The path to growth for Middle East media in a post-pandemic world

By Karim Sarkis, Karim Daoud, and Abhijat Sharma


It is now clear that during the COVID-19 pandemic, consumers in the Middle East and North Africa (MENA) region have greatly increased their consumption of digital video and audio content. This has accelerated a trend which has been gaining ground for several years, and is unlikely to slow down when the pandemic subsides. Meanwhile, the already weak advertising-supported media market has been eroded further, and will take some time to recover even to its 2019 levels. Regional media companies can therefore no longer view digital revenue as a luxury. They must urgently diversify through digital business models, and focus on subscriptions, direct relationships with consumers, and monetising content. Governments can facilitate this transition by devising regulation which supports the growth of the digital media market, while telecom operators can seize a growth opportunity as enablers and aggregators.

According to our Global Entertainment and Media Outlook 2020-24, digital revenue globally in 2020 is estimated for the first time to account for more than half of total entertainment and media revenue. The study suggests that the MENA region is not far behind the global average. The proportion of digital revenue for the region was estimated at 42%, and is expected to grow to 46% by 2024.

“The trend towards digital is thus unlikely to abate even when lockdowns are no longer the norm.”

It is not difficult to understand why 2020 was a watershed year. As governments in the region imposed lockdowns to control the pandemic, the demand for streamed video content (OTT video) immediately mushroomed. In the first month of the lockdown, 50% of OTT video subscribers increased their viewing time. Subscription services such as Netflix, Shahid, and Starzplay Arabia responded to the burgeoning demand by adding more local content. This is creating a virtuous circle, with yet more viewers attracted to the platforms.

Digital audio, both streamed or downloaded music and podcasts, has also experienced a boom during the lockdown period. In 2020, Anghami reported a 25% increase in listeners from the previous year, while digital audio revenue is predicted to increase by a compound annual growth rate (CAGR) of 19.8% CAGR between 2019 and 2024.

The trend towards digital is thus unlikely to abate even when lockdowns are no longer the norm. Given the expanding supply of content on both regional and international platforms, OTT revenue is expected to grow by a CAGR of 12.3% between 2019 and 2024.

While there may be some quibbles over the exact figures, advertising revenue is unquestionably stalling in comparison to consumer-paid revenue. Moreover, the digital proportion of advertising revenue is growing steadily. Regional media companies simply cannot afford to play down all these developments, and must adapt their business models to exploit the areas of higher growth. The danger of insufficient action is that global players will devote more attention to the growing MENA opportunity, and invest the necessary resources to achieve a pre-eminent position in the market.

“Media companies need to assess the capabilities they will require if they are to make their digital transition work.”

For larger media companies, this means a wholehearted commitment to their OTT platforms, making it as appealing as possible to the consumer in terms of both content and design. The OTT platform cannot be regarded as a second-rate alternative to free-to-air channels. Media companies will need to produce a differentiated volume of original local content, and build scale through geographic expansion across the region. These platforms could either be purely subscription-based, or a mix between advertising and subscription tiers.

Given their more limited resources and audiences, however, it would be inefficient for smaller players to create and maintain their own platforms. They have two avenues open to them. They can pool their resources and content with other media companies to create a combined platform, thus reducing the costs and increasing reach for each individual company. Alternatively, they can work with a telecom operator as an aggregator to host content from various media companies on its platform in return for a proportion of the revenue. After all, telecom operators already have the attributes to perform this role effectively—a billing relationship with customers, and the necessary infrastructure and distribution capabilities. Even larger media companies could benefit from a telecom operator’s extensive reach when it comes to distribution. This is also a significant growth opportunity for telecom operators as they seek new revenue sources.

Media companies need to assess the capabilities they will require if they are to make their digital transition work. They must also determine how they can augment their capabilities in the most cost-effective way, possibly through acquisitions or partnerships. Essential competencies will include subscriber management, original content production, digital distribution, and viewer data analytics.

To ensure that the local media sector flourishes, governments should work with media companies to design effective digital regulation that protects consumers without stifling competition. The authorities should strive for simplicity in regulation oversight as too many regulatory bodies will result in a lack of clarity for media companies. Governments can also play an important role in supporting the development of content production infrastructure and ecosystems, such as stimulating innovation through funding and incubator projects in association with development funds, venture capitalists and other investors.

The Covid-19 pandemic has brought the future forward several years. As a consequence, consumer demand for digital video and audio content has grown at an extraordinary pace. Regional media companies, both large and small, have no choice but to respond in vigorous fashion. Digital can no longer be an afterthought.

This article originally appeared in Broadcast PRO ME, May 2021.

About the authors

Karim Sarkis is a partner, Karim Daoud is a senior executive advisor, and Abhijat Sharma is a senior manager, with Strategy& Middle East, part of the PwC network.

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Karim Sarkis

Karim Sarkis

Partner, Strategy& Middle East

Karim Daoud

Karim Daoud

Partner, Strategy& Middle East

Abhijat Sharma

Abhijat Sharma

Principal, Strategy& Middle East

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