The Five Digital Personas of the Middle East Broadcaster

October 6, 2015 1 comment

If you’re a traditional free-to-air broadcaster in the Middle East, you most likely belong to one of five camps when it comes to the impact of technology and OTT services on your business and on your audience. Only one of these groups has a chance of surviving the shifting content consumption landscape.

Group 1: The Unaware (“What’s OTT?”)
This group includes quite a few household names, as well as several privately-owned standalone channels across the Middle East. The prominent members of the group are the state-owned broadcasters who have only applied cosmetic changes (“Let’s change the logo!”) to their channels. Their management teams are neither digital natives nor digital immigrants. They are preoccupied with managing the historical baggage that has accumulated in their organisation over decades. They are the captain of the Titanic standing on the bridge but not seeing any icebergs. This group will be swept aside, and they won’t notice until it’s too late.

Group 2: The In Denial
(“It won’t happen here!”)
This group has an often-heard chant: “Linear TV is forever. Viewers are lazy and passive. Our markets are different. The internet is too slow. The mobile screen is too small. The kids will want linear TV when they grow up.”
Oblivious by choice, they believe their market is somehow isolated from the impact of technology and operates under different rules. They make incremental changes to their channels (new grid here, new sports rights there) and see no need to change how they go about their business. This group will also be swept aside, but not before realising their error in judgement and attempting a futile last-minute attempt at reinventing themselves.

Group 3: The Wait-and-See
(“I’ll jump in when it’s worth it!”)
This group has it figured out. They have crunched the numbers. They have forecast the audience shares. They have built business cases with multiple scenarios at various degrees of sensitivity. They have evaluated the technology. They go to all the cool conferences. They know what it takes and will wait until the market is right and the revenues are worth going after.
This group will get a surprise. Just as they decide to jump in, they will discover that the others are already there. They will find that new previously unheard-of companies and brands ‘suddenly’ command a significant market share. Then they will crunch their numbers again, and find out that they need to significantly increase their planned investment to catch up. Those who can afford it may remain relevant.

Group 4: The Easy-Does-It (“Here’s a pretty catch-up website, and maybe an app or two!”)
This group is confident they’re taking the right steps. You can watch their channels live on your TV, your computer, your tablet and your phone. You can download the app. You can catch up with almost any programme broadcast over the past six months. They played with Periscope and Snapchat to show the world they’re cool with tech. Except they wrongly assume the answer solely lies in deploying technology, while the content, the consumer and the business model remain unchanged. Digital is something a few young people on one of the floors of the building take care of, while for everyone else it’s business as usual.

Group 5: The Paranoid
(“They’re coming after my audience!”)
They cannot sleep. They know their time is finite. They disagree on how long they can maintain the same unsustainable business model before making the transition to the new one. They worry about losses in the transition period. Meanwhile, the audience is fragmenting. The consumer is distracted across multiple screens. Technology is moving faster than the planners. The audience is experimenting. Their expectations of what and when and where and how they can consume content are changing. The advertiser has noticed, and budgets are shifting.
TV is wrenching itself from its linearity and being redefined by ever-changing technology in the hands of the consumer.

Which group are you in?

This post first appeared in BroadcastPro magazine here.

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When Hollywood is Not Enough – OTT Content in the Middle East

October 6, 2015 Leave a comment

The pure-play premium OTT market in the Middle East recently saw another entrant in the form of Starz Play Arabia joining the likes of Icflix, OSN Go and a bevy of telco offerings. Meanwhile, rumours abound of the impending arrival of Netflix and the launch of new broadcaster-backed offerings. This is all good news, as competition undoubtedly benefits consumers and drives innovation.

However, even at this early stage, it is becoming harder for services to differentiate themselves. Features such as HD streaming and multi-device support may have been enticing in the past, but they are now expected to be standard. Thus, the competing services have three primary competitive levers: price, content and convenience.

It is a safe assumption that a price war in a business that relies on volume rather than margin is a race to the bottom and best avoided unless one has deep pockets and a propensity to ignore commercial common sense. Inevitably, pure-play OTT services will converge around a similar price point or be ‘free’ as part of triple or quad play offerings.

Content, is of course, the weapon of choice in this fight. And here again, it is easy to default to the lowest common denominator: Hollywood. Yes, Hollywood content can serve well as a glamorous window display with big brand-name actors and titles, but its ability to sustain high growth in subscriber numbers in the Middle East is, in my opinion, doubtful for a variety of reasons.

