIN due to their emphasis on drama. No SVOD platforms can compete against beIN with live sports provision.”

Murray continued: “OSN’s reaction was to cut its subscription prices substantially in February 2017. Digital TV Research believes that further cuts will be made as OSN struggles to hold on to its subscriber base until its fees are just above beIN’s.”

OSN’s revenues will reach $498 million in 2023 – down from $700 million in 2015. beIN’s revenues will exceed OSN’s in 2022. beIN’s revenues will double between 2016 and 2023. beIN will overtake OSN by subscriber numbers in 2018. beIN is forecast to have 1.87 million satellite TV subscribers by 2023 – ahead of OSN’s 1.46 million [so excluding subscribers to their channels on other platforms such as IPTV and cable].

beIN’s sister company Digiturk will retain regional market leadership despite more intense competition in Turkey.

Pay TV revenue growth by operator ($m) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2017 2023 Other 580 874 Yes 462 385 HOT 472 359 D-Smart 125 124 TTNet 27 126 Turksat 81 76 Digiturk 688 655 beIN 269 521 OSN 622 498

Source: Digital TV Research

Israel will experience cord-cutting. Israel will lose 27,000 pay TV subs between 2017 to 2023. We forecast that Israeli pay TV revenues will fall from more than $1 billion in 2015 to $767 million in 2023 as cheaper OTT platforms force traditional pay TV operators to lower their fees.

Middle East & North Africa Pay TV Forecasts

Published in January 2018, this 228-page PDF and excel report is our eighth edition. The report comes in six parts:

• Executive summary and regional forecasts, with handy comparison tables to reveal the best growth prospects; • Major pay TV operators, including market share for each; • Regional forecasts summary from 2010 to 2023 by platform, by household penetration, by pay TV subscribers and by pay TV revenues; • Country insights for 25 territories; • Detailed country forecasts for 20 countries. • NEW FOR 2018: Prospects. Summary subscriber forecasts for 20 countries in a graphically appealing 43-page document.

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If you do not want the full report, you can buy the Middle East and North Africa Pay TV Prospects report for half the price of the full report. Please contact [email protected] for more details, including the table of contents and sample pages.

Forecasts for the following 20 countries and 52 platforms:

Country Forecasts No of ops Platform forecasts Afghanistan Algeria * 3 beIN; OSN; Algerie Telecom Armenia * 0 Azerbaijan * 0 Bahrain * 3 beIN; OSN; Batelco Egypt * 3 beIN; OSN; Telecom Egypt Georgia * 2 Magtisat; Sliknet Iran Iraq Israel * 3 HOT; Yes; Bezeq Jordan * 3 beIN; OSN; Orange Kazakhstan * 3 Alma; KT; Otau Kuwait * 2 beIN; OSN Kyrgyzstan Lebanon * 2 beIN; OSN Libya Morocco * 3 beIN; OSN; Maroc Telecom Oman * 3 beIN; OSN; Omantel Qatar * 3 beIN; OSN; Ooredoo Saudi Arabia * 4 beIN; OSN; Invision; eLife Syria * 2 beIN; OSN Tunisia * 2 beIN; OSN Turkey * 5 Turksat; Turkcell; TTNet; Digiturk; D-Smart UAE * 4 beIN; OSN; Du; eLife Uzbekistan * 2 Uztelecom; Uzdigital

SAMPLE: Saudi Arabia pay TV insight

• Saudi Arabia achieved 100% digital TV penetration in 2015. About 82.8% of the 5.91 million TV households receive satellite signals, with the vast majority taking free-to-air channels. Despite IPTV growth, the pay TV penetration rate will only be 23.6% in 2023, up by 4.3 percentage points on 2017.

Main assumptions behind the forecasts • FTA satellite is the most common platform. • ARPUs are expected to fall as competition bites. • IPTV and pay satellite TV services will continue to grow. • as new satellite TV subs take cheaper packages. • Analog switch-off took place in 2015. Source: Digital TV Research

• Pay TV revenues will reach $477 million in 2023, up by $100 million on 2017. Satellite TV ($287 million in 2023) will supply most of the pay TV revenues, although its share of the total will fall as IPTV ($189 million) makes its mark.

