Dubai's media industry using technology to reach new markets

Over the past 15 years, Dubai has come into its own as one of the Middle East’s key centres for print, broadcast and digital media. The emirate’s media-focused free zone, Dubai Media City, has attracted a range of global media brands, including news organisations like Reuters, The Economist and CNN; publishing firms, such as McGraw Hill and Forbes; media production companies, including Sony and Showtime; and advertising majors like DDB and Dentsu Aegis. These companies – and many others like them – serve global audiences from the UAE.

Dubai, as a consequence, is increasingly considered to be a growing player on the global media landscape. The government has worked to shore up the emirate’s reputation as a media hub in recent years, rolling out new initiatives in an effort to ensure that Dubai remains competitive with other regional media centres, including Egypt, Lebanon and Qatar. Most recently, in late 2014 the emirate’s leaders introduced a new media industry oversight entity, namely the Dubai Creative Clusters Authority (DCCA), which has a mandate to ensure that the city remains a leading location for creative and innovative companies.

History

The seeds of Dubai’s thriving contemporary media industry were planted in the mid-1990s, when rising oil prices and prescient leadership boosted the emirate’s reputation as a regional hub for foreign investment. This was largely a result of the introduction of a series of diversification-minded development policies, introduced by the government.

Central to this diversification effort was the formation of a series of free zones, which offered foreign investors incentives to set up shop in Dubai, not to mention direct access to the steadily increasing purchasing power of a rapidly expanding Gulf market. The free zone model kicked off in earnest at the turn of the millennium, with the formation – by the state-owned firm TECOM Investments – of Dubai Internet City (DIC) in January 2000. This was soon followed by Dubai Media City (DMC) in early 2001. The media free zone expanded in 2003 with the addition of the Dubai International Media Production Zone, and then again in 2007 with the construction of Dubai Studio City (DSC). As of 2015 more than 2000 companies were located at DMC. “Media City is now an established brand, and interest in the free zone is always there, as evidence by the high occupancy rate,” Mohammad Abdullah, former managing director of DSC, told OBG.

Oversight & Regulation

The UAE’s media industry is regulated by the National Media Council (NMC), which was established in 2006 as a result of a series of amendments to law No. 91 of 1972 and the introduction of law No. 1 of 2006. The council has a tripartite mandate to facilitate the development and expansion of the media industry throughout the country; to represent and promote the sector both domestically and in international markets around the world; and to maintain efficiency, transparency and quality throughout the industry.

More concretely, the NMC is responsible for issuing operating licences to media companies and developing and enacting media-related laws and policies aimed at streamlining business operations throughout the sector, and managing the UAE’s official website: uaeinteract.com. As of the end of 2015, the council had issued more than 5000 media licences.

In June 2016 the council launched its strategic plan for 2017-21. Sultan Ahmed Al Jaber, the UAE’s minister of state and chairman of the NMC, described the initiative to local media in June 2016 as “a step forward in building national capabilities by providing training opportunities and continuous education to develop the skills of the youth and to prepare them to assume leading positions in media organisations.”

The newly established DCCA also plays a regulatory role in Dubai’s media sector, with a mandate to implement a comprehensive development plan across all of the emirate’s creative industries. Launched as a result of law No. 15 of 2014, the new authority replaced the Dubai Technology and Media Free Zone Authority, which was established in 2000 in conjunction with the formation of the emirate’s first non-industrial free zones, namely DIC and, subsequently, DMC. As such, the new authority has oversight over a handful of other promotional and regulatory bodies, including the Dubai Film and Television Commission (DFTC), the Dubai International Film Festival and the recently formed Dubai Design and Fashion Council.

Advertising Spend

According ZenithOptimedia, a UK-based research firm, in 2015 the UAE accounted almost 14% of all media spend in the MENA region, totalling $524m for the year, representing a year-on-year (y-o-y) decrease of 7%. With lower consumer demand predicted across MENA due to low oil prices, ZenithOptimedia – a UK-based research firm – expects the UAE’s ad spend to decrease by another 8% over 2016, with a 12.1% drop forecast for the MENA region as a whole.

