GCC video industry to generate revenue of $1.6bn in 2020

GCC video industry to generate revenue of $1.6bn in 2020
Aravind Venugopal, vice president of Media Partners Asia (MPA), an independent research company. (Supplied)
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Updated 15 December 2020

GCC video industry to generate revenue of $1.6bn in 2020

GCC video industry to generate revenue of $1.6bn in 2020
  • The sector had a slowdown due to COVID-19, but a quick rebound is expected

RIYADH: The Gulf Cooperation Council (GCC) video industry — comprising free TV, pay TV and online video — will generate revenues of $1.6 billion in 2020, a year-on-year decline of 13 percent, according to a new industry report.

The report, titled “GCC Video & Broadband Distribution 2020,” was compiled by independent research company Media Partners Asia (MPA) and focused on the current state of and future outlook for the telecoms, online video and pay TV industries across the six GCC countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

“There are a number of factors driving the contraction in 2020 for the video industry, COVID-19 being a key one. However, well before the pandemic the signs of contraction were being felt in the ‘traditional’ video sector,” MPA Vice President Aravind Venugopal told Arab News.

“The FTA (free to air) TV sector and the pay TV sector have been in … decline for several years now as both consumer eyeball and spends, and advertising spends, move online,” he said.

“For consumers, prior to the introduction of SVOD (subscription video on demand) services, pay TV remained the only option for a subscription-based service with access to premium sports, Hollywood content and selected global language-specific content. With VOD the tables have turned, and consumers today have a number of services at their fingertips.”

Despite the negative short-term outlook, there are some positive highlights. The investment made by local SVOD players into creating premium Arabic-language content is impressive, and has helped drive a non-English base into the subscription model for the first time, and away from pay TV and FTA, Venugopal said.

Additionally, one cannot discount the role of broadband — the GCC region has seen stellar improvements in fixed and mobile broadband connectivity in recent years, helping drive growth in online video.

That growth will continue, especially in markets such as Saudi Arabia, where fixed broadband penetration is lower than its regional peers — providing much upside in the long term, Venugopal said.

“We estimate that the TV sector (comprising pay TV subscription, pay TV advertising and FTA advertising) contracted 30 percent in 2020 (versus 2019). However, this was … partially offset by a 26 percent growth in online video (subscription and advertising),” he added.

“What’s key to note here is that the online advertising sector is very much dominated by global majors (YouTube, Facebook, Twitter), which accounted for the bulk of the advertising spend, leaving little for domestic / regional players,” he said.

“For regional TV players such as MBC, Rotana, Abu Dhabi Media and others, that drop in traditional incomes hasn’t been offset by digital services just yet, though some are well underway in that journey to reposition themselves.”

One of the biggest impacts on the industry has been the coronavirus pandemic, which has resulted in a contraction in advertising revenues for the FTA sector of as much as 45 percent compared to 2019.

“I recall when I was in the region in late February / early March and had conversations with folks in the advertising space, the fear of COVID-19 reaching the region appeared … limited and mild. But within a few weeks, things changed drastically,” Venugopal said.

“Advertisers globally have cut budgets in a bid to conserve their cash balances. Separately, new products, product launches etc. have all been put on hold, which impacted advertising spend. A number of players have also reallocated budgets to digital, and in particular affiliate marketing (using e-commerce platforms), all of which has impacted TV.”

For the pay TV industry, the issue has been an increase in customer cancelations or reductions in the size of their subscription package as their income and employment come under pressure.

Looking toward a rebound in the industry in 2022, Venugopal is confident. “I believe a rebound is already underway, though a full correction to reach 2019 ad spend levels for both FTA and pay TV is unlikely in the short term, as well as for pay TV subscription revenue,” he said.

Venugopal estimates that TV advertising will grow at a 3 percent per annum compound over the next five years.

He said Saudi Arabia is an important market as it is home to nearly half the region’s subscribers to services such as Netflix and Amazon Prime, and the country will be “a key driver of any advertiser / agency media plan.”


Saudi non-oil sector’s expansion continues

Saudi non-oil sector’s expansion continues
Updated 03 August 2021

Saudi non-oil sector’s expansion continues

Saudi non-oil sector’s expansion continues
  • Rising demand from domestic, overseas clients supported upturn: Survey

RIYADH: Non-oil business activity in Saudi Arabia maintained a sharp pace of expansion in July, despite slowing for the second month running, according to a survey released on Tuesday. 