• Piracy remains a major problem in the Kingdom.

beIN monthly subscription fees ($) Package Channels Price Access 47 10 Top Sports Access + 14 channels 25 Top Entertainment Access + 26 channels 25 Complete 67 channels 30 Elite Complete + World Cup and Euros + on- 45 demand access Source: beIN

• With 416,000 subs by end-2017, beIN provides up to 67 channels. We forecast that beIN will have 561,000 subs by 2023.

• Sports is a major attraction for beIN. As well as World Cup and Euros soccer, beIN holds the rights to European Champions League, La Liga, Bundesliga, Serie A, La Ligue and English Premier League football. Furthermore, it screens NBA, ATP tennis and three Opens, F1 and Tour de France action. beIN has 19 dedicated sports channels. beIN is broadening its appeal into the Entertainment sphere. beIN has four dedicated movie channels and two dedicated series channels. beIN acquired the Miramax studio in March 2016.

OSN monthly subscription fees Package Channels Price GetStarted 32 SAR79 Entertainment 27 SAR50 Movies 13 SAR70 Ultimate Movies 3 SAR50 Sports 17 SAR80 Abu Dhabi Sports 8 SAR19 Complete 89 SAR329 Source: OSN

• OSN had about 340,000 residential satellite TV subscribers in Saudi Arabia by end-2017, with only 34,000 more expected to be added by 2023.

• Satellite TV platform Arab Radio and Television (ART) is Saudi backed. Reports suggested that ART had as many as 1 million satellite TV subscribers across the Arabic-speaking countries, although the total fell after ART joined forces with former rival OSN.

• In March 2014, Saudi-based Arabsat ordered four more satellites; two to replace existing satellites and two to increase capacity. The satellites will launch in 2016 and 2017.

Saudi Arabia: Fixed broadband subscribers (million) 2010 2011 2012 2013 2014 2015 2016 2Q17 DSL 1.49 1.56 1.87 1.85 1.38 1.57 1.62 1.56 Wimax 0.20 0.30 0.55 0.80 1.20 1.50 1.10 1.00 Other 0.05 0.04 0.08 0.26 0.43 0.45 0.57 0.69 Total 1.74 1.95 2.54 2.92 3.03 3.56 3.29 3.25 HH penetration 27.3 32.9 40.9 45.5 43.2 49.7 44.8 44.2 (%) Mobile 2.70 11.34 12.29 14.27 29.09 33.40 23.90 25.25 broadband Source: CITC

• Fixed broadband penetration reached 44.2% of households by June 2017 (3.25 million subs, but including wimax and leased lines). DSL subs numbers are falling, but the other category (which includes FTTH) is climbing.

• Saudi Telecoms Company is the largest telco (wireless and wireline) in the region. STC had constructed an 18,000km FTTH network (100,000 subs by end-2012 – with an annual increase of 88% reported in 2013 (but no number given! We estimate 188,000)), which had passed 830,000 premises by end- 2013 and wanted to pass 1.5 million by end-2014.

• As well as offering up to a 200Mbps broadband connection, STC launched its Invision TV service (including Abu Dhabi Sports and various OSN packages. However, the beIN channels were dropped) offered as part of a triple-play package) in August 2010. We estimate that Invision had 261,000 subs by end- 2017, with 404,000 forecast by 2023.

• The Basic package provides 90 FTA channels to triple-play subs. In September 2016, STC agreed to carry SVOD platform Starz Play (SAR7.50/week).

• Etihad Etisalat, parent of mobile operator Mobily, owns 66% of the Saudi National Fiber Network, which comprises 24,000km. Trading as eLife, Mobily’s fiber optic network offers various TV packs (including OSN and beIN Sports) and up to 200Mbps broadband speeds as part of triple-play bundles. We estimate that the company had 123,000 IPTV subscribers by end-2017, which will climb to 237,000 by 2023.

• Etihad Atheeb, trading as Go and 15% owned by Bahrain’s Batelco, has 200,000 broadband subscribers (a mixture of wimax (up to 3Mbps) and FTTH (up to 200Mbps)) in 12 cities. The company is yet to launch an IPTV service. Batelco states that the company lost 13% of its subscribers in 2015, having lost 28% in 2014.

• In May 2017, Zain signed a pan-regional distribution deal with Iflix. Zain had 8.3 million subscribers in Saudi Arabia by September 2017.

• Launched in June 2006, the five-channel DTT package reaches 90% of the population, although take-up has been limited. Up to 30 channels (including commercial ones) are eventually planned. Thomson Broadcast won the contract to update the network to DVB-T2 in 2014. Analog terrestrial switch-off took place in 2015.

