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Posts Tagged ‘media’

In Search of A Sustainable Business Model

April 12, 2012 3 comments

(This is a copy of an article written for BroadcastPro)

On the surface, the free-to-air television sector in the Middle East is thriving. Viewing time is one of the highest in the world. Even in the turbulent political environment of 2011, research indicates that the advertising market has continued to grow. Hundreds of channels exist yet satellite operators can’t keep up with demand and continue to launch new satellites. International players such as Newscorp and Turner have made investments in Middle East media. The region’s population is growing rapidly and is very young by global standards, thus making it attractive for advertisers. The large number of broadcasters supports an eco-system of profitable entities ranging from international and regional production houses to infrastructure providers and media professionals.

In reality, a minuscule number of broadcasters are profitable. Ad figures are inflated by rate card monitoring that does not take into account regular heavy discounting. On a net basis, ad spend per capita is lower than global benchmarks. In the absence of a single regulatory body with authority over the many countries in the region, the advertising and broadcasting sectors are practically unregulated. In advertising, this has led to aggressive but not always transparent sales practices. In broadcasting, the lack of regulation has led to large discrepancies in the quality of content. Audience measurement is either non-existent or relies on antiquated methodologies.

The rapid development of satellite Direct-to-Home distribution, while a necessity in the past to avoid strict government control of the television sector, has come at a cost. Broadcasters and advertisers cannot target individual markets and therefore larger countries tend to get the lion’s share of television spend while local TV advertising budgets are diverted to newspapers.
Despite the lack of profits, new channels continue to launch, at times as misguided commercial ventures but mostly in pursuit of non-commercial goals. This is fine in a normal free market scenario, but with the lack of audience measurement and no regulation of the claims channels can make or how their advertising inventory is sold, the market becomes distorted. Its overall value is diminished as too many players are left chasing an undervalued advertising spend.

There is no short term solution or quick fix for the various issues afflicting the TV sector in the Middle East. Many are regulatory and related to the multi-country footprint of the sector and therefore cannot be easily resolved. Ultimately, the current key players in the Middle East’s television industry including broadcasters, advertisers, media buyers and sales representatives, are best positioned to improve its prospects by taking pragmatic steps to increase revenues, reduce costs, and support transparency.

Key actions include:

All parties should support the introduction of audience measurement tools. The UAE is the only major Middle East market that is close to launching people meters.

Broadcasters can increase their revenues if they work closely with advertisers. The evolved advertisers need to expand their arsenal beyond the 30-second spot to cut through the clutter. Yet currently the content development process at broadcasters barely involves their ultimate clients. If more budgets are to be allocated to TV, broadcasters must reach out to advertisers and seek to develop content that entertains audiences while integrating brands in a seamless non-intrusive manner.

Broadcasters should begin to shift their mindset to that of content owners and capitalise on new platforms to increase revenues: IPTV platforms are emerging in Saudi and other countries. OTT is a nascent but promising sector. Satellite operators are considering spot beams. YouTube viewing on mobile is one of the highest in the world. Broadband penetration is growing rapidly in key markets. All these platforms provide opportunities for content owners to create more relevant localised content, extend television brands onto the web and mobile, generate syndication and licensing revenues, or explore new advertising mechanisms.

Broadcasters can reduce content costs by sharing productions across markets or acquiring rights for smaller geographic territories. The pan-Arab channel is a convenient myth and very few channels can be both popular with audiences across all countries and be able to generate revenues from those countries.

Advertisers too must play a role in rewarding broadcasters that create premium content with verified audiences. In too many instances, the short term focus on reducing spot rates has led to a negative ripple effect across the advertising value chain.
The TV sector in the Middle East must repair its business model if it wants to sustain itself in the long term and attract investment on a commercially viable basis. Eventually, internal voluntary reform, if not exercised, will be replaced by externally imposed regulatory reform.

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Media and Telecom, convergence?

August 2, 2010 Leave a comment

I went to a conference recently that was meant to focus on the intersection of media and telecoms. The list of speakers was full of A-list names from the top of telecom organisations so I was looking forward to it. After a coupe of hours of listening though, it was very clear that the conference should have added a question mark at the end of its title. The so-called “convergence” was not apparent. Telcos spoke their own language, which few media people could relate to. The elephant in the room was the fine line separating a telco from becoming a broadcaster or a “dumb” pipe and neither side was comfortable with either scenario. We still have a long way to go to understand each other’s priorities and drivers.

Categories: content, Technology Tags: ,

Is broadcast media in the Middle East doomed?

April 30, 2010 4 comments

Every time I attend MIPTV or MIPCOM, I am enthused by the dynamic nature of our industry around the world. Every “constant” is changing at the same time: audience behaviour, business models, media consumption habits, viewing technology. This is a time of great disruption but great opportunity and is very exciting.

Then I return to the Middle East, and it feels like we are dinosaurs happily going about our daily grazing while oblivious of the approaching asteroid. We are still debating twentieth century concepts while the world has surged past us. We don’t have a real understanding of our audience due to a lack of the most basic measurement tools. Our business model is broken and means no media company would exist today if it hadn’t been supported by a government or a wealthy individual. We have a huge mobile base, yet all we seem to do with it is generate tons of profits for telcos from good old voice and sms sending. Satellites are a boon to cheap distribution but at the same time dilute the boundaries of individual cultures and oversimplify content development. Producers are too busy sticking to the tried and tested 30 episode Ramadan cash cow. The web and mobile are still seen as “novelties” while other markets have placed them at the heart of their business strategies. We are losing the connection to the vast majority of our young population as their attention fragments either to politics (where else do news channels feature so prominently in the viewer psyche?), corners of the web or chatting to break away from their daily monotony. There is innovation, but in pockets not proportional in size to the population numbers and unsupported by a healthy eco-system of financial backers or business support systems.

How to change this before it is too late?