The Middle East and African Satellite Market

The total population of the Middle East and Africa which is 412 million and 1.3 Billion respectively, represent a very diverse group, from super-wealthy petrostates to some of the world’s poorest countries. Cultural influences are varied, contributing to a broad variety of content. With respect to the satellite market, Free-to-Air (FTA) and Direct-to-Home broadcasting (DTH) is relatively stable as compared to other regions of the world, with the Middle East & North Africa primarily being FTA, and Sub-Saharan Africa primarily being DTH. 

 

Although the entry of Netflix in the Middle Eastern and North African market in 2016 has increased the popularity of Over-the-Top (OTT) content, the penetration of OTT players is still low in this region. The Middle Eastern and African countries remain a good and stable market for satellite operators. Especially as the countries like Jordan, UAE, Lebanon, etc. are now planning to invest in building 4K broadcasting infrastructure. Therefore, satellite operators have good of opportunities to expand with new technologies in this emerging market.

 

Market Overview

 

Eutelsat is by some margin the market leader, with Intelsat, Nilesat, Arabsat, Turksat, Es’hailsat, SES, Spacecom and Yahsat also having a good presence in both the Middle East and Africa. Even though foreign satellite operators like Eutelsat, Intelsat and SES have close to 60% of the market share, the regional operators like Arabsat, Nilesat, and Turksat too have more than 30% of the market share collectively. Eutelsat provides the largest amount of HD content that is 378 HD channels across both the regions. The Eutelsat and Nilesat operate two of their satellites Eutelsat 7 West A and Nilesat 201 at 7 degrees west. This is one of the lucrative spot for satellite consumers as most North African and Middle Eastern nations are located in and around this orbit slot. Therefore these satellite operators have an added advantage to grab most of the customers

 

One common thing that binds both the Middle Eastern and North African region is the prominent use of the Arabic language. While the Sub-Saharan Africa is influenced by the European languages. Therefore, the content producer and distributors in the European region can also venture into this market as both Arabic and European (French, English, Portuguese, etc.) languages are common in this region.

Satellite continues to remain the strongest mode of content distribution in the region, with 93% total market share, despite the accelerated uptake of IPTV and streaming services in the Middle East and North Africa (MENA), according to a market study undertaken by Arabsat in conjunction with Ipsos in 2020. 

 

The DTH and Distribution market has a stronghold in the Middle East, North Africa and Sub-Saharan Africa. There are more than 10 DTH service providers in this region. OSN, DSTV Africa, Noorsat, BeIn, and IRIB are some of the well-known satellite content providers. The HD content services are still not provided to many of the countries. BeIn, D-Smart, DSTV Africa, and Digiturk provide the highest number of HD channels in the region. Considering the penetration of foreign companies, China is becoming more dominant in Africa. During the 6th Ministerial Conference of the forum on China-Africa Cooperation (FOCAC) in 2015, the Chinese President Xi Jinping, announced an annual financial commitment of US$ 60 billion to develop infrastructure in Africa.

 

Key Market Trends

 

The satellite broadcasting market in the Middle East and Africa is very much stable and is expected to grow with the incoming HD and UHD services. One of the strong reasons that this part of the world is heavily consuming satellite content is because of its developing status in the telecom and media sector. IPTV is one of the alternatives in the Middle Eastern countries, but satellite TV remains at the core of the regional content and video market. Although many African countries are now developing appropriate infrastructure for video content delivery, the hefty cost of satellite equipment is still an issue for many African communities. Therefore, China’s success in this region is also because they offer DTH hardware equipment with price as low as USD 15. Whereas, other DTH service providers used to charge more than USD 50 in the African region.

 

Comparatively, Middle Eastern population has the edge to overcome price barriers due to its natural resource reserves, combined with heavy domestic and foreign investment to achieve developed nation status. UAE, Kuwait, Jordan, Saudi Arabia, etc. are some of the well-known satellite content consumers. Therefore, the Middle East is set to grab the OTT trend much earlier as compared to Africa and Sub-Saharan Africa. And satellite operators should start implementing smart strategies to keep a stronghold on the satellite TV customers in the Middle East.

