Du eyes movie deal with US studios

Du, the UAE’s new telecoms operator, is in talks with a number of US film studios over the launch of the region’s first movie on demand service.

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By  Richard Agnew Published  March 5, 2006

Du, the UAE’s new telecoms operator, is in talks with a number of US film studios over the launch of the region’s first movie on demand service. The move, planned for later this year, will allow customers to download films over the internet, with Du splitting the revenues with movie producers such as Paramount and Time Warner. It forms part of the firm’s plan to compete with incumbent telco Etisalat and its cable television company E-Vision. Du initially intends to target customers it inherited through its recent purchase of DIC Telecom, which provides television, phone and internet services to several residential developments in Dubai. “For the homes we reach today, the platform is there,” said Ahmed bin Byat, chairman of Du’s parent company, EITC. “We are just concluding the content provider agreements. Before the end of the year, we will be able to provide video on demand services.” Analyst group Jupiter Research says the global market for movies on demand will reach over US$600 million this year, as media and video rental firms attempt to cut down on illegal downloading. However, the service has yet to be offered by any of the Middle East’s telecoms and television companies. According to bin Byat, Du’s users would be able to buy movies shortly after their release in UAE cinemas, but before they are brought out on DVD. He said Du is currently studying demand for the service among customers in other UAE cities, although many would have to wait for the firm to expand its network. “We have a very strong infrastructure and we want to push these services, but we must be very careful that they don’t overwhelm people. In cosmopolitan areas, we feel there would be a need for these types of services, but less so in other areas. However, we are doing market research to confirm this,” he said. The move follows the official launch of Du’s branding last month, and the announcement that it had bought DIC Telecom for AED1.2 billion (US$330 million) — a move which gave it several thousand customers in new developments in Dubai. The company is expected to offer mobile services to customers by the end of 2006, before beginning an expansion of DIC Telecom’s fixed line, television and internet system to the rest of the country in 2007. According to bin Byat, Du aims to take 30% of the UAE’s US$7 billion telecoms market within three years. In an effort to differentiate itself from Etisalat’s GSM offering, he added that the firm would provide funding to local media firms that develop ringtones and other multimedia services for its mobile subscribers. “Voice still dominates as far as mobile revenues are concerned, but we will be pushing data services more and more. The [UAE Telecoms Regulatory Authority] has imposed a 1% fee on the two telcos’ revenues which will go into an R&D fund — which will go predominantly into content generation. This will encourage a lot of smaller players to develop applications,” he said. “That is where our belief is a little bit different," he added. “We are working on the development of applications and we have a good consortium of partners on the application side. Whatever service we provide, it has to have a value-add. If it doesn’t, we won’t do it.” Bin Byat also confirmed that the new operator had struck a deal with global communications group, Flag Telecom. As revealed by Arabian Business last year, it has built a landing station which will connect Du’s customers to Falcon, Flag’s high-capacity undersea network, in a bid to boost the reliability of the UAE’s international phone and internet links. These are currently controlled by Etisalat, but have been hit by recent outages. “We’ve signed with Flag and we will be announcing the new landing station soon,” said bin Byat. “This gives us a very strong artery to the outside world. We are connecting to a very advanced, high-capacity submarine cable, which will link us not only to the Gulf but also the rest of the world. It will be the main highway to carry our international traffic."

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