How worried should the region’s traditional broadcasters be about the rise of Internet TV?
By Laith Abou-Ragheb
The battle for viewers and ads is heating up between the region’s established TV networks and over-the-top upstarts like YouTube and Netflix, which are increasingly using the Internet to bypass traditional methods of broadcasting content. But how fast this shift is happening and what it means for the future of the industry depends on who you ask.
On June 21 last year, a staggering 92 million viewers watched Mohammed Assaf triumph in the final of MBC’s Arab Idol. That’s slightly more than the number of people in the entire Middle East who have access to the Internet today. MBC Group CEO Sam Barnett presented this stark comparison during a session on the future of broadcasting held in early June in Amman at the Arab Advisors’ eleventh Convergence Summit. “In truth, TV is the foundation of entertainment in the Middle East region,” he said. “Entertainment TV still packs a punch which the Internet doesn’t.”
Barnett also stressed sky-high viewing figures weren’t just the reserve of massively hyped “event” TV like Arab Idol. “On drama, we get those kinds of audiences each day,” he said, adding that no less than 17 percent of Saudi Arabia’s population regularly tuned into his network watch the Turkish soap opera, Laith wa Noura.
Despite the rise of social media, Barnett said traditional TV channels remained an unmatched cultural unifier in the region. “My take is that TV remains the touch point for a lot of the introspection, the focusing on key issues in emerging and transforming societies,” he said, citing how he believes satirist Bassem Youssef became much more of an influential anti-authority figure when he moved from the Internet to prime time TV. “When they tried to jam (his show), they jammed him on TV stations, not on YouTube,” Barnett said.
Furthermore, TV remains the world’s dominant advertising medium. According to Zenith Optimedia, it attracted 40 percent of spending last year, compared to the Internet’s 21 percent. This was mirrored regionally, with spending on TV ads estimated to be worth up to $2 billion annually, which was roughly double the amount spent on digital. So for Barnett, reports of the death of traditional linear TV have been greatly exaggerated. “I have to say that the quality (of programming) is up, the viewership is robust and it’s supported by powerful growth in advertising,” he said.
A Change is Gonna Come
Despite their solid standing with audiences and advertisers today, Google’s regional manager Mohammad Mourad said “incumbent” players in the industry would be unwise to dismiss the growing clout of Internet TV. “I really think there’s no immediate threat in the next year or two (to broadcasters). But I think in five years, it’s going to be completely different,” he said.
Mourad said he expects digital advertising in the Middle East to be worth around $1 billion with a matter of a few years as more and more people begin watching content on Internet-enabled devices. “The incumbents need to decide how they’re going to capture these users,” he said. Whether they want to or not, he believes all content producers will have to start deciding how to get their work online. “It’s a make-or-buy decision,” Mourad explained. “Do I want to go to YouTube, which is the number one player with 381 million views per day? Or do I want to build my own (platform)? Both are valid. Of course, it’s a much bigger capex to do your own.”
Serial tech entrepreneur and noted new media advocate Fadi Ghandour was also on hand at the session to warn traditional broadcasters not to rest on their laurels, particularly when it comes monetizing your content online. “Every incumbent, whether TV or print, needs to think about how they’re going to be delivering their content in the future,” he said. “The issues of ‘free,fwide’ ‘monetization’ and the ‘long tail’ are huge, because most of the content that’s going online today is free. So how are you going to monetize that?”
MBC is trying to boost its online presence through Shahid, the online catch-up service it launched late last year. The website currently attracts over 13 million monthly media views, making it the widest-used video on demand platform in the region and an integral part of MBC’s future. “I’m not going to dismiss the digital revolution at all, it’s extremely important and powerful,” said Barnett. “If consumers want to watch content on other platforms then we will provide our content on those platforms… As people start to use TV in more sophisticated ways, then we’ll ask our producers to respond to that, and I’m confident that we have a creative team that will do that.”
There’s a similar strategy at play over at Roya, the TV channel that’s been credited with shaking up Jordan’s once-stale media scene. It’s also embracing the opportunities offered by the Internet to distribute its content. The channel has eight YouTube channels and five Facebook pages. “New media has been a great support for our content on TV,” said Hala Zureikat, a media consultant for Roya. “We are very much interactive when we broadcast, since most of our programs are live broadcasts like talk shows, news and so on. We interact a lot through Facebook pages with the audience. So this wasn’t a threat to us; it was a great support.”
Hands Off, YouTube
But crucially, unlike Roya, MBC won’t be adopting a ‘create once, publish everywhere’ strategy any time soon. Some MBC shows, such as this Ramadan’s Saraya Abdeen, can cost millions to produce. Barnett doubts he would be able to continue making such grand historical epics if a hefty slice of its ad revenues went to YouTube. “Giving away half my revenue to be on a platform, when I can use my own platform and keep all of it, remains chapter and verse in the shorter term,” he said.“My take is that YouTube will have to address the fact that people want to watch professional content, and that’s what the sponsors want to advertise. And in fact they’re going to come back to us—the professional producers of that content—and we will be able to make our money.”
This worry over the cost of producing quality content for online audiences was echoed by Sylvain Attal, the managing editor of New Media for France 24. He said around 60 percent of the news network’s online content was viewed through YouTube, with the remainder streamed through France 24’s dedicated websites. While France 24 viewed its partnership with YouTube as important, Attal said it would unlikely be able to meet the network’s funding needs over the long-term in its current form. “We’re going to have very big difficulties to continue putting good content, honest and accurate on-the-ground reporting programs on YouTube if the share revenue is 50/50 or 60/40,” he said. “Of course, we have to discuss the matter with YouTube. But who is bringing the content afterall? We are bringing it.”
Then it was left to the session’s moderator, the General Manager of the Arab Advisors Group Jawad Abbassi, to give the linear versus nonlinear debate some perspective. “In the Gulf markets, there is now massive deployment of cable TV and fiber- to-the home which allows people to have no-linear ways of watching TV, such as video on demanding and time-shifting,” said. “But the vast majority of the Arab people still actually tune into very successful broadcast channels like MBC using free-to-air models.”
The consensus seems to be that traditional broadcasters in the region are in the strong position at the moment in terms of audience figures and ad contracts. Some networks like MBC are even developing their own online platforms to keep up with changing viewing habits. But will this still be enough to meet the very real challenge posed by YouTube and its multi-channel networks (MCN) like Maker Studios, which was sold for hundreds of millions of dollars to Disney earlier this year? There are even reports that FullScreen, another US-based MCN, will soon be sold to Hollywood studio Relatively Media for anywhere between $750 and $1 billion.
The Guardian’s veteran tech correspondent John Naughton perhaps summed up the long term existential threat facing the likes of MBC in an article he penned back in early 2012, a time when broadcasters in more mature western markets began feeling the Internet breathing down their collective necks. “Attention is now the really scarce resource in our information economy and competition for it is much fiercer than it was in the heyday of broadcast TV,” he wrote. “What’s more, it’s a zero-sum game. So if YouTube does indeed manage to increase its share of our attention by producing more compelling content, then something else will have less. Television executives, please note.”