Internet revenue spike forecast

Online media revenue in the MENA region is expected to increase to US$600 million (Dh2.2 billion) by 2015 from less than $100m last year, research shows.

Online media revenue in the MENA region is expected to increase to US$600 million (Dh2.2 billion) by 2015 from less than $100m last year, research shows. The report, by Booz and Company, also showed that mobile revenues are set to hit $2.7bn. This surge is part of a global change that is making digital media at least as important as traditional media, forcing companies in the industry to adapt rapidly, said Karim Sabbagh, the global leader of media practice at Booz and Company.

"To debate which one is going to be more important, I guess none of us has the answer today, but definitely this is a brave new world and we need to be ready for this," Mr Sabbagh said. "The future will significantly go beyond the traditional playbook that we have." He said the company's research on MENA audiences showed that 36 per cent of those asked spent periods of two hours or more watching television, while 70 per cent said they spent periods of two hours or more on the internet.

"So this pretty much tells us where our audience, our readers, and our users are going to be," Mr Sabbagh said. He said the debate was "not a binary discussion" about traditional media versus digital media, as digital media's growth would be part of growing media revenues in the region. Mr Sabbagh added that media's double-digit growth in the MENA region in the next five years would make it a centrepiece of the region's economic development.

"By 2015, we estimate that close to 40 per cent of the population in the MENA region will be connected in one way or another by some sort of broadband access," he said. Mr Sabbagh was speaking at the opening of the Abu Dhabi Media Summit. He said the increasing digitalisation of media meant that both telecommunications and media companies would experience revenue growth, although telecoms would probably continue to benefit the most.

"If you think there is $100 to be made in our industry, a few years ago $75 of those were made by the telcos, $5 by the device manufacturers and $20 by the media companies," he said. Since then, the introduction of smartphones has widened the device manufacturers' slice, allowing them to nibble from the revenues of both the media companies and the telecoms companies. "But the total pie is not $100 any more," he said. "It's many multiples of that. That is what makes it interesting to global players in this part of the world."

A spirit of co-operation between media companies and telecoms was evident at yesterday's opening conference, with Ahmed bin Ali, the senior vice president of corporate communications at Etisalat, seated next to Edward Borgerding, the chief executive of Abu Dhabi Media Company, which owns and publishes The National. "I think what we can see in the future is having both industries growing closer, and the conversion between telecom and media," Mr bin Ali said.