Digital Broadcast ME - July 2010 by ITP Business Publishing

THE BUSINESS OF DIGITAL CONTENT DELIVERY

An ITP Business Publication

ROADMAP FOR MOBILE What next for the troubled format?

TESTING TIMES How T&M can reduce churn

WEB PLAYERS The online video site set to shake-up Middle East TV this Ramadan Amir Hegazi, GM, Vidunia Vidunia (le (left); ft); Kal Kaleil eil Isaz Isazaa Tuzman Tuzman,, chairm chairm airman an & CEO CEO,, KIT KKIT digita digita gital.l.l Licensed by Dubai Media City

VOLUME 3 ISSUE 7 JULY 2010

More satellites in 2010, more capacity to let you reach farther than ever With new, more powerful, state-of-the-art satellites launching every year until 2012, the largest Arab community in the sky is growing faster than ever. In 2010 alone, two more satellites are joining our fleet. Badr 5 at 26º East will bring unrivalled capacity for the coming HDTV revolution and provide “hot” in-orbit backup for Arabsat DTH services, while Arabsat 5A at 30.5º East will provide unprecedented 100% coverage of the entire African continent. Indeed, from the Middle East to the whole of Africa—and to Europe and beyond—Arabsat now offers more reach, reliability and flexibility like never before. Join our premium neighborhood now!

www.arabsat.com

CONTENTS

WEB HIGHLIGHTS Spot poll: What now for MENA World Cup coverage?; top web stories; editor’s choice: IN PICTURES: Al Jazeera woes.

THE BRIEFING Saudi TV drops commercialisation hints; OSN to go all HD by 2013.

WRITTEN IN THE STARS Is the Middle East set for a period of surplus or shortage of satellite capacity?

COVER STORY: WEB PLAYERS The new Arabic online video service looking to take advantage of the maturing market.

THE MOST COMPREHENSIVE FAMILY OF DIGITAL TV MONITORING, MEASUREMENT AND ANALYSIS PRODUCTS IN THE WORLD

MARKET ANALYSIS The pay TV market will continue to grow but with a shift in platform and location.

ALSO IN THIS ISSUE...

SET TO PEAK

TESTING TIMES

How one of the UAE’s smaller emirates is on the rise in the media world.

How to use T&M equipment efficiently with evolving broadcast technologies.

www.digitalproductionme.com

JULY 2010 03

DPME.COM ROUND-UP

The online home of:

AJ SPORT SHIFTS BLAME FOR WORLD CUP WOES

WEBMASTER

The broadcast and TV technology bringing the World Cup to hundreds of millions of homes.

Ikoo CEO and online ad guru Isam Bayazidi reveals how broadcasters can get more from the web.

digitalproductionme.com/analysis

digitalproductionme.com/interviews

TECHNOLOGY

COMMENT

APPLY YOURSELF

INDIAN TV CENSORSHIP

The best iPhone apps for broadcast professionals.

digitalproductionme.com/technology 04 JULY 2010

Ten big moments in the history of 3D

Arabsat unveils plans for satellite broadband

TFrance Telecom eyeing ‘four or five’ MENA deals

Middle East leads EMEA media recovery: PwC

EDITOR’S CHOICE IN PICTURES

AL JAZEERA WOES

Ten defining moments in the history of 3D entertainment.

INTERVIEWS

GREATEST SHOW ON EARTH

READER COMMENT: “The fact is, if their systems were resilient & redundant this would have been overcome. If FIFA are going to allow monopolies to exploit their customers, at least make sure we receive what we paid for.” Kevin, Dubai, UAE.

ALSO ON THE DPME SLATE THIS MONTH... ANALYSIS

Technicolor develops cheap way to show films in 3D

The legal perspective on Indian censorship regulation (or lack of).

digitalproductionme.com/comment

SPOT POLL WHAT SHOULD BE DONE ABOUT AL JAZEERA’S WORLD CUP PROBLEMS?

47%

FIFA should make it FTA.

41%

It makes no difference; no one has a clue about customer service.

12%

Another broadcaster should get the rights.

AJ should keep rights.

DATE: June 28

Al Jazeera Sport points the finger of blame elsewhere as World Cup coverage is dogged by signal loss, poor video quality and random changes in audio track. digitalproductionme.com/news

DATE: June 28

MOST POPULAR STORIES

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COMMENT

Registered at Dubai Media City PO Box 500024, Dubai, UAE Tel: 00 971 4 210 8000, Fax: 00 971 4 210 8080 Web: www.itp.com Offices in Dubai & London ITP BUSINESS PUBLISHING CEO Walid Akawi Managing Director Neil Davies Deputy Managing Director Matthew Southwell Editorial Director David Ingham Commercial Director Fred Dubery EDITORIAL Senior Group Editor Robeel Haq Tel: +971 4 210 8597 email: robeel.haq@itp.com Editor John Parnell Tel: +971 4 210 8655 email: john.parnell@itp.com ADVERTISING Commercial Director Fred Dubery Tel: +971 4 210 8381 email: fred@itp.com Japan Advertising Representative Mikio Tsuchiya Tel: + 81 354 568230 email: ua9m-tcy@asahi-net.or.jp STUDIO Group Art Editor Daniel Prescott Art Editor Simon Cobon PHOTOGRAPHY Director of Photography Sevag Davidian Senior Photographers Efraim Evidor, Jovana Obradovic Staff Photographers Isidora Bojovic, George Dipin, Murrindie Frew, Lyubov Galushko, Shruti Jagdesh,Mosh Lafuente, Ruel Pableo, Rajesh Raghav PRODUCTION & DISTRIBUTION Group Production Manager Kyle Smith Deputy Production Manager Matthew Grant Managing Picture Editor Patrick Littlejohn Image Editor Emmalyn Robles Distribution Manager Karima Ashwell Distribution Executive Nada Al Alami CIRCULATION Head of Circulation & Database Gaurav Gulati MARKETING Head of Marketing Daniel Fewtrell Marketing Manager Annie Chinoy ITP DIGITAL Director Peter Conmy ITP GROUP Chairman Andrew Neil Managing Director Robert Serafin Finance Director Toby Jay Spencer-Davies Board of Directors K.M. Jamieson, Mike Bayman, Walid Akawi, Neil Davies, Rob Corder, Mary Serafin

