Booz Allen Hamilton Finds Television Programming Improving in Arab World
Broadcasters must keep up with emerging trends to keep viewers.
Dubai, UAE, November 13, 2007 – The television industry in the Middle East and North Africa is improving significantly, but large TV channels must provide greater and more diversified product offerings and TV series, according to a new study conducted by Booz Allen Hamilton.
Looking at recent trends within the industry, the study identified a number of opportunities for broadcasters and producers of Arabic-language television series.
“There are a number of recommendations for television producers and broadcasters in the region; large television companies need to differentiate their offerings to stay relevant and keep viewers, with new formats like sitcoms to be the likely differentiator, ” said Gabriel Chahine, Vice President, Booz Allen Hamilton, a global management consulting firm with offices throughout the MENA region.
“This study aimed to highlight the emerging trends of the television series industry in the region and its future growth. We have noticed that while prices for higher-end productions continue to rise, improving quality standards and the introduction of relevant and innovative new programmes which are carefully targeted – especially capturing audiences around the Gulf, will ensure that television series in the Arab world will continue to thrive, but at a much higher level of quality,” Chahine added.
A summary of the study’s findings follows below.
The Case for Middle Eastern Media
Across the region, Booz Allen identified that the Middle Eastern Media market, in terms of television viewership is a strong and flourishing one. With a population of over 200 million and with 38 million households, an increasing number of which are affluent, the region’s population is over half the size of Western Europe and represents an attractive media market.
Entertainment and leisure centered on the television is high in the Middle East, with limited broadband penetration and very low take-up of online media. Demand for and consumption of TV broadcasting is markedly higher in the Middle East than in most developed countries for this reason. So far, large TV groups are more focused on their traditional TV viewing audience, and are yet to penetrate and utilize online media.
Television in the region is also booming due to the proliferation of free to air (FTA) channels. The growth in the number of FTA channels has outpaced the growth in TV advertising spend resulting in slowing advertising spend on a per channel basis. Furthermore, over 80% of TV advertising spending is controlled by only 9 media groups operating 28 channels. In the short term, the report found, TV channels are likely to grow at a proportionally lower rate, and as the gap with growth in the advertising arena widens, consolidation may be expected over the long term.
Advertising companies in the region are looking at ways of making advertising value more transparent, including metrics for measuring programme ratings and ascertaining viewership of different programmes throughout the region. By enhancing the measurement of viewer consumption, advertising spend can be raised more effectively and will in turn enable channels to grow. Regulations to reduce advertising breaks during programming is also expected to increase the value of advertising across the region, enabling the advertising spend/capita ratio to rise, as the industry better gauges the effectiveness of advertising and will be more willing to allocate more impetus to TV advertising.
“There is a very positive outlook for the industry in the region,” said Ahmed Elsharkawy, Principal, Booz Allen Hamilton. “We project a CAGR for the industry of close to 20% through 2012, due to strong growth in the number of wealthier households, more reliable viewer measurement systems, increasing satellite penetration and greater professionalism in the industry. Put together, we see an industry that is generating momentum, with measured year on year improvements,” he added.
Programming for Results
Competition, the study found, has intensified following the rapid proliferation of TV stations. The greater competition has begun to generate a greater diversity of programme offerings, including thematic channels, original productions and new programme formats.
TV films and sitcoms are examples of the new varieties of programming that are being added to broadcasters’ current portfolio of formats. “Broadcasters, however, need to strike a careful balance between new product offerings and broadcasting re-runs of previous series. Re-runs tend to drive away viewers, but are cheaper, while new ventures can be costly but have the capacity to attract new viewers,” said Chahine.
“The best way for broadcasters to differentiate themselves and to remain profitable is probably through providing more high-quality TV drama series in Arabic, which are a traditional bastion of the regions’ viewing preference, and are becoming dynamic ad-growth engines,” said Chahine. “In 2005 alone, US$350 million were generated by TV series adverts, with film, varieties and local programmes following after. Some broadcasters are acquiring or producing programs with exclusivity provisions, which is one of the strongest tools in fighting for more viewers,” he said.
