Gangnam Style's two billion views versus The Big Bang Theory's 17.5 million viewers – who is the real winner in the contest between short-form's potential billions versus television's long-form's millions?
Do the maths – and we will get to that in a minute – and you have a vivid illustration of the enduring might and reach of television, even as it faces challenges on a number of fronts.
For the fast-growing Middle East market, the assessment is quite similar. Healthy and positive for the near term, though with its own nuances and challenges.
Let’s take an in-depth look at four key areas for television, both globally and regionally.
SVOD
Overview: Subscription video-on-demand (SVOD) is growing fast worldwide but is currently less than two per cent of the European pay TV market, and an even smaller share of Europe's TV revenues. SVOD in the Middle East accounts for less than 1 per cent of the world SVOD market, but is growing at a much faster pace.
The details: SVOD is seen primarily as a challenge to traditional pay TV providers, but is also perceived as a potential threat to free-to-air broadcasters. However, there are thousands of SVOD services, of which only a handful may be commercially viable in the long run. SVOD will both compete with and complement other TV services, and TV broadcasters need to determine just how much of a threat – or a partner – SVOD services may be. Middle East subscriptions for SVOD services significantly lag behind more established western markets. The challenge remains that the SVOD offering in the region is limited, especially when comparing the size and quality of the library of local providers with the likes of Netflix or Hulu. However, with online streaming already at 40 to 50 per cent penetration, especially in the Arabian Gulf, there is room for the SVOD market to grow.
Premium sports
Overview: Television remains the home of premium sports, with rights values globally forecast to rise by 12 per cent this year to US$28 billion, following a double-digit rise last year. For the Middle East, premium sports is set to outperform global sports in terms of growth for the second year running.
The details: The development of pay TV has transformed the broadcasting of premium sports leagues around the world. Live content is a key subscription driver and underpins pay TV business models. As the pay TV subscriber base rises and revenue per user grows, operators are investing increasing sums to secure this key content. In the Middle East, Deloitte estimates that this year and beyond the value of premium region-specific sports rights will continue to increase by at least 15 to 20 per cent a year, exceeding the 12 per cent rise of all premium sports rights estimated globally. The much lower base in the value of regional premium sports rights will still require significant investment, development and at least a decade to reach anywhere close to the levels of the big western leagues.
Video clips
Overview: Long-form traditional TV content remains dominant in viewing hours and advertising. Long-form ads generate about $200 billion annually worldwide, about 40 times greater than estimated revenues from video clips. In the Middle East, YouTube has broken the ice for short form but long-form content remains king.
The details: Now for the maths. The Big Bang Theory, one of the most popular US television shows, attracted an average audience of 17.5 million viewers in its most recent season. In comparison, Gangnam Style has amassed about 2.2 billion views since its release in 2012. Looking at the numbers more carefully, US residents have spent an aggregate of 38 million hours watching Gangnam Style since 2012, which is equivalent to the total viewing time for only four-and-a-half episodes of The Big Bang Theory. This is assuming that the average time spent watching the four-minute-12-second video is about 200 seconds (80 per cent of the total time), and that US residents have contributed a third of views worldwide. The Middle East, at 70 per cent penetration, is YouTube's second-largest market worldwide. However, despite short form's rise and success, it cannot compare with traditional long-form TV shows such as Arab Idol, which amassed over 100 million viewers in just its second year in 2013. Traditional TV in the Middle East is here to stay.
Innovation
Overview: The TV industry has long proven adept at exploiting technological advances. Critically, the industry has delivered consistent innovation in its prime role – storytelling. Closer to home, the GCC 's unique demographics, high smartphone penetration and engagement with social media are driving innovative approaches to TV content idea generation, production and distribution.
The details: Television’s innovations are typically small in scale and great in quantity. The TV industry has survived this decade of change by reinventing itself technologically across multiple aspects, such as production quality, distribution of content and programme financing.
Santino Saguto is a partner and Danah Khatib is a consultant at Deloitte Middle East.
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