The Arab MENA TV and video market have shown significant transformations over the last few years. The footprint of traditional pay TV accesses has stabilized while video streaming is skyrocketing in the region, both in value and volume. 2022 thus marks the first year where video subscription and advertising video streaming services revenues combined surpassed the pay-TV market in value.
Of course, the region is marked by high disparities between markets, with a strong geographic breakdown between the Maghreb, Levant countries and the Arabic Gulf. In GCC countries, we observe a strong penetration of premium services both for connectivity and entertainment, higher ARPUs, and a large adoption of connected devices in the household. Some of these markets also have unique demographics, like Kuwait or Qatar which are inhabited by a majority of expatriates and non-nationals.
To be able to respond to each country's needs, local media and entertainment companies are adopting differentiated market strategies. Pricing is one lever on which service providers adjust their offers to local circumstances: since Disney+ launched in the region last June, its service is priced around 8 USD in Saudi Arabia (29.99 SAR) but only around 3 to 3.5USD in Maghreb (399.99 DZD in Algeria, 33.99 MAD in Morrocco, 3.49USD in Tunisia). Another key differentiator for local implementation is striking distribution deals with telco operators. In markets where mobile connectivity is the main internet access, deploying mobile-focused entertainment offers is crucial. At end of 2021 for example, Shahid launched cheaper mobile plans in Morrocco and Tunisia, with a free offer for new subscribers on its local partner's footprint, Orange.
Due to an overall lack of fixed infrastructures in Maghreb and Levant, deploying TV and entertainment services on telcos' fixed networks has proven difficult. Meanwhile, if DTH services remain the best way to offer high-quality TV and entertainment services in some parts of the region due to its geography, the high prices of premium satellite TV have been a deterrent for lower ARPU markets. Thus, pay TV penetration remains significantly low outside of GCC markets.
The subscriber count of DTH and IPTV combined in Arab MENA is capping at around 4.4 million households. Meanwhile, fixed pay TV ARPUs took a significant hit due to growing competition from cheaper OTT services. The monthly ARPU of paid satellite TV services dropped by one-third in the last 3 years alone. The stagnation of traditional pay-TV access in volume and this drop in revenues has been mostly impacting OSN and beIN, the two historic satellite TV providers in the region. Both have been pushed into transitioning towards OTT services, with a strong focus on their streaming products, respectively OSN+ for the first one and beIN Connect and TOD for the latter.
Shahid, the streaming platform operated by Saudi broadcasting group MBC, took the lead in the subscription-based video streaming market in volume in 2021 already and kept on expanding its footprint over the course of this year, thereby widening the gap with its competitors. In 2022, SVOD made up about two-thirds of the group's revenues for paid TV and video services. The recent announcement of the extension to 2026 of the content distribution partnership between MBC and American media giant Warner Bros. Discovery should also ensure Shahid's spot in the sun for the upcoming years, notably with the arrival of more kids content on the platform.
The battle to gain attention from viewers in the region is increasingly driven by content. While premium satellite pay TV providers were the historic gateway for premium and international content, the battle for IPs is currently remodeling the whole market. OSN+ was launched with the promise of aggregating highly valued international content, offering among others movies and series from long-lasting partners such as HBO, NBCU and MGM. But following the international turmoils around big studios' mergers and acquisitions, it remains unclear how their content proposition will be affected in the short term. OSN announced back in 2020 that it would focus on original productions and Arabic content and officially kicked off OSN+ Originals in 2022 to protect its streaming catalog and secure its market. Meanwhile, beIN is reshaping its streaming offer with the rollout of TOD, a new platform launched in early March. If its first focus was put on entertainment content, it evolved throughout the year towards more sports content, propelled by beIN's rights ownership. The popularity of the service culminated in November with the distribution of the FIFA World Cup which turned TOD into the number 1 media app across the region during the 2 weeks of the championship.
Simultaneously, another significant pay TV player made a significant move towards streaming and content securitization. In March this year, e& Group (formerly Etisalat) and Abu Dhabi-based investment fund ADQ acquired a majority stake in StarzPlay Arabia, a platform backed up by Lionsgate's content - its founder, to drive new synergies between the streaming service and E-Vision, the media and entertainment branch of e&.
Other big contestants in the region on the streaming space are still global giants. Netflix still has a stable footing in the region despite suffering a stunted growth in subscribers during 2022. Youtube is still the biggest free video service in volume and value. It generated two-thirds of all AVOD revenues in Arab MENA in 2022. But its market dominance is expected to slowly decrease to leave more space for local free and freemium platforms. Driven by a fast-growing penetration of connected TV sets, especially in the Arabic Gulf, advertisers and publishers alike are starting to eye the opportunities of addressable TV and CTV advertising.
With a clear market shift towards pure OTT services, the entertainment industry in Arab MENA is at a crossroads. Fixed TV services experience a contraction of their growth opportunities and turn towards content aggregation to secure their markets. Simultaneously, the fierce competition among an ever-growing number of streaming services is creating incentives to work more than ever with locally well-established distributors, thus pushing for more synergies across the whole value chain. ARPUs have been steadily decreasing, pushing all service providers into a fierce race to rapidly expand their footprint, but also enabling them to become relevant to a whole new segment of the population that was until now deterred to subscribe to premium content services.
The new focus put on freemium and advertising-based video services should enable an even larger audience to access those services. That is at least the challenge that several local giants are trying to meet. Shahid just announced the expansion of its AVOD offer and launched 21 FAST channels last October to capitalize on advertising revenues on its streaming assets. Parallely, StarzPlay launched its first ad tiers on selected segments of its content last year.
Ophélie Boucaud | Senior Analyst at Dataxis
This research highlight is based on our data coverage of TV and OTT markets in Middle-East and North Africa. Please contact us to get a demo and see the depth of our service.