Diversification and incentives aim to spur sector growth and create more jobs for nationals

Abu Dhabi’s media environment is in the midst of rapid diversification, as investment in technology and skills opens the emirate up to exciting new opportunities in television and film production, and digital content creation. Underlying this expansion are the fundamentals outlined in the Abu Dhabi Economic Vision 2030: to build a sustainable sector capable of driving long-term economic growth, creating highly skilled jobs for Emiratis, and presenting Abu Dhabi’s culture and values to the rest of the world. The emirate’s media strategy seems to be working, as multiple private and public media entities are already operating in Abu Dhabi, delivering both English- and Arabic-language content to domestic, regional and international markets.

Regulation

Media companies in the UAE are regulated by the National Media Council (NMC), established by Federal Law No. 1 of 2006 to fulfil the responsibilities relating to press and publications contained in Law No. 15 of 1980. These responsibilities include the issuing of media licences (including filming permits), the monitoring of media content and the accreditation of journalists. The NMC is also responsible for the official government news agency, WAM, which provides content regarding the UAE to international news aggregators such as Reuters and Bloomberg.

The UAE’s constitution allows for freedom of speech, and the NMC’s regulations provide general guidelines for content publishing and production, including political, religious, social and cultural considerations. International media operating from the UAE’s free zones are expected to abide by a 2011 code of conduct, and Abu Dhabi’s Media Zone Authority (MZA) has established content regulations to support leading news outlets like CNN and Sky News and content producers such as Ubisoft and Charisma, in achieving this.

Structure

Abu Dhabi’s diverse population has resulted in a domestic media industry that serves a variety of languages and perspectives. The sector is currently dominated by two government-related entities: Abu Dhabi Media (ADM) and twofour54, which is operated by Abu Dhabi’s MZA. This structure dates back to 2007, when ADM was formed as a joint-stock company under Law No. 13 from the assets of Emirates Media Incorporated, with a public service mandate. At the same time, MZA was established as a government authority to operate an economic free zone and establish a centre of excellence for content creation in the emirate.

MZA subsequently set up twofour54 in 2008 to manage the Abu Dhabi Media Zone and provide various products and services designed to attract local, regional and international businesses to the emirate and encourage growth in the industry. Its name refers to the geographical coordinates of Abu Dhabi. Leveraging the free zone status to attract human capital, physical infrastructure and financial capital to the zone has been central to twofour54’s strategy for building a sustainable content creation centre. It has attracted hundreds of companies to Abu Dhabi’s media zone, including CNN and Ubisoft. The zone is also home to Sky News Arabia, a joint venture between Abu Dhabi Media Investment Corporation and UK broadcaster BSkyB, launched in 2010. Film and television broadcast and production firms make up 30% of the zone’s tenants to date, while digital media companies – a growing and increasingly important segment – account for another 13%.

Through its efforts, twofour54 has created upwards of 3000 new jobs in the emirate and, as of mid-2014, had supported the production of over 18,000 hours of content. As a reflection of its success, it ranked 11th in fDi Magazine’s 2013 list of Middle East free zones. A recently signed deal with Flat6Labs, a start-up accelerator, hopes to continue this trend by launching 80 new companies in the zone in the next four years.

Film Industry

Abu Dhabi has had considerable success recently in building up its film industry. The year 2014 saw the emirate’s production rebate programme attract shoots from Hollywood and Bollywood, including the latest addition to the “Star Wars” franchise, which used Abu Dhabi’s deserts as a backdrop for filming. The “Star Wars” shoot, which brought some 300 cast and crew to the UAE, benefitted from a 30% belowthe-line rebate, administered by the Abu Dhabi Film Commission, as well as production support from twofour54’s production team twofour54 intaj. The rebate – currently the only one in the region – has proven popular with international producers, with “Furious 7” (the latest instalment of the “Fast and Furious” franchise) and Bollywood action film “Bang Bang” also shooting in Abu Dhabi over the same period, using the emirate’s skyline and iconic location as backdrops.

According to a report commissioned by the Abu Dhabi Film Commission, every $1 invested in production rebates injects $4.50 into the local economy, while the knock-on effect in terms of international recognition is hard to overstate: research has shown that filmand television-induced tourism can lead to a significant increase in visitors to a destination.