QUESTIONABLE QUALITY

he World Cup debacle should serve as a dire warning. Audiences had little to no interest in the actual source of the problems. Al Jazeera, as the customer facing broadcaster, was the target of the criticism, regardless of how legitimate that criticism was. Its response was defiant and in no way conciliatory. The World Cup problems were an isolated incident. There are ongoing problems that are far more significant. The quality of service in the Middle East is well below par. The lack of accurate data in most electronic programming guides continues. A vast number of the region’s channels are broadcast with poor quality video and frequently tinny, popping audio. Customer service is notoriously bad. A number of readers (including yours truly) have had frustrating experiences swapping out set top boxes. The number of missed appointments for the pick-up of the old box is approaching double figures in my case with drivers repeatedly going to the wrong address or failing to show up at all. Call centres are unresponsive and all too frequently, uninformed.

Getting connected to a pay TV service can be just as difficult and inevitably billing starts well ahead of the actual connection date. When all of this information is compiled, even the low pay TV penetration in the region seems miraculous rather than disastrous. Many of these problem services; billing, call centres and so on are outsourced by operators, so the message is clear, ask more from these partners or fi nd new ones. The audience is key to any objective of a TV station – commercial or otherwise. With the exception of some IPTV operators and networks pushing out HD channels, there has been little improvement in service in the last three years. The quality of experience should be enticing people to shun piracy in favour of legitimate source of entertainment, not driving them toward it.

JOHN PARNELL Editor john.parnell@itp.com

Circulation Customer Service Tel: +971 4 210 8000 Certain images in this issue are available for purchase. Please contact itpimages@itp.com for further details or visit www.itpimages.com. Printed by Color Lines Printing Press

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FOR THE LATEST NEWS, ANALYSIS AND REVIEWS FROM THE MIDDLE EAST CONTENT DELIVERY, MEDIA MANAGEMENT AND NEW MEDIA DISTRIBUTION BUSINESS HEAD TO DIGITALPRODUCTIONME.COM

TO SUBSCRIBE please visit www.itp.com/subscriptions JULY 2010 07

THE BRIEFING

GOOD MONTH FACEBOOK The runaway success of all the social networks has apparently been growing revenues as well members. Several sources close to the company told Reuters that the company’s 2009 revenues were as high as US $800m, far greater than the $500m estimate by the company itself. “They are downplaying their performance. There’s no upside in getting people’s expectations high, it’s always better to go low,” said one of the sources.

BAD MONTH BEBO Two years after being bought by AOL for $850m, struggling network Bebo was sold-off to merchant bank Criterion Capital for a fee rumoured to be as low as $10m. The company is set to gain in the region of $300m in tax benefits as a result of the sale. “The deal will allow Bebo’s users to remain within the social platform, while enabling a new owner to bring new possibilities and experiences,” said Tim Armstrong, CEO, AOL.

08 JULY 2010

BROADCAST BUSINESS

SAUDI TV HINTS AT PRIVATISATION PLAN Ministry of Culture and Information official backs commercialisation The quality of Saudi TV would improve after Similar comments were made last year by Dr commercialisation, according to an official from Riyadh Najm, assistant deputy minister engithe Kingdom’s Ministry of Culture and Informa- neering, MOCI. tion (MOCI). “Nothing is finalised yet. We are still holding The MOCI is also keen to privatise its nine talks with key government entities about possichannels in order to circumvent restrictive regu- bly commercialising Saudi TV,” said Dr. Najm. latory conditions. “We want to run the organisation more “I think that turning Saudi TV and efficiently and profitably. Of course, it radio station into private institutions will continue to be a part of the governwould free this sector from lots of rement and abide by local customs. strictions,” said Eng. Saleh Al MughaiHowever, there will be greater efleth, assistant deputy minister of inforts to make it profitable. Right formation for television affairs. now, all the investments for Saudi Al Mughaileth also added TV comes from the Ministry of that Saudi TV currently faces Finance and any revenue a number of bureaucratic, generated also goes to the fiscal and administrative Ministry. There is no challenges because it co-relation. We must complies with governbe able to generate ment rules on adverrevenue and opertising. ate profitably.” Dr Riyadh Najm, assistant deputy minister engineernig, MOCI.

MOTOROLA EYES MIDDLE EAST MARKET The Motorola Home business has identified the Middle East as a major growth region for its video services, according to a senior executive at the company. “Motorola Home is putting all its resources into this region at the moment, it will make a step-change in our business going forward,” said Steve McCaffery, VP and GM, Motorola Home. “I see KSA as one of the largest growth markets for us in all of the EMEA. The majority of our market share has come form the incumbent carriers in Western Europe but now the focus for us in terms of resources and opportunities for development is in Middle East.” Speaking after the Arab Advisor’s Media and

Telecoms convergence conference, McCaffery said that there had been a noticeable switch on attitude to content distribution. “Certainly over the last nine months the Middle East has shown a very strong drive towards video distribution systems. The onset of both wireless broadband and fi xed broadband with ultra high data speeds has driven them [the telcos] to look for new revenue streams through video services. “It was astounding to see the number of customers and CxO level executives that attended the conference and showed their commitment to the convergence process in the Middle East,” added McCaffery.