One reason is the lack of scarcity. There is no shortage of Hollywood content on free-to-air channels. Beyond blockbuster movies, viewership levels are not as impressive as they used to be. US drama series and sitcoms, in particular, do not appeal to a wide segment of the population in the Middle East markets that matter commercially.

Another reason is the windowing structure imposed by the studios, which results in a very delayed arrival of titles onto the OTT platforms. This model is out of step with market realities, but changing it is not always easy, due to the need to protect the US market or other international distribution commitments. Thus, ardent fans of a particular title will watch it in the pay-window or download it illegally shortly after its US broadcast. For everyone else, the content is free on FTA channels.

Television ratings indicate drama is the most popular genre, and time and time again, consumer surveys show that Arabic is, by far, the preferred language for drama series to be watched in. Although dubbing might work for a Turkish series because the locations and actors don’t seem too distant, dubbing becomes much less convincing when the characters and settings are obviously foreign.

We come to the unsurprising conclusion that Arabic drama content is key to success. Even more alluring would be an OTT player’s ability to offer original content outside the Ramadan window. But simply taking a page from the book of Netflix and producing original content in sufficient volume to convince people to part with their money is not viable for all players. It takes significant production and marketing budgets to produce and promote content that appeals to the various markets within the Middle East.

Relying purely on library content is not a convincing offering for Middle East consumers. Licensing a first (Ramadan) or second (post-Ramadan) run of an Arabic drama series would allow OTT players to play their other trump card: binge viewing convenience.

An OTT player offering all 30 episodes of a drama on day one of Ramadan would create a new viewing experience for viewers. Similarly, offering exclusive Arabic dramas for binge viewing immediately after Ramadan would free viewers from the shackles of TV schedules. Since it is customary for licensors of first and second windows of Arabic drama to be granted a multi-year third run (library) window, an OTT player would still be able to maintain a broad long-tail offering.

The OTT player that can offer a large selection of exclusive first- and second-run Arabic series on multiple platforms, available from the first day of Ramadan or the post-Ramadan window for binge viewing, would certainly have a tempting proposition for subscribers in the Middle East.

This post first appeared in BroadcastPro magazine here.

Categories: content Tags: ,

The case of the Zombie channel

March 16, 2015 2 comments

In a recent report, the increase in the number of Free-To-Air (FTA) channels in MENA (to around 1200) was described as a “boom”. While “boom” is a correct label from a numerical perspective, the rapid rise in the number of FTA channels is not necessarily a positive development for the viewer. It is widely acknowledged that the advertising market is not large enough to sustain all these channels, yet more continue to launch. While in the short-term this increased activity will benefit satellite platforms and create jobs, it is a mirage of growth that does not translate into the long-term creation of value.

There are no issues when channels knowingly launch for noncommercial purposes and they factor this into their business plans. In this case, they would have allocated sufficient resources to create a high quality product for viewers. The issue is with channels that launch believing they will be profitable, yet quickly find that generating revenues is difficult. Many refuse to close down, perhaps due to ego, saving face, or misguided optimism, and instead focus on cutting costs beginning typically with manpower and content. Thus the job creation becomes job destruction and content budgets dwindle so that the viewer is left with a “zombie channel” that has a high repeat rate for low-end content that serves no purpose. These Zombies individually hardly have any impact on viewership, but collectively contribute to the constant fragmentation of audiences.

This problem is usually solved through a combination of channel licensing regulation, defining programming standards enforced through watchdogs, and the economic forces of free markets. The multi-country nature of the MENA region means there isn’t a single body that has true authority over the entire region, thus creating easily exploitable loop holes. In addition, regulatory regimes vary considerably by country in terms of the adequacy and transparency. Thus we are left with the hope that prospective channel owners spend sufficient time to understand the business they are about to enter before embarking on the relatively easy technical task of launching a new channel. Otherwise, they risk becoming like the investor who, when asking how to become a millionaire in horse racing, was told to “start as a billionaire.”

Categories: Media Economics Tags:

AlJazeera and ADM: Life after the Premier League Rights Saga

August 15, 2013 Leave a comment

The saga of the renewal of the Premier League television rights recently culminated with their award to Al Jazeera on an exclusive basis. As usual, the price paid has not been announced. Given the nature of the auction process and judging by its extended duration, it would probably be safe to assume the final amount is in the hundreds of millions of dollars.

If there is one thing that everyone agrees on, it is that the process took far too long. The result was announced roughly a month before the scheduled start of the 2013 season, leaving fans and subscribers confused as to how and where they will be able to watch the games. That the PL allowed the process to drag on for so long must imply that they reaped a financial benefit above and beyond what they would have gained by accepting the initial bids. Nevertheless, the proceedings did not help the reputation of the sports rights sales processes in MENA, which are in general quite ambiguous in nature.

