IPTV operators getting a foot in the door of pay-TV in the region

IPTV is seen as a service that lets operators get closer to customers, yet uptake in the region remains low

Tags: Arab Radio and Television NetworkBahrainEtisalat International - UAEFTTHIDC Middle East and AfricaIPTVQatarSaudi ArabiaShowtime ArabiaUnited Arab Emirates
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IPTV operators getting a foot in the door of pay-TV in the region IPTV service providers must be able to differentiate themselves from their competitors, says Irfan.
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By  Said Irfan Published  November 30, 2009

As operators in the region seek to get closer to their customers and add more value on top of their network - and thus avoid becoming a mere pipe - IPTV is increasingly being seen as one of the services that can fit that purpose. In addition, by bundling the service with DSL and telephony lines, IPTV is expected to be an attractive retention tool that can contain the decline in revenues from the fixed line network.

With IPTV so far provided in the region in Qatar, UAE, Bahrain, Egypt, Morocco and Jordan, the success, however, has been dismal - only 5.4% of pay-TV households subscribe to IPTV in the region.

Nonetheless, IDC believes the service will gain a larger share of the pay-TV market in the long term. There are major fiber deployments underway that will lead to the wider availability of IPTV services in the region. In early 2009, Etisalat announced plans to migrate all of its subscribers by 2011 to the fiber-to-the-home (FTTH) network it is installing throughout its coverage area; currently, the carrier has TV subscribers on its HFC cable network and DSL subscribers on its twisted pairs. There are also plans afoot for full-scale fiber optic network deployments in smart cities in other Gulf countries, particularly in Saudi Arabia, Qatar, and Bahrain - the first of these projects is expected to be complete at some time in 2010.

Further, the current market situation indicates that a large majority of the pay-TV households subscribe to services provided by direct-to-home (DTH) satellite providers, while the remaining few households use cable TV services, which is only available in UAE and Qatar. DTH satellite is popular mainly due to a widespread lack of terrestrial TV broadcast networks. Further, the DTH satellite providers in the region - Showtime Arabia/Orbit, and Arab Radio Television (ART) - also happen to be the major content aggregators; thus, giving them a leverage in content syndication.

Nonetheless, pay-TV households comprise only a fraction of the overall TV market in the Middle East - with household penetration at around 5% in 2008. The market is largely dominated by the existence of Free-to-Air (FTA) TV channels that are broadcast through satellite to the entire region. These channels are owned by well-financed media companies that have content libraries rivaling those available on pay-TV.

In addition to the competitive pressures placed upon them by FTA channels, pay-TV providers face a greater challenge from the proliferation of pirated smart cards and unlicensed set-top boxes across the region. Both these challenges have already led to market consolidation in the DTH satellite space with the merger of Showtime Arabia and Orbit last July.

To gain a significant foothold in the market and to justify investment in content acquisition and network upgrades, as well as to withstand the above challenges, IPTV service providers must be able to differentiate themselves from their competitors and stop looking at the market as a simple add-on to their broadband business. A few operators have already started differentiating themselves with plans to digitize content as well as introduce digital video recorders and video on demand, thus enhancing the quality of the network and providing more control to subscribers. In addition to that, as many of these service providers also have billing relationships with customers through their mobile and broadband services - and can also provide TV services over those platforms - they should be able to negotiate better terms for acquisition of high-quality content with the content providers/aggregators.

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