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THE BRIEFING

DELIVERY

SIGNAL PROBLEMS BLIGHT WORLD CUP COVERAGE Reception losses continue as claims of industrial sabotage cause confusion over cause of issues Al Jazeera Sports has claimed that unnamed elements deliberately disrupted its coverage of the FIFA World Cup with a number of alternative theories arising as the tournament progressed. Nasser Al Khelaifi, general manager of Al Jazeera Sport, initially claimed that the people responsible for “destroying our signal” would be found “very soon”. His statement came after the fi rst game, South Africa vs Mexico, was blighted by repeated losses of picture and the English language commentary suddenly switching to the French audio track.

The debacle continued with disruption affecting further matches in the tournament after a brief period without disruption.

Meanwhile Digital Broadcast learned that Al Jazeera was evaluating a conditional access swap-out prior to the tournament with the intention of sending the “kill signal” on the fi rst day of the event. It is not clear whether this process could have affected the Nilesat signal only and leave the Arabsat feed unblemished. Al Jazeera has made no further comment since its accusations against satellite operator Nilesat. Nilesat has also remained tight-lipped after initially angrily refuting accusations of wrongdoing.

QUOTE OF THE MONTH

It’s a good thing that there was a cull [of FTA channels] just to keep the numbers down, to make the market sensible and ensure that TV is of interest to people as a marketing tool. The medium has done extremely well during the downturn. MEKKI ABDULLA CEO, FUJAIRAH MEDIA

Zoran Vasilijev, MD, Value Partners.

Elie Aoun, COO, Ipsos MENA.

M&A ACTIVITY TO RISE IN REGION

IPSOS WINS AJ SPORT CONTRACT

A rise in merger and acquisitions activity among Technology, Media and Telecoms (TMT) firms is expected in the Middle East, according to a report by Value Partners. “The acquisition of content providers and producers has been limited, due to the low uptake of IPTV and mobile TV in the region,” said Zoran Vasiljev, MD, Value Partners

Media research agency Ipsos MediaCT will provide Al Jazeera Sports with viewership research data for football matches staged during the FIFA World Cup and the UEFA Champions League, the company has announced. Ipsos will conduct day-after-recall interviews in KSA, UAE, Egypt, Kuwait, Yemen, Syria, Jordan Iraq and Iran, following live matches.

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QATARI CINEMA AUDIENCE FIGURES TRIPLE IN JUST FOUR YEARS The number of cinema-goers in Qatar tripled between 2005 and 2009, according to statistics released by the Qatar Statistics Authority (QSA). Aided by an increase in the number of cinemas from nine to 25, attendances leapt from 374,568 to 1,365,000.

JULY 2010 09

THE BRIEFING

DELIVERY

ALL OSN CHANNELS HD BY 2013: D’HALLUIN Pay TV operator sets target date for SD switch-off as HD gains traction

Broadcasters around the world deployed new audio filtering technology to counter the ever-present vuvuzela horns at World Cup matches. The BBC received more than 500 complaints from UK viewers about the instrument. International audiences were far from enamoured, with many complaining that the combined drone created by the instruments makes it difficult to hear TV commentary. French audio lab Audionamix created a specialised filter designed to remove the vuvuzela frequencies from a the mix, without distorting or dampening the rest of the atmospheric sound of the fans. Pay TV network CANAL+ was the first to apply the technology to its coverage of the competition. “We were watching the World Cup and found our enjoyment of the experience hindered by the loud drone created by thousands of vuvuzelas,” said Olivier Attia, CEO, Audionamix. “Our engineers immediately went into the lab and emerged 48 hours later with a solution.” 010 JULY 2010

BROADCAST BRIEFS

WORLD CUP BROADCASTERS TURN TO TECHNOLOGY TO SILENCE VUVUZELAS

Pay TV operator OSN has said that it intends to offer all its channels in HD by 2013. The network currently offers nine channels in the HD format but hopes to transfer all 75 by the end of 2012 and will switch-off its SD services six months later. “I’d estimate that by mid- to end-2011 every one of our in-house channels will be available in HD,” Marc-Antoine d’Halluin, CEO, OSN told newspaper The National. D’Halluin also said that the non-HD

$1.7 trillion

channels would be available for six to 12 months after that meaning the network would be HDonly by 2013. OSN is seeking to position itself as the fi rst choice for HD content in the Middle East after its reign as the English Premier League broadcaster in the region ended. “We have very good reactions from the market that the Middle East wants HD. OSN is already the biggest platform for HD in the whole region – and the whole company is Marc-Antoine gearing up behind the d’Halluin, CEO, OSN. HD effort,” he added.

The value of the global media and entertainment market in 2014 according to PricewaterhouceCoopers, up from $1.3 trillion in 2009.

MOVERS & SHAKERS MARQUIS APPOINTS NEW PRODUCT MANAGER Software developer Marquis Broadcast appointed John Woodhouse as product manager. Woodhouse will map out the future development path for the company’s Media Highway Technology, which forms the underlining architecture for the its Medway media transfer and format conversion software. Woodhouse previously held the position of head of operations at Softel in addition to several product management and marketing positions with Quantel.

