By Jyoti Lalchandani
When news emerged from the United States last week of a deal that would see Charter Communications acquire media giant Time Warner Cable for more than $56 billion, the reverberations were felt right across the industry. And with good reason, for the proposed deal will combine the second and third largest cable operators in the country, with the new entity serving 23.9 million customers across 41 states.
For a number of years now, cable companies in the U.S. have been coming under intensifying competition from online service providers such as Amazon and Netflix. The common response has been to initiate efforts aimed at cutting costs and improving the quality of their content, but there was always a sense that industry consolidation on the scale of this latest deal was ultimately inevitable. Indeed, a number of industry commentators have suggested that the merger addresses a long overdue need for a strong national player that can offer faster services for watching and playing online content.
At this point, you may be wondering what relevance this has to our own region. And the answer is "a lot". There may be various different factors at play in each of the two markets, but the endgame remains the same – customers are increasingly shunning the idea of traditional 'linear' TV, choosing instead to view video content at a time of their convenience. Commenting on the future direction of the industry, Charter's CEO, Thomas M. Rutledge, said "It is not just the small screens or the large screens in the house, it is the mobile screens and more." And it is this observation that rings particularly true here in the Middle East and North Africa (MENA).
Viewing habits in the region have steadily been moving away from traditional linear TV sources in recent years, with the market no longer revolving around the act of watching 'live' TV on large television screens. The days of sitting down in the living room at 7.30 every evening to watch your favorite show are becoming a thing of the past, with 'TV Everywhere' options such as digital video recorders (DVRs), video-on-demand (VOD) services, streaming platforms, and catchup services offering the ability to consume content whenever, wherever, and however the viewer decides.
Given this evolution in viewer behavior, the focus is shifting noticeably to video content as providers leverage its ability to engage, inspire, and draw in consumers. And on top of all this, a multitude of untethered content services have recently emerged to stoke the flames of competition in the MENA region, including the likes of Go by OSN, Invision by STC, Icflix, istikana.com, and StarzPlay. These over-the-top (OTT) providers are offering ad hoc on-demand content without the need for ongoing subscriptions, and they have the potential to cause as much disruption here as Amazon and Netflix have in the States.
It is abundantly clear that MENA represents a truly dynamic and growing content market, with pay-TV companies, free-to-air (FTA) giants, and regionally focused OTT offerings all vying for eyeballs and attempting to maximize their potential profits on video content. How they ultimately achieve this is the million-dollar question, although various strategies are beginning to take shape both here and in the more mature media markets of Western Europe and the United States.
Typically sitting front and center of these strategies is the quest to enhance customer interaction, with social media and content personalization becoming essential for appealing to the region's huge youth population. The ability to properly harvest and analyze customer data plays a key role in this, enabling providers to tailor content offerings through highly tuned auto-generated suggestions that direct individual viewers to must-watch features that they would otherwise miss altogether. Gamification initiatives have also been successful in this regard, generating enhanced customer insights and facilitating a more in-depth understanding of consumer behaviour.
Alongside this, we are seeing the emergence of digital advertising strategies in the region, with the likes of Du and Etisalat beginning to experiment with dynamic ad insertion (DAI) techniques in a bid to squeeze greater advertising revenue from their video content. And elsewhere in the region, the introduction of innovative new payment systems is helping to unlock the huge potential customer base here in MENA that is either unwilling or simply unable to pay for services through traditional channels.
The options may be myriad but it is clear that the industry has now reached a critical junction in its evolution. Viewing habits are shifting irrevocably right across the world, and as Charter's CEO noted, the method used for accessing content is becoming less important. Whether it is viewed on a big screen, a laptop, a tablet, or a smartphone is largely irrelevant; what truly matters is that video is now a megatrend that is here to stay. The fallout here in MENA is unlikely to be as dramatic as a $56 billion takeover bid, but with multiscreen video experiences set to shape the future direction of the market, the next few years should be eventful to say the least!
(The columnist is group vice president and regional managing director for the Middle East, Africa and Turkey at International Data Corporation (IDC) . He can be contacted via Twitter @JyotiIDC)
The Peninsula
