OTT Video Path to Success MENA

OTT Video Path to Success MENA

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OTT Video Success Path in MENA

How can SVOD be more relevant and create long-term value

Author: Samer Majzoub CEO, Elev8 Consultancy

Publication date: September 2021

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INTRODUCTION

Statistics are phenomenal, SVOD subscribers reached a little more than 1 Billion subscriptions globally in 2021-Q1 and expected to grow by 50% by 2026. We have seen in less than 2 years the entry in the US market of Disney + and Apple TV + , Warner Media and NBC Universal launched HBO Max and Peacock and recently Viacom CBS launched Paramount + , and Discovery with Discovery + . Many are rolling out globally and are expected to enter the Middle East markets in the future challenging the existing regional players in an already crowded video streaming market. In parallel to this OTT video hype, a feeling is emerging that could jeopardize this media revolution. Viewers are overwhelmed with all of the new options available; the Horowitz survey finds that 50% of TV content viewers feel that there are too many streaming services and are confused and struggling to keep connected to their favorite content.

The hype level has been increasing dramatically around the growth of OTT Videos as a global trend and consequently the proliferation of the cord-cutting phenomena, i.e., the consumer behavior of “cutting” pay-tv services at home which started in the US in the last decade and spread across other markets notably the MENA region and UAE.

The emergence of this new digital media reality created tremendous pressure on the content owners and big studios, forcing them out of their comfort zone to break up with their traditional way of doing business. Many started to get into the race of launching their DTC streaming platforms, with one objective in mind: Stop Netflix, but realizing later than copying the ramping up Netflix model is a strategic decision to survive and grow in this new emerging media world. SVOD is now the new norm in the TV/Video industry becoming a preferred way for customers to consume their content lead by the emergence of Netflix and the disruption it commanded in the entertainment landscape and the overall media value chain through its Direct to Consumer (D2C) model.

Figure 1: Gross SVOD & Net SVOD Subs (Millions)

Success Path Framework In this paper we will understand the SVOD situation in the MENA region, discuss strategic tips and the framework path to success for existing and new SVOD streaming players in MENA. How they need to adapt their strategy to be able to grow, compete, monetize their assets better and combat emerging streaming fragmentation.

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OTT Video Success Path in MENA: How can SVOD be more relevant and create long-term value

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The streaming war is inevitable! Like all other parts of the world, in MENA the number of SVOD OTT players is growing. Regional OTTs have managed creating a big success story so far in leading the battle of subscriber share over their international counterparts, and enjoyed a phenomenal increase in their number of subs, accelerated as of 2020 by the pandemic: We have seen subscribers more than doubling for Starzplay and Shahid VIP , 2020 was also marked by the strategic decision of the regional pay TV OSN to launch their SVOD service with OSN streaming app. SVOD MENA subscribers across 13 Arabic countries (covering GCC, Levant and North Africa) grew by 77% YoY and revenue by 55% YoY in 2020 to reach $350M, with Saudi Arabia and UAE capturing nearly 60% of total subscriptions. This could be only the beginning as the Arab market potential is huge and is expected to grow at CAGR of 12% by 2026, reaching 15 million subscribers up from 8.61M forecasted in 2021. Current Strategy The growth strategy deployed by regional SVOD players in the last 2 years has been revolving commonly around an aggressive subscribers’ acquisition strategy across 3 main pillars: 1- Customer price affordability vs leading international players; 2- Telco partnerships across different market of the region with hard bundling; and 3- an Increased investment in premium local and global content, and an early humble original production. Competition will further intensify as more regional and international OTT video platforms are expected to enter the market with more variety of choice to customers, but also more market fragmentation, making a streaming war inevitable in the region. Situation in the MENA Region

Emerging Challenge This aggressive market penetration strategy is coming with an increasing threat. Indeed, High acquisition cost and low customer lifetime value in a landscape dominated by little content differentiation and brand loyalty will further dilute the market. That said, looking for different business models and new strategic levers has become the primary challenge to be able to monetize content and develop a long- term path for healthy growth. SVOD companies in the region should make the above challenges their first consideration while developing a long-term strategy for healthy growth What is clear is that direct relationship with customers is a global opportunity and streaming is slowly dominating video viewing across the region; However, is the mere fact of going directly to consumers and launching its own branded OTT platform with an acquired general content enough for competing in the fragmented market?

Figure 2: Forecast 15M SVOD Subs by 2026 in the Arab World

Figure 3: Regional Players leading in SVOD Market Share

*MENA region covered: 13 Arabic countries in Levant, GCC and North Africa

2020 Growth R evenues: 55% YoY Subscrption: 77% YoY

OTT Video Success Path in MENA: How can SVOD be more relevant and create long-term value

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Be Relevant or Die!

Win the consumer “share of time”

Direct-to-Consumer is not enough

Create value to customers free time

We will describe in more details how to create value to customers by being relevant across different strategic levers . SVOD companies in the MENA markets need to employ a variety of strategies with informed >Page i Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11

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