ROSS PROMOTES BRIAN OLSON Ross Video announced the promotion of Brian Olson to XPression marketing product manager. Olson previously held the position of XPression business development manager for the US market with Ross. “Brian has done a great job developing our XPression business in the US. He has a deep passion for graphics and character generators, and their use in broadcast, production and branding applications,” said Jeff Moore, executive VP sales and marketing, Ross Video.

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THE BRIEFING

Marc Rennard, executive director MEA and Asia, France Telecom.

FRANCE TELECOM EYES MEA DEALS ‘THIS SUMMER’ France Telecom is eyeing four or five acquisitions in the MENA region during the next five years and some deals could be concluded this summer, according the fi rm. In April the company said it was looking to invest a total of US $8.6 billion in the region. “Perhaps we will sign in the summer, perhaps it will take six months,” said Marc Rennard, executive director for MEA and Asia, France Telecom speaking to Bloomberg. “We do not want to deteriorate our Ebitda (earnings before interest, tax, depreciation and amortisation) ratio, but we need growth,” he added.

MIDDLE EAST FREE-TO-AIR CHANNEL GROWTH SLOWS The growth rate of free-to-air (FTA) channels in the Middle East has slowed to just 2.7 percent between April 2009 and April 2010, according to the latest report from the Arab Advisors Group. The research found that there are now 487 FTA channels broadcasting on Nilesat, Arabsat and Noorsat with 13 new channels emerging between March 2009 and April 2010 compared to 104 new additions between August 2007 and March 2009. The most common genre of the FTA stations are general-private sector channels, which constitute a share of 19.6 percent.

SATCOMMS MARKET ARABSAT TO OFFER BROADBAND SERVICES; LAUNCHES NEXT-GEN SATELLITE Satellite operator Arabsat has officially unveiled and one each in Yemen, Jordan and Afghanistan. its plans to offer satellite-based broadband The company also successfully launched its new services in the MENA region. Arabsat 5A satellite after a brief delay caused by a The company first disclosed its intentions at problem with the launch infrastructure. an industry conference in Dubai last December According to Arianespace – the launch service but has now spoken publicly of the service – provider – it “postponed its Ariane 5 flight... followbranded Ar@b Surf – for the first time. ing a pressurisation anomaly”. The expense of installing terrestrial The launch was finally undertaken three networks throughout sparsely popudays late on Saturday June 26. lated areas of the MENA region has “We are very thankful for the successleft broadband services limited to ful launch of 5A that will cover the whole major cities. Satellite broadband African continent for the first time,” can be received through a said Khalid Balkheyour, president relatively small 0.6m dish and CEO, Arabsat. “It will provide in any part of the service’s satellite television broadcasting, coverage. The proposed telephone connections, broadcoverage area is made up band services, VSAT and of 10 spot beams, five interactive services. It repover KSA, two in Iraq resents great progress.” Khalid Balkheyour, president and CEO of Arabsat.

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BROADCAST BRIEFS

Mazen Hayek, official spokesperson, MBC.

YAHLIVE CHIEF PREDICTS MAJOR TV INDUSTRY REFORMATION The Middle East broadcasting industry has reached a defining moment in its development that could see a shift from today’s free-to-air (FTA) landscape towards subscription-based, on-demand services, according to YahLive CEO Mohamed Youssif. The growth of FTA channels in the region has levelled-off during the past year and Youssif believes this is the beginning of a major reorganisation of the broadcast industry as a whole. “At the moment people give their spare time to view free entertainment,” said Youssif, speaking exclusively to Digital Broadcast. “But this model will not last much longer. People don’t have much free time these days, now they want to watch what they want, when they want.” “We are at a crossroads and the [business] has to change to accommodate this. With broadcasters being squeezed by expensive content and a challenging advertising market, they have to start looking at another source of revenue – a viewer supported model – pay TV,” said Youssif. “If you look at the figures around the world subscription is outpacing advertising as a source of revenue. Broadcasters are starting to realise this and are looking for a new business model,” claimed Youssif. “I feel it is about time that people get used to the idea of paying for their TV.” JULY 2010 011

VOX POP

WRITTEN IN THE STARS Predicting the bandwidth requirements of Middle East broadcasters is a guessing game satellite operators must indulge in. Digital Broadcast asks how to mitigate for the lag between demand and launch and whether the region is set for a period of surplus or shortage.

REGION SET FOR SURPLUS PATRICK FRENCH Senior analyst and head of Singapore office, Northern Sky Research Typically it is a three to five year process from end-to-end from when management starts internal market assessments through to satellite bidding, construction and launch. Th is leads to a common cycle in the satellite industry of demand appearing in a market, such as the Middle East, supply tightening for a few years and then launch of new capacity often leading to an excess supply situation that requires several years for the market to absorb. Certainly there are strategies such as switchable capacity between beams or steerable beams that help reduce the risk of over-serving a market. Yet, all competitors see the same demand and the natural tendency is to want to launch sufficient excess capacity to address longterm market developments over the lifetime of a satellite – 15 years and up – that simply cannot be predicted today. 012 JULY 2010

