Regional pay-TV revenues expected to double as Iran opens up

Standalone services such as Netfix and Starzplay, however, are unlikely to have a significant disruptive impact in the near future, IHS said.

Above the cast of House of Cards' season 4. David Giesbrecht / Netflix

Pay-TV revenues across the Mena region are forecast to nearly double over the next five years as Iran’s market opens up following the lifting of sanctions, according to new research from IHS.

Revenues from pay-TV service providers such as OSN and BeIN are forecast to rise to just over €2 billion (Dh8.21bn) per year across the Mena region by 2020, compared with €1.17bn in 2015, according to Constantinos Papavassilopoulos, a senior analyst with IHS Technology.

Standalone services such as Netflix and Starzplay, however, are unlikely to have a significant disruptive impact in the near fut­ure, IHS added.

Such an increase in pay-TV revenues is contingent on the opening up of Iran’s broadband infrastructure, currently lagging behind markets such as the UAE and Qatar, and the ability of international broadcasters to deliver engaging content for Iranian viewers.

Broadband penetration was at 56 per cent of Iranian households at the end of 2015, according to IHS.

“However, due to the Iranian government policy of regulating access to the internet for its citizens, broadband speeds are lower than in neighbouring Arab states,” Mr Papavassilopoulos said.

And while the recent lifting of sanctions against Iran may lead to some of these restrictions being lifted, leading to an increase in internet TV subscription packages, Mr Papavassilopoulos stressed that broadcasters will not be able to simply offer repackaged content from the wider region.

“The content has to be original,” he said. “It’s not just the language barrier. We had the example of MBC Persia, that was launched in 2008 offering western and Arabic content dubbed in Farsi, which was not well received, and was eventually rebranded as MBC Plus variety offering just Arabic content.”

The Mena region is cur­rently the fastest growing pay-TV market in the world, thanks to an increase in locally produced content, the consolidation of the market around the two dominant players of OSN and BeIN, and increasingly effective anti-piracy measures, said Mr Papavassilopoulos.

Revenues from across the region rose to €1.17bn in 2015, with the number of pay-TV households increasing 10 per cent to 4.95 million across the same period, according to IHS research.

In the UAE, annual pay-TV revenues rose 33 per cent to €342.1 million in 2015, and are forecast to grow to €498.8m by 2020.

Stand-alone internet video ser­vices such as Netflix and Starzplay, are meanwhile, not expected to adversely affect the region’s pay-TV revenues and subscribers, according to Mr Papavassilopoulos.

“There are a lot of factors that will hinder the success of Netflix and Starzplay in the initial stages, not least the lack of Arabic language content, as well as low broadband penetration across large parts of the region,” he said.

"The fact that they've now shut down the ability to watch via VPN means that the local offering in the region is much more limited than in the US, with the latest seasons of House of Cards and Orange is the New Black unavailable in the region."

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