The silver bullet for MENA HDTV

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Pay TV services in the MENA region are still yet to achieve double-digit penetration.

Growth earlier this decade was checked by the explosion of the FTA sector. On the face of it, the regional pay TV market is simply not strong enough to drive HDTV viewership. However, one event in 2006 electrified the MENA pay TV market and set a worldwide precedent.

For many, being provided access to World Cup TV broadcast coverage is considered a basic human right - the TV equivalent of food. In 2006, ART did the unthinkable - they successfully encrypted it. Initially there was outrage and disbelief, but this quickly turned into a buying frenzy. ART's subscriber base more than doubled with over a million new subscriptions in the six weeks leading up to the knockout stage.

Unfortunately for ART, the World Cup only lasts for a month. Despite attaching the games to a 12 month subscription, they were unable to convert the surge of new subscribers into long-term customers.

By June 2007, when ART's World Cup subscribers were coming to the end of their 12-month contracts, the competition amongst regional networks for programming rights had reached epic proportions.

The most significant development was FTA network Al Jazeera's move into the pay TV market following its acquisition of the (for a record sum) rights to the Italian and Spanish football leagues and Formula 1.

Al Jazeera's non-financial agenda was underlined by their annual subscription - the price of a smart card.

Showtime, facing stiff competition in movies and series from FTA giant MBC, also stepped into the football rights war and acquired EPL for an estimated $120m.

ART was left with the UEFA Champions League - which it lost to Al Jazeera the following year for a reported $200m.

These bidding wars show no signs of stopping: both the regional FTA and pay TV networks have seemingly bottomless pockets when it comes to programming.

There have been merger attempts in the pay TV industry, but the participants consistently fail to agree on valuations.

In this hostile environment, strategic long-term developments cannot take place, so satellite TV as a whole gradually stagnates and weakens. In the coming five years, pay TV over fibre and DTT networks will become more accessible, but the channels they offer mirror those already available on satellite networks.

HDTV provides the much-needed differentiator: given the choice between SD over satellite and HD over fibre, consumers with 42-inch LCD screens will start to make the switch away from pan-regional satellite TV.

Nobody in the pan-regional broadcast industry stands to gain if HDTV over satellite fails.

The only way it will succeed is through cooperation. Effective packaging and marketing of World Cup 2010 could roll out 500,000+ HD-capable MPEG4 boxes, but premium HD content must be available after the end of the competition. This requires commercial cooperation between ART, Al Jazeera and others.

Through cooperation on HDTV, the World Cup could serve as a catalyst to bring the regional pay TV industry out of its malaise.

The barriers to cooperation are not confined to egos and rights negotiations. There are technical hurdles as well, such as ART's move to Viacess encryption - away from the Irdeto system currently used by the other pay TV operators. These issues are complex, but surmountable if the parties work together now to solve them.

HDTV is becoming the worldwide standard. It has been overlooked by regional broadcasters and they need to wake up fast.

It's not enough simply to launch HD channels: MPEG-4 STBs need to penetrate the market. The only way to achieve this is through compelling Pay TV.

World Cup 2010 could bring 500,000+ HDTV viewers to the region, breaking the seal on the market. But ART alone does not have sufficient premium programming. For HDTV to succeed, regional content owners need to cooperate.

Time is short. Unless this opportunity is seized, satellite HDTV and ultimately pan-regional TV itself will be usurped by new technologies such as IPTV.

Nick Grande is the managing director of ChannelSculptor, a strategic consultancy working on behalf of regional and international television businesses. He has previously been employed in senior executive positions with MTV Arabia, Showtime and MTV Networks Europe.

For further information relating to ChannelSculptor, you can contact Nick at i This email address is being protected from spam bots, you need Javascript enabled to view it .

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