HD and eventually 3D are undeniably important market developments but they alone will probably not generate sufficient capacity demand long-term in and of themselves to guarantee a “healthy” market. The industry is all about aggregating demand for all types of applications and being as flexible as possible to adjust to new market developments as they come along. Slower FTA channel growth could be one dynamic in a possible decline in capacity pricing in the Middle East but it would certainly not be the only consideration. New capacity and new players, arrival of new undersea cables and terrestrial fibre and a number of additional issues all combine to determine eventual capacity pricing trends. Individual operators may be under more pressure than others to bring down pricing. The Middle East appears to be on the cusp of the curve moving from a tight supply situation to a one with much greater supply assuming all of the currently planned satellite launches are successful. But as NSS-8 demonstrated recently, it can only take one failure to dramatically alter market dynamics. www.digitalproductionme.com

VOX POP

PRICES UNLIKELY TO FALL SANTINO SAGUTO Managing partner, Value Partners The cycles of surplus and shortage of capacity has been a constant in the satellite industry. There was a shortage in late 90s, and a capacity glut in the mid 2000s. The 18-24 months timeframe from planning to launch indeed presents some risks for any satellite launch. There is also some difference between the forecasting and management of TV versus Telecom services. With TV, it is important to identify the proper fi xed orbital position, after which the demand is linked to the broadcasters interested in that specific position. It is then important to manage the relationship with them over the 15-20 years life span of the satellite. Telecom services have a higher degree of flexibility.

Satellite operators need to differentiate themselves beyond pure transponder capacity sale (or resale). There are opportunities for satellite operators and satellite broadcast service providers to better serve the MENA TV market for instance. The band selection is also an important element to consider. Band C is much broader than the Ku and Ka bands. The broader the coverage the lower the risk, although in Ku and Ka there are also mechanism to re-orientate the spot. Pricing is also a key variable to manage supply and demand. The launch of HD means larger needs for satellite capacity. However this capacity need is also offset by improvements in compression technologies. 3D will also be another driver as the technology improves. Prices for premium capacity are unlikely to fall as these cannot be easily substituted.

NEW FORMATS WILL CREATE SHORTAGE MOHAMED YOUSSIF CEO, YahLive There are many steps that must happen before an operator can begin offering services on a satellite. Assuming the company has resolved the issue of finding an orbital slot – which is not an easy task these days – and that it has completed frequency coordination with neighbouring satellites, the process can still take years. Finalising a design takes time and there are still two to three years before launching and testing once it is ordered. Obviously during this time, the market may change. Often it does. Th is means that operators perhaps have to do a little guessing, in reality it is more of an educated guess. Th is is not a unique situation, the satellite business is like any other investment, no one can guarantee the business plan. I’m very optimistic about the satellite industry and I’m particularly bullish about www.digitalproductionme.com

the satellite TV business in the Middle East. HD and 3D will create lot of demand, the question is how it will be implemented. The HD available now is using quite a small bandwidth. YahLive is planning to only put four channels on each transponder, which would be about 12Mb/s per channel. Even an SD channel at 12Mb/s will look very good. This year we are watching the World Cup in HD and 3D. In a few years we could be looking at Ultra High Definition, which requires 33Mb/s per channel. This would take us back to the analogue days of one channel per transponder. The possibility of what is about to happen in terms of HD and 3D channel development, means the Middle East will soon be underserved. JULY 2010 013

NEWS REVIEW

014 JULY 2010

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NEWS REVIEW

AL JAZEERA IN A JAM The recent signal interference during the World Cup led to a bout of finger pointing but long-term issues over the lack of regulation and consumer protection are more important than the blame game.

fter facing criticism for its World Cup distribution, Al Jazeera would have been hoping to overwrite the bad press it was generating by delivering high quality coverage of the event. Its introduction of both HD and 3D channels for the competition looked like they could go a long way toward delivering the compensation many viewers in the region felt was owed. Instead the broadcaster found itself on the receiving end of further criticism during its coverage of the showpiece’s opening fixture. Signal losses continued to dog several proceeding matches. The English language match commentary was also intermittingly swapped with its French equivalent. The network issued a statement immediately stating that it had been the victim of “deliberate acts of sabotage”. In an official statement, the broadcaster said: “Al Jazeera Sport would like to condemn the actions of those involved in the deliberate attempts to block its signal during its World Cup broadcasts yesterday”, and continued to condemn those responsible. UAE-based Arabic newspaper Emaraat Al Youm quoted Al Jazeera Sport managing director Nasser bin Ghanem Al Khleifi as accusing Nilesat of intentional interference and an “act of piracy”. The paper featured the front page headline: Al Jazeera has ruined the World Cup. Meanwhile, Mahmoud Juma, head of the Egyptian Radio and Televsion Union – which owns 40 percent of Nilesat – was quoted by AlJazeera. net as saying: “Al Jazeera might have decided to punish Nilesat 10 minutes after the first disruption by claiming that its causes were unknown and requesting its viewers to move to other providers, such as Arabsat, Eutelsat and Noorsat. Al Jazeera is punishing Egyptian viewers and advertisers. Egyptians are not thieves or highwaymen; we are gentlemen and professionals. We do not want to spoil the fun of Egyptian and Arab families watching the World Cup”. Regardless of who was responsible for causing the problems and of how little Al Jazeera could have done to prevent them, it (as the public facing opera-