According to Michael Flannigan, the head of the Abu Dhabi Film Commission, the next goal is expanding infrastructure – in terms of facilities and skilled workers. “We have a fantastic incentive that is drawing a lot of people here,” he told OBG. “It is our goal now to match it with appropriate infrastructure. If you do not have the infrastructure, then the advantage you get from an incentive is mitigated by the fact you have to bring a lot of people in.” As such, building links with the Indian film industry has proven key. “Set construction was the first area we concentrated on, and then we moved on to hair, make-up and wardrobe. It makes us competitive, and helps keep the cost down,” Flannigan explained. The strategy, which has involved the creation of a structured freelancer scheme, has already seen success. Paul Baker, executive director of twofour54 intaj, noted that when Hollywood movies “Deliver Us From Evil” and “The Bourne Legacy” turned up for shooting in Abu Dhabi, they only brought crews of five – everything else was available on site.

Local Talent

In addition to providing a home for skilled freelancers, the Abu Dhabi film industry is committed to encouraging local talent. According to Michael Garin, current CEO of Image Nation, providing talented Emiratis with the opportunity to use and grow their skills remains a primary objective. “When I arrived at Image Nation, 3% of the staff were Emirati,” he told OBG. “Now it’s 60%, and every expat has an Emirati number two.” Garin is impressed with what he sees in the emirate. “The local talent here is exceptional,” he told OBG. “They could work anywhere. If we do not provide opportunities for them, we are going to lose them, and we cannot afford that. We have an abundance of financial capital, but a scarcity of human capital.”

Programmes to encourage local talent include creative lab and tadreeb, which provide classroom training and hands-on content creation experience through commercial short-form projects, respectively. They are coordinated by twofour54 but have cross-industry support. Creative lab has become a community of over 10,000 “creatives” and entrepreneurs working in film, music, digital apps, TV, publishing and gaming. Notable graduates include the “Peeta Planet” brothers, the hosts of a popular travel and culture show, and Emirati filmmaker Nayla Al Khaj. To date, tadreeb has delivered more than 600 courses to 6000 people, over half of which were Emiratis. It has also developed partnerships to provide opportunities in growing niches, such as animation and gaming. In line with its goal to foster sustainable, Arab-focused media and digital businesses, twofour54 has directly invested Dh150m ($40.8m) in content projects and other enterprises to support youth entrepreneurship and local talent development.

Industry incentives also include local talent promotion. The recent “Star Wars” shoot, for instance, involved six Emirati interns who not only worked in the UAE, but returned with the crew to work in the UK. Image Nation provides valuable opportunities as well: in addition to creating content for the local and regional market, it has also produced a number of successful Hollywood films, including “The Help”, “Men in Black III” and “Flight”. A key objective of its investments in international productions is to achieve a dividend with which to fund domestic productions and provide opportunities for the development of local talent in the form of on-the-job training and internships for nationals. This is already paying off, with the skills base of the national workforce growing and several feature films, documentaries and television programmes being produced locally.

Content Production

As part of the government’s long-term economic development strategy, twofour54 has been working to position Abu Dhabi as a regional centre for content creation across a broad range of media, including film, television, computer games and digital. Its television and film production unit, intaj, has six television studio spaces available, as well as 10 post-production editing suites and a 20-channel SD/HD playout centre for broadcasting. According to twofour54, intaj’s studios are currently operating at 75-80% of capacity, while a recent deal with the First Gulf Bank Arena will allow twofour54 to use the arena’s grounds as overflow studio space for both television and film.

Noura Al Kaabi, the CEO of twofour54, told OBG that one of the company’s main objectives is to raise the standard of production in Arabic-language content. “We focus on Arabic productions that will change the game,” she told OBG, highlighting the popular Syrian drama “Al Ikhwa” (“The Brothers”). “We shot 100 episodes of ‘Al Ikhwa’ entirely in Abu Dhabi, and the quality of the production and post-production is of a standard that has not been seen in the region before.”

In addition to dramas such as “Al Ikhwa”, twofour54 brought the Arabic-language version of US children’s programme “Sesame Street” (“Iftah Ya Simsim”) to Abu Dhabi. The show – to be produced by Bidaya Media – will use both twofour54 studio space and intaj post-production services. The Abu Dhabi-based production will mark the show’s return after a 20-year hiatus. High-profile programming such as “Al Ikhwa” and “Iftah Ya Simsim” acts as something of a calling card for Abu Dhabi’s full spectrum of production capabilities.

Baker identifies four key sectors in which Abu Dhabi is investing, and where the local content industry is attempting to build a reputation for excellence: broadcast services, post-production, studios and production services. For Baker, the role of government-related entities such as twofour54 is to do the initial heavy lifting in the sector and lay the groundwork for organic growth. “We are here to inject the adrenaline, to create fast-paced growth,” he told OBG. “Eventually we will disappear into the ether, as the private sector takes over. We are now talking to industry players who are serious about opening in Abu Dhabi.”