In 2015 the UAE’s newspapers attracted more advertising expenditure (adex) than any other segment, with 32.2% of the total, down from 36% a year previously, continuing a pattern of falling adex in the subsector from 2011, according to data from Ipsos, a Paris-based market research firm. The outdoor advertising segment, which includes billboards, street furniture, transit and other out-of-home media, made up 31.6% of total adex in 2015, an increase on an average spend of 27.9 between 2011 and 2014. Magazines, meanwhile, brought in 12.9% of ad spending in 2015, down from 14.3% in 2014, highlighting the lower spending rates across print media in recent years. This was followed by the radio segment, with 13.1% of adex; TV, with 6.7%; and cinemas, which attracted 3.5% of spending, up from 1% in 2011 and 2012.

“The advertising mix is now changing because of the move to digital. There is a redistribution of funds across categories, and TV and digital will get the biggest chunk of the revenues,” Pierre Choueiri, chairman and CEO of Choueiri Group, one of the largest media companies in the Middle East, told OBG. “In contrast, the radio, outdoor and print segments will get smaller over the next three years.”

As in many other markets in the region and further afield, the telecommunications and consumer goods segments account for a large portion of adex in the UAE. According to Ipsos data, the UAE’s two telecoms operators – the Emirates Telecommunications Corporation and the Emirates Integrated Telecommunications Company – topped the list of ad spenders in 2015, with an outlay of $54.7m and $50.8m, respectively. McDonalds took the third spot, spending $21.2m, followed by the Japanese automotive manufacturer Toyota, at $21.1m; the Abu Dhabi National Oil Company, at $18m; and banking group Emirates NBD, at $17.2m. Rounding out the top-10 were Samsung, with $17.1m in adex; French supermarket chain Carrefour, which spent $17m; UAE-based home decor retailer Sedar, with $16.6m; and Danube hotel company’s Glitz Residence, whose adex reached $15.8m.

Print

Dubai is home to a variety of regional print media brands, including local firms Al Bayan, a state-owned, Arabic-language daily publication; Gulf News, an English-language daily; Khaleej Times, a broadsheet that was founded in 1978 – making it the oldest English-language media brand in the country; and 7Days, a free English-language tabloid. Neighbouring Abu Dhabi, meanwhile, owns The National, an English-language daily. According to 2014 survey data from Ipsos, Gulf News is the most-read English-language newspaper in the UAE, followed by Khaleej Times, Sport 360, 7Days and The National.

Print media attracted the single largest share of adex in the UAE in 2015, with 45.1% of the total; however, the segment has posted consistently lower figures since 2011, when its share of adex was 60%. This suggests Dubai’s print segment faces many of the same issues currently being navigated by traditional newspapers and magazines in other markets around the world. Despite this, demand still exists for local content, delivered both in the form of newspapers and magazines, with fashion and lifestyle magazines being particularly popular. Most print publications have invested heavily in their web presence in recent years, as evidenced in particular by the fact that Emirates 24/7 – which is owned by Dubai Media Incorporated (DMI), the emirate’s state-owned media holding company – shuttered its printing presses in July 2010, choosing to publish online only.

Paper To Pixels

According to the Paris-based Starcom MediaVest Group, one of the largest communications firms in the world, in 2014 mobile handsets and related digital platforms, such as apps, were the fastest-growing medium in the UAE in terms of adex, with expansion of around 20% annually in recent years. Indeed, the UAE is widely considered to be home to one of the most tech-savvy populations in the world. Furthermore, with expatriates outnumbering Emiratis by a ratio of 8:2, English is widely spoken and understood throughout the UAE, which has helped make the country a key area of focus for app developers, digital advertisers and other technology-focused media players. Dubai, which is home to DIC – by most metrics the largest information and communications technology (ICT) hub in the Middle East – is at the centre of these developments.

