The GCC video industry, comprising free TV, pay-TV and online video, will generate revenues of $1.6 billion in 2020, representing a 13 percent contraction with deep declines in TV advertising and subscription only partially offset by the significant growth of online video, according to new research.
According to a report by Media Partners Asia, Covid-19-related macro issues have exacerbated headwinds across the TV sector in the region.
It said a rebound is expected in 2022 but the TV industry will continue to face secular challenges in the future while OTT video services will continue to proliferate as platforms reposition and reinvent.
GCC video industry revenues are forecast by MPA to increase to $2 billion by 2025, a compound annual growth rate (CAGR) of 5 percent from 2020.
The research said online video will surpass TV to account for the lion’s share of total video industry revenue by 2025 with both pay-TV and free TV in secular decline.
Within the GCC, Saudi Arabia and the UAE will continue to contribute about 70 percent to pay-TV and online video revenues in aggregate by 2025.
Commenting on the findings of the report, MPA vice president Aravind Venugopal said: “The GCC’s vibrant and highly competitive video ecosystem has seen some significant changes in the past few years. Online video services continue to grow, driven by low-cost pricing, telco partnerships, including hard bundles, and the availability of premium local and global content online, including increased investment into exclusive originals.
“Market consolidation is also likely as the GCC region will be unable to support 15+ platforms with many competing in the same customer segments. New entrants into the market such as Disney+ Hotstar and HBO Max, could provide further impetus to industry growth, competitive intensity and consolidation.”
He added: “Meanwhile, the slow pace of innovation by pay-TV operators combined with high prices of services (versus SVOD) and the proliferation of broadband have contributed to the decline of pay-TV. IPTV has maintained subscriber growth, driven primarily by hard bundled triple-play services. However, as telcos re-examine their cost structures and investments in content and platforms, there remains an impending threat of the breaking of the hard bundle, which could further endanger pay-TV.”
As platforms seek to further expand their customer base and drive consumption, investment in Arabic originals has become a key battleground, he noted.
While the Covid-19 pandemic and the economic crises in the region have impacted production activities, MPA forecasts that productions will return to normalcy by Q1 2021 as economies recover and new content production hubs such as the UAE, Saudi Arabia and Jordan are established.
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