Encouraging smaller content producers by providing facilities for them to grow and experiment is a key step. To that end, twofour54 and creative lab engaged in around 30 projects with the local community in 2014, involving some of creative lab’s pool of over 10,000 members. There is also a space on twofour54’s campus for young, independent producers and would-be content creators to work and interact.

Getting In The Game

The burgeoning gaming industry is providing another forum for content production. twofour54 has entered into several partnerships to support the development of Arabic-language games targeting the MENA region. In 2012 it partnered with developer Ubisoft to create a production and development studio in the emirate, employing local talent. Its first major release, “CSI Hidden Crimes”, has been downloaded over 16m times since May 2014, making it the most successful mobile app fully developed and produced in the Arab world. twofour54 has also invested in games designer Falafel Games, which produces massive multi-player online games in Arabic, and Lamsa, a leading Arabic “edu-tainment” platform for children.

Broadcast

In terms of demand, Abu Dhabi’s broadcast market is fragmented – reflecting the diversity of the population and the absence of a single, dominant player in the Arabic-language segment. It remains a popular medium, however, particularly among expatriates, who watch around three hours of television per day on average, roughly double the amount consumed by Emiratis. According to figures from tview, a subsidiary of the Emirates Media Measurement Company, the average audience share for the top-rated Arabic channel, MBC 1, was less than 5% in 2013 (rising to 7.7% among Emirati viewers). Indeed, only 12 Arabic-language channels in the UAE enjoyed an audience share of above 1%. Dubai-based MBC filled the top seven places, with Abu Dhabi Al Oula in 11th place.

The Arabic audience was the most fragmented in 2013, while among South Asian households viewership was slightly more consolidated. The top-ranking Asian channel, Asianet Middle East, achieved average audience share of 7.79%. Meanwhile, for Arabic-speaking viewers, the three most popular programmes were all talent shows: MBC’s “Arabs’ Got Talent”, which captured 26% audience share; “Arab Idol”, which received 28% (though with a lower overall audience as a share of population); and “The Voice”, at 24%. For the South Asian audience, movies and sports shows were more popular, with Asianet Middle East’s showing of “Ustad Hotel” achieving 27% audience share.

Print

The UAE’s print media landscape is composed of 14 daily newspapers and a wide range of magazines. Four dailies are government-owned (two by ADM and two by Dubai Media Incorporated), and six are English-language. The remaining eight serve the Arabic-language market. After the exit of the Audit Bureau of Circulations from the regional market in 2006, the only paid newspaper with audited circulation in the UAE is the privately owned, Dubai-based Gulf News, an English-language daily with BPA-backed circulation of almost 104,000 for the second half of 2013, and a web following of about 1.5m unique browsers for August 2014. The English-language, Dubai-based Khaleej Times is also privately owned and claims a circulation of 90,000, while The National – Abu Dhabi’s government-owned, English-language daily – has not announced any circulation figures since its launch in 2008, but estimates put it at around 80,000-90,000 as of 2014. Freesheet 7Days, a Dubai-based, English-language publication, has a BPA-audited circulation of just over 60,000.

The Arabic-language market is similarly lacking in audited circulation figures. The Abu Dhabi government-owned Al Ittihad and Dubai government-owned Al Bayan claim circulation of 94,275 and around 105,000, respectively, while Emarat Al Youm (Dubai government-owned) is estimated at 80,000. Privately owned, Sharjah-based Al Khaleej puts itself at 37,000 to 60,000.

Given the large share of bulk subscriptions in non-audited figures, a more accurate sense of the market in terms of actual readership is probably provided by the Dubai Press Club’s most recent readership survey, conducted by Deloitte in 2012. This ranks Gulf News in first place, at 48%, followed by Al Khaleej (39.3%), Emarat Al Youm (31.6%), Khaleej Times (27.7%), Al Ittihad (26.6%) and Al Bayan (23.5%). Significantly, the Times of India and Malayala Manorama both had readership of almost 10%, reflecting the role of the UAE’s migrant worker community in shaping the local market.

New Media

According to the “Arab Social Media Report” from the Dubai School of Government, the UAE is among the top Arab nations for use of social media. In 2014 the UAE ranked first in the region for LinkedIn penetration (22.7%), and second for Twitter and Facebook (6.1% and 58%, respectively), behind Kuwait (Twitter) and Qatar (Facebook). As of March 2014, 46m tweets were sent per month in the UAE.

The prevalence of social media – in particular on mobile devices – has encouraged the government to offer services in app format as part of its Smart Government initiative, as well as make increasing use of platforms such as Twitter to communicate with citizens. However, the degree of private sector investment in digital platforms remains less documented, as industry analysts like the Pan Arab Research Centre (PARC) do not include digital spending in their sector analysis. However, online market research firm OOX monitor claimed that the UAE market for online advertising was larger than Saudi Arabia’s in 2012, at $108m – equivalent to average spend per user of $31.40.

