Saudi Arabia capitalises on demand for streaming services

Television in Saudi Arabia is arguably facing its biggest shift in 25 years as more traditional broadcasters disrupt digital consumption patterns. Over-the-top (OTT) video streaming services, led by Netflix, have changed the business model for networks and television producers around the world. Certain Netflix content has been available to subscribers in Saudi Arabia since January 2016, and while the company does not provide a country-by-country breakdown of its subscriber base, a total of 104m people in 190 countries pay to view its television shows and film content. Although popular television series such as Broadchurch from the UK and Breaking Bad from the US are available for Saudi customers to stream on TVs, laptops and smartphones, Netflix does face some competition. For example, pay TV service OSN bought the licensing rights for Netflix’s flagship serial House of Cards and was able to air the show first in May 2017, a month before regional Netflix subscribers were able to view it.

More Players

In August 2017 OSN launched a new streaming service called WAVO with separate monthly packages for movies, television shows and sports, and a choice of daily, weekly or monthly charges. The content is accessed using apps available on Apple and Android devices. The company’s previous OTT service, OSN Go, had fewer than 35,000 subscribers across the MENA region, according to IHS Markit Digital Media Intelligence. IHS data showed that OSN lost 12% of its MENA subscriber base for its core pay TV service between the second quarter of 2015 and the final quarter of 2016, with revenues falling by 5% over the period. IHS noted that the fall in revenue across the quarters was relatively slight because OSN had increased subscription prices in 2015, a move it reversed in February 2017 by cutting monthly rates to $21 in the Gulf and $16 in the Levant. OSN says it has ambitious plans for WAVO, aiming to attract millions of subscribers across the MENA region within a few years. “The growing uptake of OTT services is determining what clients expect from broadcasters, meaning there is a need to develop new technology platforms locally, as well as regulations for the OTT sector in Saudi Arabia,” Bandar Al Sunbuly, general manager of OSN Saudi Arabia, told OBG.

Mobile Operators

The development of OTT video also presents mobile phone operators with an opportunity to provide additional entertainment services to data package subscribers. The Saudi Telecom Company (STC) forged an alliance with US-based Starz Play in September 2016, allowing the mobile provider to offer film and television content to its customers, including the BBC Worldwide programme Top Gear. The STC launched the service by charging customers SR7.5 ($2) per week to access 5000 hours of subscriber video on demand, with the charges added to customers’ phone bills. The service features English, French and Arabic audio options, as well as one-click Arabic subtitling.

Content Catch-Up

Although the new streaming services are bringing together Hollywood movies, British dramas and some Arabic content, opportunities remain for filmmakers and television producers in Saudi Arabia to release fresh regional titles. The US entertainment publication Variety noted that Netflix had bought just a handful of Arab films by February 2017, including the Oscar-nominated film Theeb from Jordan, the Emirati crime thriller Rattle the Cage and Speed Sisters, a Palestinian documentary about race drivers.

In September 2017 OSN announced it had acquired exclusive rights to broadcast the Emirati legal drama Qalb Al Adalah, which is set in Abu Dhabi. The content will also be available to download on OSN Play.

Financial Viability

Consultancy firm Arthur D Little has estimated a pan-MENA OTT streaming company would need a subscriber base of 1.8m to 2.6m customers, each paying $9 per month, to be financially viable. However, a key issue for OTT providers as they grow their subscriber base is the use of virtual private network internet connections by regional customers to stream the US version of services such as Netflix.