Unless Al Jazeera has been quietly preparing for winning the PL rights, the short duration until the season’s kick-off leaves them with a considerable challenge. Undoubtedly, Al Jazeera will provide a high standard of coverage with a star line-up of pundits, presenters and commentators. If, as has been speculated, the PL has mandated that cards be paired with decoders, Al Jazeera has a limited amount of time to make sufficient decoders available in the market. Ironically, ADM’s decoders are compatible with Al Jazeera cards, but pairing will require the cooperation of ADM, which may be difficult to secure. There is a marketing challenge in defining and communicating pricing, availability and technical requirements to potential subscribers. Finally, there is a customer service challenge in signing up a significant number of new subscribers within a short period of time. The coming weeks will confirm whether Al Jazeera is able to meet these various challenges.

The exclusivity of the PL rights as awarded to Al Jazeera firmly answered the question of cooperation among MENA rights holders. Many speculated that ADM and Al Jazeera had drawn a line in the sand in the face of ever escalating rights costs. Indeed, had this scenario played out, it would have set the tone for a reduction in future sports rights values in the region. As it stands, future rights costs may rise sharply if ADM attempts to replace the PL rights with Spanish, Italian or UEFA rights as they come up for renewal in the coming years.

As many have commented, the costs of sports rights in the region are not commercially viable. Although I do agree, neither Al Jazeera nor ADM are naïve enough to think that they are purchasing assets to generate a financial return over a three-year period. Each has his own strategy and perspective and, in both cases, my guess is their reasoning extends beyond the commercial constraints of regional pay-tv.

Some have been critical of the rights owners for embarking on strategies that promote price hikes. I would agree that constant shifting between platforms is not conducive to long-term subscriber growth, but in the end sports rights are worth whatever someone is willing to pay for them. Incidentally, rapidly escalating costs for sports rights are not unique to the MENA region. The primary difference is that in most other markets, the bidders are driven by a commercial objective and operate within a market with sufficient scale to justify the costs.

For ADM, it must now of course determine the fate of its platform, which has hundreds of thousands of subscribers and represents a significant multi-million dollar investment. Most subscriptions will likely be expiring between August and December and ADM needs to offer its existing subscribers a viable alternative. It can of course shut down the platform and cut its losses, thus leaving Al Jazeera as the only viable buyer of international football rights in the region. Alternatively, ADM may elect to expand its HD entertainment offering to retain subscribers and gain new ones. Another possible scenario is for ADM to wait until major football and sports rights come up for renewal and attempt to acquire them. Each of these scenarios will have a significant impact on the pay-tv market in the region.

What next for Al Jazeera? Typically, pay-tv operators use sports rights to attract subscribers to a larger bouquet of entertainment channels with the aim of maximising revenues. So far for Al Jazeera, sports rights have been an end in and of themselves. After securing the rights for every major football tournament, will they focus on local football league rights? Or will they cast a wider net and seek to expand into entertainment? It would be an opportunity to create a compelling and complete pay-tv portfolio to entice a larger number of consumers at a lower subscription price point that Al Jazeera is clearly comfortable with. In comparison to the costs of sports rights, movie and entertainment channel rights in the region are a “bargain”!

(This post appeared in BroadcastPro Middle East.)

Contribute, don’t regurgitate.

September 25, 2012 Leave a comment

Imagine you are in a coffee shop full of people who may or may not know you. There is a rack stocked with very well-known newspapers and magazines. Every few minutes, you grab one of these titles, pick a headline, and read it out aloud so that everyone in the coffee shop can hear you.

What do you think the people in the coffee shop will do after about 10 minutes? My guess is the ones not interested will leave while the others will start picking out their own stories from the magazine rack.

Odd behavior isn’t it? You would never do this in real life would you? I am sure not. So why do people do this on Twitter and Facebook all the time? Pick any general subject (e.g. Tech) and look at your twitter feed. Almost everyone will be retweeting from the same four or five well-known sources. Some people seem to spend their entire day retweeting from a few sources. They don’t add an opinion or a perspective or a personal experience. This is akin to the person randomly shouting in the coffee shop. These people are usually the same ones who announce how many followers they gained or lost, or the ones who let everyone know their Klout score. They seem more interested in building a following than actually benefitting their followers.

There is an implicit contract between you (as a person or a brand) and your followers on social media platforms. They are giving you their attention, but in return expect to obtain interesting and relevant information from you. There are scenarios where retweeting/linking is useful: to curate for a specific subject from relatively unknown sources, or to broadcast regional stories to followers in another part of the world, or to highlight original contributions from other members of your network. Otherwise, you are wasting your time and your follower’s time.