The UAE’s reputation as a country of early adopters is well deserved. Data from 2015 showed internet penetration in the nation was 93% – the highest rate in the region and one of the highest in the world. Similarly, according to GroupM, a US-based advertising group, smartphone penetration in the UAE was at 75% in 2016, while Ipsos put it at 91% at the end of 2014. It is clear that the country is among the top-10 in the world in terms of smartphone handset penetration. Furthermore, it was found that some 96% of the UAE’s smartphone owners had mobile internet subscriptions. Lastly, Ipsos found that 90% of internet users in the UAE used some kind of social media, with popular networks including Facebook, Instagram, LinkedIn, Snapchat and Twitter, among others. “The digital sector is growing substantially in Dubai, and advertising is one of the areas in which digital is especially surpassing traditional platforms,” Benjamin Ampen, head of revenue at Twitter for the Middle East and North Africa, told OBG. “We are predicting a 30% y-o-y growth in digital in 2016, with mobile being the platform taking the lion’s share of that growth.”

Online Focus

Given these figures, it is perhaps not surprising that much of the recent growth in the local media sector has played out online and in digital formats in recent years. While up-to-date data on digital adex in the Middle East is hard to come by, most local players suggest that advertisers have yet to fully commit to digital platforms of various sorts. According to data published by Ipsos, in 2013 some 46% of the total population of MENA interacted with the internet in some form or another, and 41% spent time on a mobile device. In the same period adex in these two areas was at 2% and 0%, respectively.

While this advertising gap is likely not as pronounced in the UAE, it is nonetheless extant and, as such, represents a key potential area of growth for the domestic advertising and ICT sectors alike. A variety of local media companies operate high-traffic websites. According to data from Alexa, a US-based web data analytics firm, as of late 2015 Gulf News operated the 16th most visited website in the UAE, for example. Another popular website is dubizzle.com, a local classified listings site similar to Craigslist. Others include souq.com, an e-commerce site; urdupoint. com, an Urdu-language site; and a range of major global tech properties, including Google, Facebook, YouTube, Twitter and Wikipedia, among others.

Broadcast

The rapid uptake of smartphone and digital devices of all sorts in recent years has also impacted the UAE’s television broadcast segment. According to Ipsos survey data, in 2014 some 80% of UAE residents used their smartphones for watching television, more than in neighbouring markets like Saudi Arabia and Kuwait, both of which are home to thriving tech sectors of their own. Additionally, around 6% of all time spent on smartphones in the UAE in 2014 was spent watching video, and 80% of this time was spent watching clips on YouTube.

Despite the increasing prevalence of smaller screens, Dubai’s television market is thriving. More than 700 free-to-air channels are broadcast in the UAE, including offerings by local heavyweights Dubai One, which is owned and operated by DMI; City 7 Dubai, a private, locally owned news and entertainment broadcaster; and several channels owned by the Dubai-based, Saudi Arabian-owned conglomerate the Middle East Broadcasting Centre (MBC), including Al Arabiya, an Arabic-language news station; MBC 1, an Arabic entertainment channel; and MBC Max, which primarily broadcasts American films.

Dubai – and particularly DMC – has been at the centre of an uptick in pay-TV subscriptions through the Middle East in recent years. According to data from IHS, a US-based market research firm, as of the end of 2015 there were 4.95m primary pay-TV households in the MENA region in total, up 10.25% from 4.5m a year prior. Over the same period regional pay-TV revenues jumped from €852m to €1.17bn. IHS forecasts the number of primary-pay TV households in the region rising to 6.46m by 2020, with most of this expansion expected to take place in the Gulf, where pay-TV providers have built up a substantial subscriber base.

While reliable data on individual pay-TV markets was unavailable as of time of publication, by most estimates the UAE leads the MENA region in terms of pay-TV subscribers and revenues. The pay-TV segment is dominated by two key players, namely the Orbit Showtime Network (OSN), which is based in DMC and jointly owned by Kuwaiti and Saudi investment groups; and Al Jazeera and beIN Sports, both of which are owned and operated out of Qatar. As of mid-2016 OSN – which was established in 2009 as the result of a merger between Showtime and Orbit – offered 97 channels in total.