• The Al Saud family has an iron grip on the country. However, the Kingdom has been subject to attacks from militant Islamic fundamentalists, who oppose Saudi Arabia’s close ties to the US.

• GDP per capita was $20,957 in 2017, according to the International Monetary Fund. GDP growth will be below the regional average in the next five years. Unemployment rates are fairly high.

• A strict adherent of Islam, Saudi Arabia is the largest Gulf State. Around 8.0 million of the 32.38 million population are expatriates. Riyadh has a population of 6.70 million, followed by Jeddah (4.25 million), Mecca (1.83 million), Ad- Dammam (1.11 million) and Medina (1.33 million).

Saudi Arabia pay TV forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Total households (000) TV households (000) Digital cable subs (000) Analog cable subs (000) Pay IPTV subscribers (000) Pay digital Satellite TV subs (000) Free-to-air Satellite TV HH (000) Analog terrestrial households (000) Primary FTA DTT households (000) Primary Pay DTT households (000)

Digital homes (000) Analog homes (000) Pay TV subscribers (000) Total DTT homes (000)

Digital cable subs/TV HH Analog cable subs/TV HH Pay IPTV subs/TV HH Pay Satellite TV/TV HH Free-to-air Satellite TV/TV HH Analog terrestrial/TVHH Primary FTA DTT/TV HH Primary pay DTT/TV HH

TVHH/Total HH Digital/TV HH Analog/TV HH Pay TV Subs/TV HH Total DTT/TVHH

Stand-alone digital cable subs (000) Dual-play digital cable subs (000) Triple-play digital cable subs (000)

Stand-alone pay IPTV subs (000) Dual-play pay IPTV subs (000) Triple-play pay IPTV subs (000)

Saudi Arabia pay TV forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Revenues (US$ million) Stand-alone digital cable revs Dual-play digital cable TV revs Triple-play digital cable TV revenues Digital cable TV subs revenues Digital cable TV on-demand revs Digital cable TV revenues Analog cable TV subs revs Cable TV revenues Stand-alone IPTV revenues Dual-play IPTV revenues Triple-play IPTV revenues IPTV subscription revenues IPTV on-demand revenues IPTV revenues Satellite TV subscription revenues Satellite TV on-demand revenues Satellite TV revenues DTT subscription revs DTT on-demand revenues DTT revenues Subscription revenues On-demand revenues Total revenues

Average Revenue Per User (ARPU - US$) Stand-alone digital cable subs Dual-play digital cable TV subs Triple-play digital cable TV subs Average digital cable (subs & VOD) Analog cable TV subs Stand-alone IPTV subs Dual-play IPTV subs Triple-play IPTV subs Average IPTV (subs and VOD) Pay Satellite TV (subs) Pay Satellite TV (subs and PPV) Pay DTT (subs) Pay DTT (subs and PPV) Average monthly ARPU

Saudi Arabia pay TV forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Pay TV subscribers by operator (000) beIN (satellite) OSN (satellite) Invision (IPTV) eLife (IPTV) Others

Share of pay TV subs by operator % beIN (satellite) OSN (satellite) Invision (IPTV) eLife (IPTV) Others

Subscription & VOD revenues (US$ million) beIN (satellite) OSN (satellite) Invision (IPTV) eLife (IPTV) Others

Share of pay TV revenues by operator % beIN (satellite) OSN (satellite) Invision (IPTV) eLife (IPTV) Others

Average Revenue Per User (ARPU - US$) beIN (satellite) OSN (satellite) Invision (IPTV) eLife (IPTV)

Source: digital TV research

Saudi Arabia pay TV subscriber prospects

Subscribers by platform (000) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2017 2018 2019 2023 A terres 0 0 0 0 Pay DTT 0 0 0 0 Free DTT 632 573 523 427 Free satellite 4,137 4,225 4,305 4,671 Pay Satellite 757 785 812 934 IPTV 384 453 511 641 A Cable 0 0 0 0 D cable 0 0 0 0

Subscribers by operator (000)

0 Others 0

237 eLife 149

404 Invision 303

374 OSN 337

561 beIN 447

0 100 200 300 400 500 600 2023 2018

Saudi Arabia pay TV revenue prospects

Revenues by platform ($m) 500 450 400 350 300 250 200 150 100 50 0 2017 2018 2019 2023 Pay DTT 0 0 0 0 Pay Satellite 273 265 254 287 IPTV 104 126 144 189 A Cable 0 0 0 0 D cable 0 0 0 0