The study also found that TV series that appeal specifically to Gulf markets like Saudi Arabia are increasingly sought by broadcasters, due to the relatively large sizes of the Saudi and Gulf audiovisual ad spending market. The lion’s share of TV series production is currently owned by Egyptian producers which account for 65% of the total and potentially provide the highest quality productions. Broadcasters however, are increasingly looking to those series produced in the Gulf region, which fit more closely with the tastes of Gulf viewers. Syria and Kuwait are also popular in terms of providing Gulf-specific content. Despite Kuwait’s relatively small proportion of TV series – 2% - those series produced in Kuwait remain amongst the most popular among the Gulf nations.
A Move to the Gulf
For the past 50 or so years, Egypt’s domination of the TV series market has been due to the large pool of creative talent and relatively cost effective models for producing TV series. The accessibility of the Egyptian dialect is also a positive factor, with viewers from across North Africa to the Levant and throughout the Gulf region able to understand the dialect.
A number of challenges, however, are facing Egyptian producers of TV series. One such challenge the study found, was the decreasing availability of good scripts, which is attributable to greater shares of production budgets being spent on star actors for their roles.
“We saw from the study that Egypt’s TV producers are also facing stiffer competition for talent from a reinvigorated film industry. Films have much better resources – including larger budgets to make better films – and this coupled with the popularity of visiting movie theatres means actors prefer to enter the film industry, at the expense of TV,” said Elsharkawy.
On a regional scale, the emergence of large pan-Arab broadcasters that cater to the Gulf market are also posing a threat to Egyptian producers. The report cited that in 2006/2007, at least one or two series from the Gulf region were aired across the channels – during prime-time Ramadan viewing. The other rising threat from Syria is due to the increasing appeal of Syrian popular actors who have become popular throughout the Arab world for their roles in historical epic series. With financial injections from the Syrian government, better quality scripting and fabulous scenic backdrops, the plethora of television series coming out of Syria are ever more popular.
Rising Prices for High Quality TV Series
Prime-times, like during the Holy month of Ramadan when viewership is high, drives the high prices of first run exclusives. The study found that high quality, first run exclusives reached US$85 thousand per episode hour for 2006/2007 – some 33% increase on 2003/2004 prices. Similarly, prices for first-run non exclusives and second run series witnessed large increases over 2003/2004 prices.
“Despite the increases in revenue, we found that it was not necessarily synonymous with an increase in quality. We found that money from revenue increases were largely going to star actors who can command fees as much as 25% of total production cost. Sales commissions are also attributed to rising costs, with production houses relying on sales agents to promote and sell programmes, especially throughout the Gulf and Syria,” said Elsharkawy.
“One excellent response that we have seen to these rising costs is broadcasters commissioning their own TV series or entering into joint production ventures,” he added. “Joint production agreements with production houses have their own advantages, including the fact that broadcasters have direct access to the content creation, development and distribution of production houses, at a cheaper price than via acquisition off the shelf. Production houses in turn benefit from joint production because they can recover a significant part of their production costs from the broadcaster’s guarantee of sale, of at least the first run exclusive,” he added.
The proliferation of TV-sitcoms and TV films, which are so popular in markets in the Western world, are gradually making their way in to the region. Considered as a risk, large pan-Arab broadcasters are approaching these new mediums as a way of encouraging producers to innovate, to keep up to date with modern viewing habits and to make a move away from traditional government-driven productions.
TV broadcasters, who are becoming increasingly involved in series production, even if just as financiers, are likely to improve overall production quality. “TV broadcasters will be able to put considerable energy in to marketing the new programmes, while being in a better position to understand the needs and preferences of viewers. At the same time, broadcasters can tailor productions toward more contemporary topics of interest to viewers, in the hope of capturing the interests of an ever increasing viewer-base,” Chahine concluded.
