OSN plans 'cinema for Saudi'

Expansion of offerings includes premiering of international films in the kingdom

Marc-Antoine d'Halluin says OSN may charge more in Saudi Arabia for VOD.
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Orbit Showtime Network (OSN) plans to launch a video-on-demand pay-TV service in September in a move that will see the network premiering films in Saudi Arabia, where cinemas are banned. The network will also broadcast current films on a pay-per-view basis in the other Gulf states.

Marc-Antoine d'Halluin, the president and chief executive of the satellite network, said newly released films would be available to subscribers for between US$4 (Dh14.70) and $5 a film but added that the company might charge more in Saudi Arabia, where cinemas were banned 30 years ago when the clergy deemed them to be un-Islamic. The network currently operates a video-on-demand (VOD) service, but this is the first time it will charge subscribers separately for current VOD content.

The service, to be launched in September, "will allow you to watch movies at pretty much the same time as theatrical releases elsewhere, and three to six months earlier than on Showmovies", Mr d'Halluin said. "There is really no reason why we couldn't premiere movies in Saudi Arabia, within the theatrical window," he said, referring to the period between a film's release at the cinema and on DVD rental. "In Saudi Arabia, it is likely that we'll price it at the same level as a theatrical ticket."

Jayant Bhargava, a principal at the consultancy Booz & Company, said the addition of VOD films could be a "valuable differentiator" for OSN but added that the relatively small size of the Arabic movie industry could limit its appeal. "VOD services in developed markets like North America correlates to 20 per cent of total pay-TV subscription revenues. So [OSN] could reach an increase of up to 20 per cent on its subscription revenues. But it will probably be less than that, because they will not be able to monetise it from an Arabic movie point of view," Mr Bhargava said.

"In Saudi Arabia, it's going to be about the appetite for international movies, because the Arabic movie industry is very small. The critical question is how many pay-TV subscribers will look for international movies," he added. Only 9 per cent of households in Saudi Arabia subscribed to pay-TV networks, Mr Bhargava said. In the free-to-air sector, 18 per cent of audience time was spent watching international films, which he said was "a very high percentage - but a declining trend: people are watching more chat shows and series".

OSN plans to start broadcasting 3D films this year. "We'll be able to push 3D movies through the satellite ? Those who have a 3D set will be able to watch 3D movies through this box. We are going to be launching Avatar in HD [high definition] on July 21. I hope to be able to push Avatar 3D at a later stage - it'll be a nice one to start with," Mr d'Halluin said. OSN is rolling out a new set-top box, Showbox HD, next month. The box will have a personal video recorder with a 500Gb capacity, compared with the 160Gb of the current hardware.

"We will be able to put a lot more content on the box, despite the fact that it's in HD, which takes up more space. It's like having a DVD store inside the hard drive of your box." The current and future set-top boxes being distributed by OSN have additional security features, making it harder for the channels to be picked up illegally. The greater protection against piracy could see the network invest more in its own content, Mr d'Halluin said.

"It changes our business model substantially. Because we've become a secure platform, it allows us to tap into opportunities we couldn't before. It's paving the way for us to gradually start investing in original content," he said. OSN is also preparing for the migration to high definition television broadcasts. The network said this year that it planned to deliver all of its 75 channels in HD by the end of 2012, followed by the closure of all standard-resolution services six months later.