Considering the trend of HD and UHD content, both Middle Eastern and North African countries are currently undergoing a change from analog to digital. This shift in the technology is set to change the landscape of satellite broadcasting market. Intelsat is one of the operators to target this segment of change, especially in Africa where the majority of the people are still viewing SD channels. To benefit from this digital technology, two Kenyan media companies Nation Media Group and Royal Media Services, formed a consortium, Africa Digital Network Limited (ADNL). In 2017, this consortium decided to utilize Intelsat’s DTT to serve a maximum number of East African countries with a special focus on remote and rural areas. This collaboration between satellite operators and service providers is setting a new trend in East Africa to rapidly the digital solutions. And this further will lead to an expansion across Africa, which will ultimately pave for more satellite service providers in this region.

 

The Middle Eastern market is dominated by FTA and DTH broadcasting. But the Middle Eastern market is evolving rapidly as the new technologies are now dominating the media and broadcasting segment. In 2018, Turk Telekom was the first operator to utilize Media Transport Network (MTN) infrastructure for live feeds over the fibre network. The company utilizes this technology for sports broadcasting as it eliminates latency and adverse weather conditions for satellite-based connectivity. On the other hand, SES and YahSat launched Yahlive in 2011 with an optimize the reach of HD content across the Middle East and North Africa. Yahlive currently serves 13 million satellite TV homes, with the majority of the households from Morocco, Tunisia, and Algeria. SES is well known for its HD and UHD solutions in the European and American continent. And now with Yahlive, the company is expecting a two-fold growth in the HD content delivery across this region.

From this overall scenario, it is right to say that partnerships and international collaborations are fueling the growth of satellite broadcasting services in the Middle East. While in North Africa, the regional and international satellite players are still dominant swinging with a wave of digital transformation across the continent. The entry of Chinese company in the Sub-Saharan African will help to diversify the region with international players. And the growing popularity of OTT and IPTV in this region is still not a big threat to the satellite sector. But a prior readiness in developing smart solutions and taking over OTT platforms is something that satellite operators should focus in the coming years.

 

Impact of OTT and IPTV

Pay TV revenues for the 20 countries in the Middle East and North Africa region fell by 14% between 2016 and 2020 to US$ 2.74 billion. Revenues will continue to fall slowly - to US$ 2.52 billion in 2026. The 2026 revenues will be 23% lower than 2016 according to Digital TV Research.

 

Currently, OTT and IPTV services are not much popular in Sub-Saharan Africa as compared to Middle Eastern and North African countries. One of the reasons is the high cost of internet data. But as the telecom and media sector is rapidly developing in this region, the data prices may drop in the future. This will ultimately pave for the OTT and IPTV services. OSN is one such player in the Middle East to provide IPTV services. In late 2018, OSN signed a deal with Huawei to offer IPTV services in countries like UAE and Saudi Arabia. While in Africa, Showmax is already dominant SVOD player. Currently, Showmax has 6.6 million subscribers in South Africa. The company’s biggest competitors in South Africa are Netflix and Amazon Prime. Both Netflix and Showmax offer a basic monthly subscription for USD 7. Therefore, the cost is not a competitive factor, but the African audience-oriented content is the baseline to attract more customers in Africa.

 

iflix, is one of the popular Malaysian company specializing in free as well as SVOD services. In 2017, the company expanded in Middle East under a joint venture, iflix Arabia, with investment backing from a Kuwaiti telecommunication company, Zain Group. While in Sub-Saharan Africa, the company provides IPTV services under Kwesé iflix, a joint venture with Sub-Saharan sports broadcasting company, Kwesé sports. Due to these foreign collaborations, OTT is slowly becoming popular in the Middle East, North Africa and Sub-Saharan African. But the international partnerships are also ensuring the growth of satellite TV in Africa. In May 2019, Chinese Rocket Company and Ethiopia Space Science and Technology signed an agreement to build broadcasting satellite. The agreement aims to cover most of the remote Ethiopian population. Able Wireless, a Kenyan OTT operator currently provides services to more than 5,000 homes with prices as low as USD 5. The OTT market in Africa is growing but at a very slower pace. Therefore, traditional TV consumption remains main source of entertainment for the African audience.