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Although this is not the first time in Arab broadcasting history that large sums of money have been paid for exclusive broadcasting rights of sporting events, it may well be the first time that such a monumental event has been subjected to jamming. SONYA SHAYKHOUN Attorney, Charles Russell LLP

tor) that the public were blaming for the problems. This blame was also being laid at Al Jazaeera’s door by consumer groups. The UAE Ministry of Economy said it had met with Al Jazeera officials and was discussing the possibility of pursuing compensation for viewers in the Emirates that had purchased the broadcasts. However, a lawyer with experience of the region’s satellite broadcasting industry said that it was unlikely that Al Jazeera could be held liable for compensation because of the blackouts. “Commercial satellite contracts typically include a force majeure clause that would envisage interference ‘out of the broadcaster’s control’, such as the jamming that Al Jazeera suffered last month and that would excuse the broadcaster from liability,” said Sonya Shaykhoun, attorney, Charles Russell LLP. “Moreover, as satellite television is still not regulated in the Middle East, it is unlikely that any of the telecommunications regulatory authorities in the MENA region would have jurisdiction over a satellite television operator in the highly unlikely event that the operator caused the transmission interference itself,” she added. Al Jazeera did agree to refund UAE customers that were given faulty cards or who were charged over the defined prices by distributors. No compensation for signal problems is forthcoming so far. “Needless to say, it is caustic to imagine that either of the satellite operators, Nilesat or Arabsat, would interfere with the Al Jazeera channel, which is owned by the Qatari government, to such a damaging extent and at such a crucial time,” claimed Shaykhoun. “Especially given that Nilesat is owned in party by the Egyptian government while Arabsat is owned by a consortium of Arab countries. It is imaginable that the sabotage was not commercially-motivated but rather motivated by a disgruntled customer armed with the know-how or by political malcontents for obscure political reasons,” said Shaykhoun who also noted that signal interference of any form is illegal under international law. “Tracing the source of the jamming is a timeconsuming effort which is apparently akin to tracing a phone call.”

JULY 2010 015

OPINION

GOODBYE BUYOUTS? Merger and acquisition activity is back on the cards as borrowing restrictions ease off, but can media companies expect to have the same number of suitors as they did post-recession?

he recent international merger and acquisition activity looks likely to touch down in the Middle East very soon but it is likely to be unrecognisable compared to what was expected three years ago. Prior to the economic downturn, there was a great deal of expected merger and acquisition (M&A) activity expected in the Middle East. It all seemed very obvious. The most anticipated shift was to see telecom operators buying media companies so that they could push content onto their customers via various platforms. Meanwhile, the biggest and most successful technology vendors would continue to gobble up smaller competitors. At the time, regional telco giants were spending billions of dollars buying smaller operators around the globe. The (relatively) tiny fees required to aggregate content did not seem like much of an obstacle when compared to these huge transactions. Many local production houses were convinced that sooner or later, a telco would offer them a golden ticket. The recession – specifically the squeeze on borrowing that it created – has made it more difficult for any firm, telco or otherwise to, find the temporary cash for a shopping spree, within its own resources or from outside. The immediate consequence was a freeze on transactional activity. As this thaws, the deals that we are seeing are highly strategic, carefully crafted and relatively low risk. Broadcast technology firms have sought out rivals with complementary product lines, but only the

016 JULY 2010

WHAT’S THE DEAL?

$25bn-$30bn

The estimated value of TMT M&A activity in the Middle East and Africa in the next three years.

30%

The increase in the average value of MENA M&A deals in Q1 2010 compared to Q1 2009.

16%

The fall in the total number of deals completed during the same periods. SOURCE: Value Partners; Ernst & Young

tightest fits and the most obvious combinations are coming together. Hard times have traditionally encouraged merger activity as companies look to trim operating costs and improve efficiencies, but the difficult banking landscape has blocked off that escape route. The shortage of financing for deals has also made it difficult for companies looking to invest in other ventures for the purpose of revenue diversification or expansion, to chase their objectives and improve their standing. The restrictions on all forms of M&A activity therefore created a set of frustrating problems for companies that had found a route to improvement, but could not afford to pursue it. As economic troubles begin to melt away, technology, media and telecoms (TMT) players can now revisit the possibility of indulging in some M&A action. Whether we will ever see the telcos buying up media assets with the appetite that was predicted previously is unclear. A recent report by Value Partners noted that the slow uptake of mobile TV and IPTV in the region offers little incentive for telcos to splash out on content, a situation unlikely to change unless a business model emerges that would allow them to recover the high costs associated with acquiring premium content licenses and developing original productions. So far the indication is that telcos would prefer the partnership route, offering media owners infrastructure and a degree of distribution in return for content, a convergence of goals, if not balance sheets.

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COVER STORY

WEB PLAYERS

Online video ventures in the Middle East have previously failed to gain traction. Digital Broadcast spoke to the team behind the latest effort looking to take advantage of a maturing market. 018 JULY 2010

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COVER STORY

nline video covers a broad spectrum of services that deliver an even wider range of satisfaction for consumers. Until recently, the technology required to underpin a satisfactory online video experience has been playing catch-up with the expectations of the public. The result is a lot of questions and disillusion with the platform. If YouTube can host however million videos then why can’t my favourite channel put all its content online? If I can download a movie trailer in HD, why is the show I’m streaming so grainy? And of course the dreaded word for all online video viewers, “buffering”. The fact is that consumers simply do not understand the nuances of the technology itself and why should they? All that they should be concerned with is the end experience. There are numerous examples of services in developed markets that have overcome these obstacles but several pieces of the puzzle in the Middle East have been missing. New Arabic online video portal Vidunia claims to have finally tied these loose ends together to offer a service that leaves few unanswered questions for consumers. There have already been a number of plays in this field in the Middle East, so what is it about Vidunia that differentiates it from these earlier – not entirely successful – attempts? “Vidunia is tailored for this specific region,” says Amir Hegazi, general manager, Vidunia. “Because it can geo-block, it can offer different pricing in different markets for the premium content and restrict access to rights in certain territories or