Revenues by operator ($m)

0 Others 0

70 eLife 41

119 Invision 85

130 OSN 153

157 beIN 112

0 20 40 60 80 100 120 140 160 180 2023 2018

Digital TV Research publication schedule for 2017 Title Publication Price 1 Sub-Saharan Africa Pay TV Forecasts January £1200/€1440/$1560 2 Middle East & North Africa Pay TV Forecasts February £1200/€1440/$1560 3 Asia Pacific Pay TV Forecasts March £1200/€1440/$1560 4 Latin America Pay TV Forecasts March £1200/€1440/$1560 5 North America Pay TV Forecasts April £750/€900/$975 6 Eastern Europe Pay TV Forecasts April £1200/€1440/$1560 7 Western Europe Pay TV Forecasts May £1200/€1440/$1560 8 Global Pay TV Subscriber Forecasts May £1800/€2160/$2340 9 Global Pay TV Revenue Forecasts May £1800/€2160/$2340 10 Global Pay TV Operator Forecasts May £1800/€2160/$2340 11 Netflix Forecasts June £750/€900/$975 12 Global Pay TV Subscriber Databook June £750/€900/$975 13 Global Pay TV Revenue Databook June £750/€900/$975 14 Global Pay TV Operator Databook June £750/€900/$975 15 Sub-Saharan Africa OTT TV & Video £1000/€1200/$1300 Forecasts July 16 Middle East & North Africa OTT TV & Video £1000/€1200/$1300 Forecasts July 17 Asia Pacific OTT TV & Video Forecasts August £1000/€1200/$1300 18 Latin America OTT TV & Video Forecasts August £1000/€1200/$1300 19 North America OTT TV & Video Forecasts September £600/€720/$780 20 Eastern Europe OTT TV & Video Forecasts September £1000/€1200/$1300 21 Western Europe OTT TV & Video Forecasts October £1000/€1200/$1300 22 Global OTT TV & Video Forecasts October £1800/€2160/$2340 23 Global AVOD Forecasts October £1000/€1200/$1300 24 Global SVOD Forecasts October £1500/€1800/$1950 25 Online TV Piracy Forecasts November £1200/€1440/$1560 26 SVOD Digest November £500/€600/$650 27 OTT & Pay TV Forecasts December £1500/€1800/$1950

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Digital TV Research publication schedule for 2018 Title Publication Price 1 Sub-Saharan Africa Pay TV Forecasts January £1200/€1440/$1560 2 Middle East & North Africa Pay TV Forecasts February £1200/€1440/$1560 3 Asia Pacific Pay TV Forecasts March £1200/€1440/$1560 4 Latin America Pay TV Forecasts March £1200/€1440/$1560 5 North America Pay TV Forecasts April £750/€900/$975 6 Eastern Europe Pay TV Forecasts April £1200/€1440/$1560 7 Western Europe Pay TV Forecasts May £1200/€1440/$1560 8 Global Pay TV Subscriber Forecasts May £1500/€1800/$1950 9 Global Pay TV Revenue Forecasts June £1500/€1800/$1950 10 Global Pay TV Operator Forecasts June £1500/€1800/$1950 11 Pay TV Prospects June £1200/€1440/$1560 12 Pay TV Databook July £800/€960/$1040 13 Netflix Forecasts July £600/€720/$780 14 Sub-Saharan Africa OTT TV & Video £1000/€1200/$1300 Forecasts August 15 Middle East & North Africa OTT TV & Video August £1000/€1200/$1300 Forecasts 16 Asia Pacific OTT TV & Video Forecasts September £1000/€1200/$1300 17 Latin America OTT TV & Video Forecasts September £1000/€1200/$1300 18 North America OTT TV & Video Forecasts September £600/€720/$780 19 Eastern Europe OTT TV & Video Forecasts October £1000/€1200/$1300 20 Western Europe OTT TV & Video Forecasts October £1000/€1200/$1300 21 Global OTT TV & Video Forecasts October £1800/€2160/$2340 22 Global SVOD Forecasts November £1500/€1800/$1950 23 OTT TV & Video Prospects November £1000/€1200/$1300

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