 

In the Middle East, illegal consumption of the satellite content is one of the biggest issues from past one decade. Especially UAE, where DTH has a stronghold in the broadcasting segment. The country’s major workforce involves Indians. And with the launch of Tata Sky in mid-2000’s created a somewhat negative impact on UAE’s DTH market. As the Tata Sky utilizes satellite capacity from ISRO’s INSAT-4 and GSAT-10 satellites, the satellite signals are also very well received in the neighboring countries. Many Indians were caught while illegally transporting Tata Sky equipment’s from India to UAE. Therefore, UAE government regulated transport and followed various protocols to check the Indian luggage on UAE airports.

 

In 2014, MENA Broadcast Satellite Anti-Piracy Coalition was established to ban the illegal use of satellite content. Moreover in 2018, this coalition also banned 22 illegal TV channels that were broadcasting content via satellite. In spite of these efforts, the illegal satellite content still makes its way to Middle Eastern market. For example, BeIN Sports is a recent victim of pirated live sports broadcasting. A pirated platform called, BeOutQ, broadcasts illegal live sports video content via on BeIN Sports channel. And this situation has affected the whole sports broadcasting chain, such as reduction in selling legal rights to channels as well as affecting the overall image of the sports broadcasting companies. BeIN fighting this piracy issue from past 2 years, but still BeOutQ is unaffected even after the strict broadcasting regulations implemented by the Arab nations. On the other hand, in 2018, total 2.7 billion downloads of pirated satellite content were recorded in the Middle East. Therefore, the countries like Saudi Arabia and UAE, which are the strong economic pillars of Middle East, should roll out very strict regulatory framework for both satellite and OTT companies. As it will help to keep up the sustainability and integrity of the media and entertainment industry.

 

The growing popularity of OTT is certainly going to impact the satellite operators and service providers in this region. But as the development of infrastructure in various segments is increasing, many players like Netflix and Showmax will carve a way into this market segment.

 

Key Takeaways 

 

Looking at the OTT scenario of Middle East and Africa, Satellite TV market is set to be flat in the coming years. But as the video market is evolving, satellite operators should also run with the time to deploy some creative and innovative solutions for the Middle Eastern and African video market. Following are the key takeaways for the satellite operators from regional OTT companies:

 

• Identifying the consumer needs: The meaning of this strategy is that if satellite TV is not attracting the consumers then start reinventing the video broadcasting by identifying the regional and international reach of the content to the specific region. This may not increase the overall subscriber base but might encourage the growth of SVOD content on DTH platforms.

• Fill the Gaps: The OTT players like OSN and Huawei are filling the technology as well as international content gap in the Middle Eastern and African region. Satellite operators should now focus on deploying 4K, Multi-screen and Multi-cast solutions in this region. Especially in Middle East, as countries like UAE and Oman have already started providing 4K TV services. This is one of the important step as it will help the satellite operators and service providers to match up the video market competition with the OTT players.

• Find the right partners: No matter how huge video market competition is, both Middle Eastern and African market are evolving mainly due to foreign partnerships. Satellite operators have this opportunity to collaborate, partner or acquire the relevant content distributors or the movie studios to take over the OTT market in the Middle East and Africa.

 

Conclusion

 

Globally, the Middle East and Africa market may contain some of the best opportunities for satellite broadcast, in spite of challenges. As the population is still very much dependent of traditional TV rather than any other video consumption mode. Following are certain aspects that both satellite operators and service providers should keep a close eye to expand their reach to the maximum number of customers:

 

• Take advantage of developing Technology Media and Telecom (TMT) infrastructure and accordingly develop video solutions specifically targeting countries like UAE, Saudi Arabia, Kuwait, Morocco, Tunisia and Algeria.

• Overlook the need of the regional audience. Showmax is an example that a regional video service provider can be a great competitor, if it knows what kind content is needed to be delivered to the respective audience.

• Deliver HD and UHD solutions by amplifying partnerships with local or regional decoders. As both Middle Eastern and African audiences are not served full-scale HD content, this is the right time to increase the presence of satellite solutions in the market.      

--------------------------

Omkar Nikam is an independent space and satellite consultant based in Strasbourg, France. He has eight years of experience in technology and business consulting. He is also the EMEA correspondent for Satellite Markets & Research, USA. Omkar specializes in market research, analysis, and consulting services for several space and satellite market verticals. He can be reached at: www.oknikam.eu