Profitability of Middle East HDTV still fuzzy

ABU DHABI // High definition television (HDTV) will not be available in the Middle East until broadcasters see an economic incentive to make the switch, say the region's two largest television networks. Although major broadcasters have upgraded their production and transmission infrastructure to support the new standard, the costs of switching to HDTV are higher than the expected increase in advertising and subscriber revenues.

"It is difficult to put a time frame on exactly when we will begin, because it needs to make good business sense," said Azhar Malik, the vice president of marketing and public relations at Showtime Arabia, the Middle East's largest pay-TV network. "The decision to begin will be dictated by customer needs and their willingness to adopt and pay for the technology," Mr Malik said. "We are not at that stage today."

HDTV, which broadcasts at a quality similar to the new generation Blu-Ray optical disc format, has taken off in Europe and North America. It is particularly popular for televising sports matches and nature documentaries, both of which take full advantage of the increased detail and image quality. Its adoption in these markets was aided by mandatory government switchover dates and heavy competition for advertising and subscribers, whereas governments in the Middle East have yet to set a required switchover date, and broadcasters are already reaping healthy profits from growing markets.

"While there is a lot of hype and interest in HD currently - driven to a greater extent by the consumer electronics companies - the demand for HD programmes by customers and their willingness to pay for this service is still limited," said Mr Malik. Tim Thorsteinson, the president of Harris Communications, a major supplier of HDTV equipment to broadcasters and production houses, believes that commercial viability is the most significant roadblock in the adoption of the new system.

"A lot of TV stations look at HDTV and wonder if it will get them any new advertisers. That is really a core issue for broadcasters here - will all this equipment and cost pay itself off with increased ad revenues?" he said. Competitive pressure also drove networks abroad to adopt HDTV as a new standard, he explained. "If other networks are doing it, then it puts pressure on the ones who are not. Nobody in America wants to watch a sports match in standard definition anymore. So if you're a sports broadcaster, you have to offer HDTV."

Al Jazeera English, the global news network based in Qatar, became the first news broadcaster in the world to offer HDTV when it launched in 2006. MBC, which is the Arab world's largest free-to-air satellite broadcaster, is technically equipped to offer the service, but remains sceptical of its costs and benefits, said Mazen Hayek, the director of marketing and public relations at MBC. "The deployment of high-definition television will only make sense if it were to bring tangible benefits and real added value to MBC's loyal viewers," he said. Such benefits would need to be coupled with high returns on investment for advertisers, he added.

"Today, the consumer market in the Middle East and North Africa is not yet ready to receive the high-definition broadcasting signals," Mr Hayek said. "Till the market matures, MBC Group will keep monitoring the technical aspects of HDTV, while staying committed to providing viewers with the best available content." The switch to HDTV will also require additional transmission capacity on communications satellites targeting the Arab world.

New satellites being launched by Arabset, a pan-Arab consortium, and the UAE's YahSat, a satellite company founded by Mubadala, will provide much of the additional bandwidth needed for high-definition broadcasting. @Email:[e-mail]