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COVER STORY

Vidunia will offer content across a number of genres. It expects to have 2000 hours of programming ingested by the beginning of Ramadan with many more content owners in ongoing talks to provide more.

on certain platforms based on the details of the content rights. Niche content can also be targeted at certain parts of the region.” Although some content will be charged for, the intention is that the vast majority of content will be offered free with only premium content or functionalities subject to subscription, a model described as ‘freemium’. “We believe that Vidunia is absolutely correct to pursue the freemium model and it will be the fi rst such Arabic content service to take this approach anywhere in the world,” claims Kaleil Isaza Tuzman, chairman and CEO, KIT digital – Vidunia’s technology partner. “There are other services that are basically linear but VOD for online content has been shown to be more popular by a factor of 20. There are linear, premium subscription channels and then there are low-quality ad funded services. Hulu is the model to follow in terms of providing a high quality, free service. The prospects are very good,” says Tuzman. The other indisputable differentiator between Vidunia and its predecessors is the support across four screens. 020 JULY 2010

No one really cares if their favourite show was by ABC, NBC or DMI. The fidelity around the content is based on the content itself or a certain actor, presenter, gameshow host, whatever the case might be. KALEIL ISAZA TUZMAN Chairman &CEO, KIT digital

A user’s account can be accessed online, through a smartphone, iPad or connected TV, allowing them to view their content on the platform of their choice. Crucially, this choice includes the living room. “We’re not asking people to watch poor quality video on a web player, if they want to watch something with the family on a 42-inch screen in the living room then the technology can deliver that,” says Andy Steward, CTO, KIT digital. “One of the great differentiators of Vidunia is the quality of the content in terms of the visual experience. We’re streaming at very high bit rates and we’re enabling the viewer to see it in DVD or even HD quality. It’s not the typical web experience where the viewer has no choice but to watch grainy, degraded quality content, it’s a true movie rental experience.” The next crucial question is what bandwidth is required to run these services? The high cost and patchy availability of broadband in the MENA region is well documented – though improving – and this has been one of the primary obstacles to previous ventures. www.digitalproductionme.com

COVER STORY

“The HD quality requires a bit rate of 3Mb/s, 1.2 to 1.8Mb/s is approaching DVD quality and in the living room the difference becomes unnoticeable,” says Steward. With an additional 10 percent on top of the recommended bit rate, a decent quality of service can be achieved with a 2Mb/s connection. The adaptive bit rate technology ensures that users are given the best possible signal as dictated by pressures on their internet connection. “If you are serious about being a primary entertainment service then you have to do adaptive bit rate,” says Tuzman. So far Vidunia has secured 400 hours of launch material from Jordanian production house Arab Telemedia. By Ramadan a total of 2000 hours of content from various providers will be ingested and live on the service. Discussions with further partners are on-going. “We are talking to between 40 and 50 content providers in the coming weeks. Ramadan is our biggest focus at the moment. We’re confident that we will have a strong offering by then including the major Ramadan series as well as content in a number of other genres such as lifestyle, game shows and so on,” says Hegazi.

“The four screen strategy will see different genres of content prove more popular on different devices. News, sports highlights and other short-form content is best on mobiles for example but there is a trend now of people using multiple devices. Th is is often dictated by their schedule. They could be watching a show at home in the morning then switch to mobile when they start their commute.” The ability to move between platforms creates complicated issues regarding the licences for programming. A robust and comprehensive digital rights management (DRM) system is required to ensure protection for content owners. “KIT digital is actually the only IP video platform that is studio approved. It is working with all of the major Hollywood studios. KIT supplies services to Vodafone and other operators. There is a lot of protocol to be followed regarding how many people can actually touch the product throughout the supply chain. It’s about as high grade as you can get,” claims Tuzman, adding that the Hollywood seal of approval for the DRM system is a decisive pre-condition for some content owners. The DRM can be downloaded to portable devices and laptops and provided to connected TVs

We’re not asking people to watch poor quality on a web player, if they want to watch something with the family on a 42-inch screen in the living room then the technology can deliver that. ANDY STEWARD CTO, KIT digital

Vidunia will look to exceed the penetration achieved by previous ventures in the Middle East such as Getmo (above), that have failed to find a mass audience and convert content into sustainable revenues.

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COVER STORY

The freemium model will be based on subscriptions and online ads.

Vidunia will initially be a free service as it looks to build an audience. Eventually it will begin charging subscription fees for access to premium content or premium functionality. This could be the licence to download a piece of content and ‘own’ access to it through the Vidunia user account. It could be a fee in the order of a few dollars per month to remove all advertising from your service. Pay per view events will also be phased in driving extra revenues. Sponsorships will be offered with clients able to target their exposure toward users based on viewing habits and so on. Once the audience is developed, the service will begin carrying adverts in the form of regular banners, pre- and mid-rolls as well as interactive call to action campaigns, overlays and others. 022 JULY 2010

SEARCHING FOR A WEB WINDFALL

ROUTES TO REVENUE

by plugging a small device into the WiFi terminal. The presence of the DRM is as critical to the business model of Vidunia, as it is to enabling the four screen end-user experience. “One of the things that makes us comfortable with the project is that there is a context of trust here with regard to DRM and the content owners, that is different than a lot of other projects like this in the region – even those that have more significant corporate players involved,” says Tuzman. The online content rights landscape in the Middle East is somewhat fragmented, another fact that makes negotiations with content owners in the region complex. “Th is issue is at the heart of the matter right now. In the US those online rights have been disassociated between the producer and the distributor. In this region, the majority of content has all the rights in one corporate location,” explains Tuzman. “That is going to change, which is to the benefit of online platforms. Instead of dealing with one megalith distributor you are dealing with smaller individual producers, so you can divide and conquer from a negotiating perspective. We’re starting to see that happen in this market.” Th is shift has come as distributors have realised that consumers’ loyalty lies elsewhere and they have become less protective.