The fifth Abu Dhabi Media Summit, an initiative of twofour54 held in November 2014, focused on new media and attracted top sector executives. According to a study launched at the summit and conducted by twofour54 and Strategy&, e-commerce will be a key source of digital growth. The MENA e-commerce market was worth $2.3bn in 2014 and is expected to grow at 13% per annum until 2019. Saudi Arabia and the UAE are set to remain the dominant markets, at a combined 40%, while mobile commerce is forecast to grow from 7% of e-commerce revenue in 2011 to 20% by 2015.

Advertising

The UAE is the largest advertising market in MENA and accounts for one-third of all GCC ad spending. Advertising spend for the first half of 2014 saw healthy growth, as the positive effects of the Dubai Expo 2020 announcement continued to be felt. According to PARC research, based on official media rate cards, first-half spending hit $819m, up 5% year-on-year.

While big names such as Carrefour, Arabtec and Etisalat continue to dominate traditional media – with top spending on print, television and radio, respectively – steady growth in internet advertising, particularly through lower-cost options such as Google AdWords and Facebook Ads, is also bringing small and medium-sized enterprises with more modest ad budgets into the market. PwC foresees digital platforms outperforming traditional media in MENA in the next three years, with compound annual growth of 28% anticipated over the 2013-17 period – a figure backed by International Data Corporation in its 2014-18 forecast.

Abu Dhabi’s recent legacy of strong investment in both physical data infrastructure and digital content creation means the local advertising sector is well placed to benefit from regional and domestic growth in this new market. Indeed, expansion in digital advertising may even contribute to an eventual shift among bigger corporations away from the current preference for traditional above-the-line media strategies.

For the time being, however, traditional media continues to prove resilient in the UAE. Spending on outdoor advertising represented 14% of the total in 2012, while strong ad growth in the real estate sector saw a 38% increase in spending in 2013, as developers returned to billboard advertising. Cinema advertising, at 2% of the total in 2012, also witnessed strong growth, up 31% in the first half of 2014, as both audiences and facilities continue to increase across the UAE.

According to PARC, television and radio advertising accounted for 10% and 3%, respectively, of the 2012 total. Since then, the emergence of tview, an audience measure platform, has enabled television advertisers to get a better breakdown of domestic viewing figures and thus more accurately target campaigns. This will be particularly important among Arabic-language broadcasters, which currently lag behind their South Asian counterparts in gross rating points (GRPs). According to tview, the top-rated Arabic campaign for 2013 was Pepsi, with 20,092.8 GRPs, while the top-rated South Asian campaign was Lulu Hypermarket, with 27,115.7.

However, a cross-sector breakdown reveals that print media still accounts for the lion’s share of spending in the UAE. Mohammed Al Otaiba, the editor-in-chief of The National, told OBG that despite digital ad trends in the West, print remained a strong market in the Gulf. “This is a culture which still tends to consume its media in print form,” he told OBG, “and luxury brand advertisers in particular still very much value print advertising.”

PARC reported that full-year spending in 2012, the most recent for which figures were available, saw 70% of the market – equivalent to $1.1bn – given over to newspaper and magazine advertising, with government departments and related entities (which account for nearly a quarter of all spending) in particular continuing to favour print. Despite this, top print spend came from supermarket chain Carrefour, which spent $10.7m on newspaper and $2.4m on magazine ads, followed by mobile operators Etisalat and du, with spend of $8.7m and $7.7m, respectively, on newspaper ads.

Outlook

The government’s media strategy has seen the emirate achieve rapid success. In particular, twofour54 and its partners, including Abu Dhabi Film Commission and Image Nation, have positioned it as an emerging centre for film and television production, attracting global production teams and raising Arabic content standards. Maryam Al Mheiri, twofour54’s COO, said, “Abu Dhabi is uniquely positioned to serve both MENA and international markets, with a growing infrastructure and ecosystem that can support small start-ups through to large global industry players.”

In the coming two to three years, it is likely that these government-related entities will begin working more intensively on horizontal diversification, possibly through an above-the-line incentive for film production, which would go some way towards consolidating gains.

However, some challenges persist. Certain areas of Arabic-language content, for example, have proven hard to crack, particularly in digital game development and cinema. In terms of the former, twofour54 will no doubt be hoping that Flat6Labs can help foster a start-up culture in the emirate, while establishing a successful cinema industry will depend on growth in demand as much as supply, with the region still relatively under-served by cinemas. Nonetheless, with the groundwork already laid, Abu Dhabi is set for continued growth across a diverse spectrum of media, with content production in film and television likely to remain strong.