Market Insight

MBC expands pay channels business with telco partnerships in UAE and Qatar

April 25, 2017  | Subscribers Only

Constantinos Papavassilopoulos Constantinos Papavassilopoulos Associate Director, Service Providers & Platforms
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MBC, the largest commercial broadcaster in the MENA region, has secured new carriage deals for its 17 HD channels, most recently partnering with UAE telco Etisalat to give the operator exclusive distribution rights in the country. Etisalat will carry the channels on its E-Vision IPTV platform, and any other operators wishing to offer them must negotiate deals with the telco.

The agreement will also see the MBC and Etisalat launch a new channel, scheduled to go live by the end of April. The channel will be exclusive to E-Vision, customers of which also have access to content from MBC’s SVoD service, Shahid Plus.

MBC’s deal with Etisalat comes after the broadcaster struck a similar one with Qatari telco Ooredoo in February. As with the latest agreement, Ooredoo has exclusive carriage rights to MBC’s full bouquet of HD channels, and the deal also covered the launch of a new channel, MBC+ Ooredoo, which debuted in March.  

Our analysis

The partnerships with Etisalat and Ooredoo are not MBC’s first foray into the pay content business. Back in 2009, the Dubai-based company, in partnership with DTH operator OSN, launched MBC Drama+ exclusively on pay TV. MBC later struck non-exclusive deals with DTH operator My-HD and Saudi Arabian online-video provider Selevision for carriage of eight HD channels. The broadcaster has also partnered with mobile operators in the Gulf countries to offer short-form recaps of episodes of popular Turkish TV series one day ahead of them airing on the MBC channel. And building on the success of its AVoD service Shahid, MBC launched an SVoD version, Shahid Plus, in 2014.

By entering into deals with Etisalat and Ooredoo, MBC is aiming to achieve a number of strategic goals, to compensate for the erosion of TV advertising revenues, which are shifting to online and mobile platforms. The absence of reliable audience measurement systems in the MENA countries – with the exception of the UAE – is further hindering MBC’s efforts to increase ad revenues.

Securing new carriage fees for its bouquet of HD channels serves to boost an emerging revenue source for the broadcaster. Although the MENA region boasts one of the larger HD channel offerings globally, almost half of these channels (47%) are offered for free. However, 2016 saw a clear reversal of this trend, with pay HD channel launches outnumbering free-to-air ones by more than 10 to one (22 pay to two free). MBC is riding this wave by securing deals for exclusive carriage of all its HD channels (including future launches) on pay TV platforms in specific countries – primarily in the Gulf.

The launch of brand new channels, such as MBC+ Ooredoo, exclusively on pay platforms is another means of generating new revenue. These channels will provide MBC with the opportunity to better exploit not just the premium content it owns, but also some of its niche programming as well.

In the online space, MBC is seeking to expand its Shahid AVoD service and, in particular, attract new subscribers to the Shahid Plus SVoD service. The arrival of international SVoD services such as Netflix, Amazon Prime and STARZ Plus in the MENA region has raised the stakes for pay TV operators, but it also having positive effect on the industry as a whole by normalising the concept of paying for content – doing so is not common the region. MBC firmly believes that its popular content puts it in in a better position than anyone else to benefit from a shift in consumer attitudes.

Finally, another tool that is likely to be important in MBC’s long-term pay distribution strategy is GOBX, a hybrid set-top box launched by the broadcaster in Saudi Arabia in November 2016, offering free and encrypted satellite channels (including HD) and supporting a broadband connection. Rollouts in other MENA countries are likely, though not confirmed. GOBX customers are required to purchase the box, which retails for around $70, but MBC does not charge any subscription fees. The service provides access to more than 40 HD channels, as well as live Saudi Football League matches for the 2016-17 season, for which MBC has the exclusive rights in MENA. GOBX does not yet provide access to any online services, though this is likely to change as the product gains traction. With the launch of GOBX, MBC is seeking to: gain ownership of its viewers by collecting valuable information about their consumption habits, with a view to taking a more targeted approach to advertising; and potentially build its SVoD subscriber base by distributing Shahid Plus on the platform.

IHS Markit believes that MBC’s recent moves evidence a clear shift in strategy. Until 2016, around 10% of the company’s revenues came from its limited pay TV endeavours. The partnerships with telcos for exclusive distribution of HD channels and brand new ones, coupled with the potential online-video revenue-generating opportunity associated with the GOBX platform, indicate that MBC is seeking to significantly raise the contribution pay content makes to total revenues within the next five years. We estimate that it could account for between 20% and 25% of the total within this timeframe.

Research by Market
Media & Advertising
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