Output grew at a sharp pace, underlined by a robust increase in new business inflows, but still staff levels rose only fractionally in July as firms continued to signal an excess of business capacity despite rising sales.

Rising demand from domestic and overseas clients supported the upturn, which some firms linked to competitive pricing strategies.

The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) fell for the first time in four months to 55.8 in July, from 56.4 in June, due to weaker growth in output, new orders and employment compared to the previous month. 

Employment prospects were also harmed by a drop in future output expectations to the joint-weakest for more than a year, despite the strong improvement in operating conditions that extended the current run of growth to 11 months.

Hiring growth weakened to a fractional pace, as only few firms reported needing additional staff and backlogs were reduced solidly, suggesting a wide gap between demand and full capacity in spite of a sharp increase in new orders in recent months

“While Saudi Arabia’s PMI continued to signal strong growth in the non-oil economy in July, our survey data related to business capacity highlighted that challenging economic conditions prevailed,” said David Owen, an economist at IHS Markit.

“Firstly, employment growth slowed to only a marginal pace, suggesting that many companies still have little need for new hires in spite of a sharp rebound in new orders. Secondly, backlogs of work fell at the second-quickest pace for a year, adding further evidence that businesses have yet to reach pre-pandemic levels of capacity utilization,” he said.

“Sustained rises in demand should help the economy move closer to full capacity over the second half of the year. However, a drop in business expectations to its joint-weakest since June 2020 illustrated growing doubts that this will be a smooth ride,” he said.

Nearly 27 percent of surveyed businesses reported an increase in activity, linked to strengthening client demand and a loosening of pandemic-related measures.


SABIC set to announce Q2 financial results

SABIC set to announce Q2 financial results
Updated 03 August 2021

SABIC set to announce Q2 financial results

SABIC set to announce Q2 financial results

JEDDAH: The Saudi Basic Industries Corp. (SABIC) said that it will hold a virtual press conference to review the financial results for the second quarter of 2021 on Thursday.

Yousef Al-Benyan, SABIC vice chairman and CEO, will attend the conference.

Based on the data available on Argaam news website, analysts predict profits of SR6.4 billion ($1.7 billion) compared to SR2.2 billion losses in the second quarter of 2020.

SABIC is seeking to become the largest petrochemical company in the world by 2030. 

The petrochemical industry in the Kingdom has a significant impact as it contributes more than SR260 billion annually to the gross domestic product (GDP), representing 36 percent of the industrial GDP and more than 57 percent of non-oil exports.


Startup of the Week: Skil Studio; Perfecting the art of marketing, designing

Startup of the Week: Skil Studio; Perfecting the art of marketing, designing
Updated 04 August 2021

Startup of the Week: Skil Studio; Perfecting the art of marketing, designing

Startup of the Week: Skil Studio; Perfecting the art of marketing, designing

JEDDAH: Zakaria Ahmad owns a digital design agency called Skil Studios focused on identity building, graphic designing, and social media content building.

“We were working with another company but recently started our own business,” said Ahmad.

The entrepreneur is grateful for the customers who trust them with the design and layout.

Their services start with designing the identity that represents their clients, then services such as digital marketing, e-commerce, and social media content development are also offered. Sometimes the business also offers videography and photography services.

The company’s founder said that most companies here focus more on quantity rather than quality. He said his company’s goal is to start an agency that cares about its clients and has their best interest in mind.

“We appreciate art in everything,” Ahmad said. He believes marketing and identity building is an art and his company seeks to achieve the target with perfection.

He said that they want to offer something new. Ahmad said his team does not believe in “copying and modifying already existing designs,” instead they want to introduce the latest global trends in the Middle East without compromising on their uniqueness.

He admitted that the business faced quite a few challenges along the way, which is usual for a startup.

“We were looking for talented people with a passion for designing and art to help us achieve our goals,” Ahmad said.

Ahmad is most proud of his company’s identity and the trust that his team has built with clients due to their sincere efforts.

He said members of the creative team ensure they understand the requirement of clients and deliver them whatever their demands are.


