With the huge amount of attention given to High Throughput Satellites (HTS), Low Earth Orbit (LEO) constellations, and NewSpace, it is easy to forget that the bread and butter of the satellite industry remains video broadcast, with this accounting for just over half of satellite industry revenues at year end 2017, and over 1800 new channels to be added within the Middle East and Africa (MEA) over the coming decade. The MEA region has recently received much press coverage related to the video markets, with news being both good and bad. When looking at these markets, there is a very clear difference between Middle East and North Africa (MENA) and Sub-Saharan Africa (SSA), with these two regions having seen very different types of development of the video market, with quite different prospects moving forward.
MENA: Bifurcation and Piracy
MENA has traditionally been a region dominated by Free-to-Air (FTA) TV stations, with pan-regional Arabic content being the norm. This has changed significantly over the past 5 years, with pay TV platforms such as beIN (Qatar) and OSN (Dubai) targeting the wealthier regions of MENA with some success, with each believed to have subscriber numbers in the low single-digit millions, at Average Revenue Per Users (ARPUs) of around $20-30 per month. Relying on a variety of premium content, and a large number of High Definition (HD) channels, these two platforms have revolutionized the MENA broadcast market, creating a pay TV business model that works. Both platforms have larger ambitions outside of MENA, although beIN has so far been the more aggressive of the two, broadcasting exclusive sports content to many parts of Asia (both developed and developing). These premium TV platforms have had the most success in the wealthy regions of MENA and amongst expat communities, with subscribers tending to be concentrated in the Gulf Cooperation Council (GCC) countries.
Despite channel counts and subscribers being on an upwards trend, premium platforms – most notably beIN – have been under attack recently by the continuing problem of pay TV: piracy. In an interesting instance of politics getting involved in the satellite pay TV market, beIN has recently been coping with illegal re-broadcasts of its content from a platform called beoutQ. This has involved beoutQ rebroadcasting beIN live sports content on a 10 second delay, with beIN claiming that the broadcast is coming from Saudi Arabia, and being carried on ArabSat satellites. The piracy has been going on for some time, with the 2018 World Cup, 2018 Champions League, and other expensive and exclusive content being illegally re-broadcasted on beoutQ. While there isn’t a set price for beoutQ content (it is pirated content, after all), sources have indicated a price of $100 per year, around a third of the price of a beIN subscription. While this isn’t believed to be creating a life or death situation for beIN, this issue is significant in its extreme reach (the entirety of MENA), and also its boldness.
Outside of pay TV, the MENA video market maintains a large number of FTA channels, although these channels have seen relatively less growth lately. Due to a large number of these channels being financed by state funding, which is tighter now due to lower oil prices and a general decline in the value proposition of ad-based TV content, these channels are seen as being in terminal decline in MENA. With that said, there remains some positive growth in niche markets, such as domestic content in countries like Sudan, or the broadcast of ethnic content across MENA. For example, Turkish content has become very popular throughout the entirety of MENA, leading to organic channel growth in this regard.
Sub-Saharan Africa: Growth from Several Sources
The Sub-Saharan African broadcast market has long been dominated by DSTV of South Africa, and to a lesser extent, China’s StarTimes. These two companies remain the biggest platforms in the region by far, but recent years have seen more regional-level, but also some cases country-level content entering the market, with this growth boosted by additional investment from China.
Fairly established platforms such as Zuku (in Kenya) have been joined by newer platforms such as Kwesé TV, the latter being launched last year to cater to Ghana, Rwanda, and Zambia. This has also been supplemented by an increase in national-level FTA channels in some countries, such as Ethiopia and Nigeria, both of which are home to large populations which are spread over relatively large land areas.
In addition to these platforms, China has also been trying to increase the penetration of satellite TV in Africa through its 10,000 villages program, which aims to connect 10,000 villages in Sub-Saharan Africa to satellite TV through the reach of StarTimes. This is expected to lead to organic channel growth in Standard Definition (SD) channels, due to an increase in the total number of viewers on these platforms. This may also lead to generally deeper penetration of satellite TV into the Sub-Saharan African market, given that many of these villages are currently not receiving satellite TV signals.
Bottom Line
The Middle East and African satellite TV markets are diverse, with the MENA market having two distinct sub-markets, and the Sub-Saharan African market having several distinct sub-markets. With that being said, recent developments in both regions have generally been positive, with an increasing awareness of satellite TV and with generally increasing channel numbers throughout both regions.
Moving forward, channel numbers are expected to continue to increase, however challenges will remain. Piracy, particularly in MENA but also very much in SSA, is a key issue still, and macroeconomic factors such as oil prices (or in the case of SSA, natural resource prices more generally) have made government-funded channels more difficult to justify. At a time when the satellite industry is being dominated by talk of HTS and the next generation of satellite technology, it is important to remember that video broadcast remains the industry’s bread and butter, and that the MEA region remains a strong market in this regard. VS