So next time you want to retweet or link to a story as-is from a very well-known source, think twice and evaluate whether you can add context or perspective that will make it valuable.

Technology and the Rebirth of Creativity in Advertising

May 14, 2012 Leave a comment

The headline in the LA Times on Dish Network providing its customers the option to skip commercials (something possible on Youtube most of the time), further emphasizes the speed at which technology is advancing is faster than the speed at which advertising agencies are able to react. Consumers are increasingly getting the tools to choose whether they believe an ad is worth their time. If every consumer was able to skip any advertisement which they deemed irrelevant, boring, or pointless, the measure of the success of a particular advertisement becomes very binary: watched or not watched, relevant or not relevant. Obviously, this type of measurement is most suitable for web, mobile, or internet-connected TV sets. However, measurement is increasingly possible in the offline world: how many people scanned a QR code on a print ad? How many consumers typed in a coupon code on a newspaper ad? How many users visited a Url on a billboard? How many Groupon customers came back a second time after their first discounted visit?

As technology becomes intertwined with consumer behavior, Lord Leverhulme’s well known saying “Half the money I spend on advertising is wasted and the trouble is I don’t know which half.” will cease to be relevant. Every passing day increases our ability to measure advertising and decreases the uncertainty associated with it. This will be painful for some whose campaigns will be demolished by a lack of user response or engagement, but it will herald a golden age of creativity. It will challenge creative directors to not only create beautiful imagery, but to also understand the context, behavior, interests and reactions of consumers.

Technology is changing the nature and format of advertising. It will also change how advertising is judged and evaluated. The creatives who understand the impact of their work on the behavior and actions of the consumer stand to gain the most.

What will the Television watching experience be like in 5 years?

April 28, 2012 Leave a comment

I posted an answer on Quora.com recently in response to the following question:

Q. What will the Television watching experience be like in 5 years?
I sit on my couch with my phone in my hand and remote in the other, but still watch tv in the same way I did 15 years ago. With smart TV’s and users on the couch having smart phones, I imagine there is a lot of disruption and changes that will take place in this market.

A. “The passive lean-back experience at the heart of television watching has resisted many attempts to change it. It will remain at the core of watching and will not be replaced by viewers selecting the next video file every five minutes in the next five years. Even as digital video rises in advanced markets, television viewing is rising alongside it. The most evident support for this is that web players like Youtube and Yahoo are changing themselves to organize content into “channels” (sounds familiar?).

These days five years is too far out in tech terms to predict! However, there are trends that are influencing the mainstream television watching.

1) TV will continue to extend to multiple platforms: Tablets, consoles, web and mobile. This will make TV a more personal and portable experience since it will increase individual viewing rather than family-unit viewing. In Western markets this is already the norm, but in developing markets this will be a stronger influence.

2) Rise of the second screen and social communities: Consumers continue to multi-task while watching TV, but increasingly they will be looking at additional info to support their TV viewing. This will build communities around content in a new way that extends beyond broadcaster borders. TV has always been social and the subject of conversation. However, technology now means that the scale and reach of the conversation changes (from a few friends/colleagues to global discussions) and the speed of the discussion accelerates (from next-day to immediate).

3) Time-shifted viewing will dominate and begin to influence the broadcaster scheduling model and advertising formats. DVRs/ Network playback/ catch-up viewing online will encourage advertisers to focus on integration of brands within content rather than relying only on spots (but those will still be there in five years time).

4) New younger talent: New talent (actors/ writers) will reach the TV screen through discovery on the web (e.g. Youtube etc). Barriers to entry into the TV business for individuals will be lower. Some programs will be “hits” at a TV scale before they reach the TV screen.

The barriers to massive change in television watching are not technological but commercial and social. The technologies to change our tv viewing experience are already available but the entrenched advertising and subscription business models in markets like the US will continue to be a large hurdle against revolutionary change. On the social level, viewers still want to have a predominantly passive viewing experience rather than on-demand viewing. This may change as younger generations grow up without the habit of watching broadcast channels but five years is too soon for it to become mainstream.

TV watching will drastically change when someone figures out the perfect recommendation engine to line up programs selected from sources all over the web and at the same time untangles the complicated rights and window-release systems currently in place to free-up content while still able to finance its creation. But that’s a separate discussion altogether!

In summary, the TV watching experience will be more social, more suited to the viewer’s time, more integrated with advertising, more personal, more portable and will feature more on-screen talent.”