WEF leader urges countries to ‘pay close attention’ to digital currency

WEF leader urges countries to ‘pay close attention’ to digital currency
Updated 03 August 2021

WEF leader urges countries to ‘pay close attention’ to digital currency

WEF leader urges countries to ‘pay close attention’ to digital currency
  • The Asian superpower recently announced it will allow foreign visitors to use digital yuan in the upcoming Winter Olympics

DUBAI: Digital currency is going to play a big role in the global economy, a World Economic Forum (WEF) committee leader said, and nations need to pay attention to its unprecedented progress.

“Somebody needs to be paying close attention to this space, and assessing on a weekly basis, what the national policy ought to be regarding digital currencies,” Sheila Warren, deputy head of the Centre for the Fourth Industrial Revolution (C4IR) committee of WEF, told Arab News.

Digital currency will continue to evolve, she said, adding some nations have already started investigating its effect on their own economies.

“We’re going to see a variety of offerings in the digital currency space — central bank digital currency, stable coin issuances, and cryptocurrencies including Bitcoin,” Warren explained.

According to Atlantic Council, which tracks central banks’ participation in the space, 81 countries have already explored a digital currency with China leading the pack.

The Asian superpower recently announced it will allow foreign visitors to use digital yuan in the upcoming Winter Olympics.

Other major central banks in the race are the US Federal Reserve, the European Central Bank, the Bank of Japan, and the Bank of England.

In the Gulf, Saudi Arabia and the UAE previously said they were working jointly on a digital currency plan — they called the initiative “Project Aber.”

The two countries aim to develop a cross-border payment system that will reduce transfer times and costs between banks.

Although every nation doesn’t necessarily have to “immediately jump in,” Warren said it is important to watch the evolution of the industry.

“If you're not doing that, you're going to be stuck, I think, with whatever the world decides, the direction of travel is going to be, and not have enough opportunity to help shape that,” she explained.

On decentralized cryptocurrencies, including bitcoin, Warren said it will continue to have a huge role in the global economy as well.

“We’re going to see an increase in market cap, an increase in market share of the suite of digital currencies,” she said.

The private sector will take advantage of this by developing some of a blockchain or distributed ledger, she added.


Tunisians hope for better times ahead

Tunisians hope for better times ahead
Updated 03 August 2021

Tunisians hope for better times ahead

Tunisians hope for better times ahead
  • The proceeds from selling the plastic, combined with limited financial assistance from the government

TUNIS: As day breaks over Tunis, Jamila Ghuili takes her two small children out into the streets to scavenge in waste bins for plastic bottles that she sells to buy food for her family.
Abandoned by her husband, the single mother lives in a poor part of Omrane Superieur, a neighborhood of the capital where Tunisia’s economic malaise is acutely felt.
“Everything has become expensive,” said Ghuili, as her children played next to her.
Exacerbated by the repercussions of the COVID-19 pandemic, economic grievances have fueled discontent in Tunisia, leading to protests that encouraged President Kais Saied to remove the prime minister and assume governing authority last month.
Ghuili, 55, gathers a few kilograms of dirt-covered plastic each day, foraged from heaps of garbage dumped at the roadside.
The proceeds from selling the plastic, combined with limited financial assistance from the government, amount to 190 Tunisian dinars ($69) a month, around half her monthly rent.
Hamza Ayari, who buys the bottles and re-sells them to factories, says many people are doing the same. “They don’t have any other job, they are poor people,” he said.
Desperate for better lives, some of Omrane Superieur’s residents are hopeful about Saied’s move.
“I salute the people who voted for him, he is a good person,” said Fakhreddine Wannas, 56, a resident. “I hope he can take us out of the dark and into the light.”
It echoes sentiment expressed by other Tunisians who are fed up with political bickering and want to see an improvement in the economy — which shrank by 8.8 percent last year — and more effective action against COVID-19.
Saied, who was elected in 2019, says he will not become a dictator and that the actions he took on July 25, including the 30-day suspension of parliament, were constitutional. He has yet to set out next steps.
Soumaya, who paints henna tattoos for a living, expressed relief about the situation, saying that for a long time Tunisians did not know where they were heading. “Now we are all happy,” said Soumaya, as she painted a child’s hand.