OSN broadcasts a range of programming from major content producers, such as HBO, Disney, Warner Bros, Fox, ESPN and a variety of Arabic- and South Asian-language studios. BeIN Sports, meanwhile, operates 18 channels in total, including 10 in Arabic, three in French, two in English and one in Spanish. The firm holds the exclusive licensing rights to a range of major sporting events – including the European Champions League, the 2018 and 2022 FIFA World Cups, the English Premier League and the US’s National Basketball Association. Al Jazeera, meanwhile, is owned by the government of Qatar, and broadcasts 20 channels in total, including a range of Arabic-, European- and English-language news and entertainment stations.

Boosting Transparency

The television segment in the UAE has benefitted from two major recent developments. First, the government made a concerted effort in 2015 to expel illegal internet protocol TV (ipTV) providers, which have been proliferating in the country in recent years. In August 2015, in response to a copyright infringement complaint filed by OSN, the Dubai Police raided the premises of UKTV Abroad, an unauthorised firm offering ipTV packages, and seized the company’s equipment. The raid was widely regarded as a signal that the government was prepared to go after the country’s ipTV market, which bodes well for licensed, legal players like OSN.

Second, a handful of new technologies – including the Emirates Media Measurement Company’s (EMMC’s) tview service, are expected to generate a vast amount of new information about who, exactly, is watching television in the UAE, not to mention when and what they are watching. These audience-monitoring services are widely expected to have a positive knock-on effect on TV advertising (see analysis), with a huge jump in transparency in terms of TV viewership data, giving advertisers the confidence that they are putting their money in the right place.

Silver Screen

Over the past decade DSC has served as base for the development of the local film and television production industry. The free zone’s sound stages, which include an underwater filming facility, have attracted various TV production companies and a number of Bollywood film shoots, the latter of which are considered to be a key future growth area. Since DSC expanded in 2013, its operational focus has shifted towards its sound and studio industries, according to Mohammad Abdullah, former managing director of DSC.

More broadly, the city of Dubai has served as a setting for a handful of big-budget movies in recent years, including the Hollywood blockbuster “Mission Impossible 4” and the Chinese movie “Switch”. The DFTC offers a variety of services aimed at attracting more film and television production to the emirate, including location scouting assistance and visa facilitation for crew and cast members. The regulator is also in charge of issuing filming permits and approving scripts before filming begins.

As well as these efforts, Dubai-based Global Investment Bank (GIB) established an international film fund in 2016, which will act “as an investment vehicle to pour resources from the region into Hollywood”, according to Reza Dari, executive directive and CEO at GIB. “Investors will have a say on the production process and own the rights of the films through a hands-on approach. As a result, this will not just attract major attention from blockbuster films to the UAE, but also boost the local film industry.”

Outlook

Dubai’s media industry faces a variety of challenges. As in most other highly developed media markets around the world, the steadily increasing reach and importance of digital media has been a hurdle for traditional media companies. This issue is perhaps more acute in Dubai – due to the emirate having one of the highest smartphone penetration rates in the world – than in most other markets in the Middle East. Similarly, advertisers have found it increasingly difficult to track the impact of advertising in a sector that has seen rapid proliferation of new media outlets and devices in recent years. This is perhaps more an opportunity than a challenge, however, as demonstrated by interest in the EMMC’s tview television monitoring and reporting system, for example (see analysis). Finally, the UAE’s advertising market has been negatively impacted by recent regional geopolitical and economic tensions – including declining oil prices – which have put pressure on multinationals to shore up their bottom lines and proceed with caution in Middle Eastern markets.

Nonetheless, as evidenced by the steady increase in advertising expenditure and investment across several media segments, many local players appear to be broadly optimistic about the future. Increased activity – particularly in digital products and services – suggests that despite relatively high media and ICT penetration rates in Dubai, there is still considerable room for continued growth in the local market. Though the ipTV market has boomed in recent years, the recent crackdown on illegal operators is expected to eventually result in new, legal market activity.