Market Insight

OSN to launch new flexible package and cut expensive sports programming

February 22, 2019  | Subscribers Only

Constantinos Papavassilopoulos Constantinos Papavassilopoulos Associate Director, Service Providers & Platforms

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OSN, the Dubai-based pay TV operator, has officially launched a new TV service in Saudi Arabia and a number of Gulf countries. The new service, called El Farq, which means “The Difference” in Arabic, is a flexible entertainment package that does not tie up the subscriber with a long-term contract. El Farq offers monthly renewal options, precisely like the main OTT subscription services all around the globe.

OSN claims El Farq will provide its subscribers in Saudi Arabia with value for money for several main reasons. First, because of its content offering which includes all six premium OSN film channels, out of a total of 56 channels for the whole package. Second because the price of 159 Saudi riyals ($43) per month is the cheapest price ever offered for an OSN high-tier package. Finally, OSN claims El Farq provides the subscriber with the option of a simple online purchase process and guarantees the latest children’s, lifestyle, movies and TV series programming for the whole family.

Separately, OSN is shutting off most of its sports channels in an effort to better control programming costs. The operator will retain only the its cricket-programming channels OSN Sports Cricket HD and its bouquet of TEN Sports channels. OSN plans to replace this content with additional lifestyle content tailored for a female audience.  

Our analysis

The launch of the El Farq package and the de-investment in sports programming form part of a new commercial strategy by OSN to tackle several major challenges thwarting the growth of its pay TV business in Middle East & North Africa (MENA).  OSN appointed a new CEO at the end of November 2018. Under the previous management, OSN made concrete steps into disassociating the company from the perception it is a very expensive pay TV operator and beyond the means of the average TV viewer in MENA. OSN launched new low-cost packages for its pay TV service in February 2017. In addition, the company launched a new OTT SVoD service, called Wavo, in the summer of 2017, which is based on a similar business mode to that of Sky ‘s NOW TV service in the UK. The service adopted a skinny-bundle business model. The new strategy paid off for OSN by stopping the downward trend in subscriptions to the company’s satellite service, which commenced in 2Q2015.

However, OSN is again facing several challenges including severe delays in critical business initiatives such as its deal with Netflix. In February 2018 OSN announced a partnership agreement with Netflix, which was the first agreement between a pay TV operator and the Los-Gatos OTT service in MENA. The Netflix app would have been accessible via a new hybrid set-top box that OSN planned to launch towards the end of Q2 2018. This project faced severe delays and the launch date was moved to the second semester of 2019. The delay is likely to negatively impact subscriber take-up, given Netflix has inked deals with telecom operators in the interim. For example, Du introduced the Netflix app to its service without the need of a new set-top box in 4Q2018. Separately, the Wavo service has found a rather lukewarm acceptance by the MENA public. IHS Markit analysis indicate Wavo added 36,000 subscribers to its service by the end of 2018, a figure which is distant from the six-digit numbers OSN hoped to achieve.

Under the new management, OSN seems determined to follow the same business strategy, albeit in a more aggressive manner. First salvo of this strategy is the shut off of costly sports programming which has failed to deliver the masses of subscribers that OSN was hoping to attract. The company will retain only its cricket-focused channels to target the large Indian and South-East Asian ex-patriates communities residing in the Gulf countries. Second, OSN is re-orientating its content investment to obtain rights to programming which better tailors for a female and family audience. Third, the company is focusing on signing more partnerships with local content producers and content owners, in an effort to significantly enrich its Arabic language content offering. In 2019, between 15% and 20% of OSN’s content offering is in Arabic language which the pay TV operator plans to increase to 30% over the next 2 years.

OSN’s major competitor, beIN Media, is making aggressive moves to acquire premium content, especially after it launched entertainment packages in November 2015. The success of beIN Media is recognized as a cardinal threat to OSN’s business survival. BeIN Media, fully backed by the Qatari government, is keenly interested in snatching away from OSN the contracts the company has signed with the major US studios. OSN, under the previous management, acted quickly to secure long-term partnerships (up to 2022 in the majority of cases) with almost all major US studios including Disney, DreamWorks, Fox, HBO, MGM, NBCUniversal, Paramount and Sony. Only Warner has switched sides, in recent times, moving from OSN to beIN Media from 2019. However, securing US studio content has come at a high cost to OSN and the company now has little option but to try and recoup this investment through an aggressively expansion of its subscriber’ base.

In addition to a shift toward programming for a female and family oriented audience, OSN is also keen to attract the millennials, particularly the demographic group of 25 to 44 years old. This group wants to consume content on the go, in a variety of devices and tends to avoid long-term commitments and subscribing to pay TV packages. Therefore, OSN is implementing a multi-pronged strategy to appeal to this demographic group, including:

  1. Lower the cost of accessing premium content. El Farq is the best example as it is offering 6 OSN movies channels, which were previously offered exclusively to the higher-tier subscribers.
  2. Invest in local content and launching more Arabic language channels.
  3. Become device agnostic and offering content to a variety of devices.
  4. Embrace the binge-watching culture by launching a channel with compelling Arabic and US TV series to encourage viewers to watch multiple episodes in rapid succession.
  5. Remove the obligation of committing to long-term contracts as El Farq is offering monthly renewal options.
  6. Transform OSN from a traditional pay TV operator into a content aggregator offering premium (mostly non-sports content) from a variety of sources like Netflix or Arab content producers. OSN has not ruled out the possibility of complementing the partnership with Netflix by bringing on-board other local and international OTT subscription.


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