“No one really cares if their favourite show was by ABC, NBC or DMI. The fidelity around the content is based on the content itself or a certain actor, presenter, gameshow host, whatever the case might be,” claims Tuzman. “Hulu is the famous example of those historical barriers around production and branding being overcome. Arch-rivals, hated competitors got together and recognised that no-one was identifying their content as Fox or NBC. Th is hasn’t happened in the Middle East yet. Some times when we talk to a big broadcaster their approach will be ‘we have X percent of the market why do we need to partner with anyone else?’ It’s only a matter of time in our view before it becomes clear that the Arab consumer is like every consumer in the world in the way they consume video. They want it all in one location. They don’t want to have to go to a different location for each individual show, they don’t care who produced it. They want one place for everything,” claims Tuzman. Hegazi is confident that once the service is up and running and content owners see the potential of the product at work – and the potential revenues to be made – there will be a spike in enthusiasm. “Many people are not monetising the online rights that they do own at present or if the content is available

$100 million

The ad revenue in 2009 of online video service Hulu.

Hulu is perhaps the most successful online video platform bringing content from Disney, NBC, Fox, MTV, MGM, Paramount and others to one location. www.digitalproductionme.com

COVER STORY

online it’s certainly is not on all three screens. It becomes a pretty simple proposition for them to except,” adds Hegazi. The obstacles in attracting the content to the platform therefore seem to have been addressed by Vidunia. Previous online ventures in the Middle East have also suffered from lukewarm receptions from users. Some of the barriers that were the root cause of this have since been removed however. “Consumer devices have changed dramatically in the past two years and broadband has steadily improved in this region to,” says KIT digital’s Steward. “But consumer devices and the understanding and awareness that you can consume content on these, has dramatically changed. In the past most people watched pretty substandard content on the internet and it wasn’t a great experience. The fact that we can now put great content onto an iPad, a smartphone or the TV screen is going to convince these people to come back to this model.” Steward says there are now a number of consumer orientated companies such as Apple, connected TV manufacturers and online players such as Google and Yahoo! all driving the usage and awareness of how content can now be consumed. The most high-profi le example of this is arguably Google TV. So how does Vidunia view the

mooted service from the web giant? “It’s great for the market and it’s great for us,” says Steward. “It solidifies the strategy we are pursuing. Vidunia has similar technology, but it doesn’t have to be driven by Google. Samsung and LG are adopting open standards for connected TV which has opened up a great opportunity for Vidunia. And if Google were to become the established technology then Vidunia could be made available on the Google platform too.” The next stage for Vidunia is to continue signing up content and to begin marketing as well as piecing together its ad sales business and fi nalising subscription packages. “The final charges haven’t been set and there could be variation in different territories and adjustments based on user feedback. The basic package would be a five-day trial for around $3.95. The other end of the spectrum would be the allyou-can-watch, all access packages that will cost in the order of $19.95 to $24.95 per month.” Hegazi also says they expect to offer live events such as local concerts and sporting events on a pay per view basis with one-off prices in the order of $3.95 to $7.95, depending on the content and the target market. “In the initial phases, we are more interested in having as much as possible for free to draw traffic and build awareness,” says Hegazi.

We are talking to between 40 and 50 content providers in the coming weeks. Ramadan is our biggest focus at the moment. We’re confident that we will have a strong offering by then including the major Ramadan series as well as content in a number of other genres such as lifestyle, game shows and so on. AMIR HEGAZI GM, Vidunia

TECHNOLOGY FOCUS THE TECHNOLOGY BEHIND THE BUSINESS

THE TECHNOLOGY DELIVERING THE SERVICEE

“KIT digital has provided the four screen platform to Vidunia; from the online environment to the connected TV, mobile and iPad and really providing them with all the tools necessary from a commercial and merchandising perspective. The platform also permits the broad ad inventory from banners and pre-rolls to contextual and overlays, call to action and so on. It also provides the e-commerce platform around the video. The freemium approach means there are several trigger points around the content. It is also important to provide the tracking tools so that Vidunia can comfortably carry out the revenue share with providers so that it can provide the tracking and information back to those content providers ensuring they can get the correct royalties.”

“The content is being ingested in Central Europe, it is protected there, something the content providers want assurance of. The ingestion is done so that it can be played on all devices. It is encoded from HD quality all the way down to mobile quality. Distribution is done through a network of edge servers on the Akamai network. Other networks could be used but in our experience Akamai is the best performer globally and is well connected in this region. These are taken as close to the consumer as possible soo that it doesn’t create a bottleneck. The individual’s user account enables the content and depending on pricing and licensing rules for that content we can enable it for any device. Effectively we can control how they get the content.”

KALEIL ISAZA TUZMAN Chairman & CEO, KIT digital

ANDY STEWARD CTO, KIT digital

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AAG CONFERENCE

STATE OF THE UNION

With the latest Arab Advisors Group convergence conference talking place last month, Digital Broadcast assesses how the evolving relationship between telecoms and media is affecting vendors, service providers and broadcasters alike.

onvergence has been a useful industry notion, to describe anything that seemed slightly non-traditional, for the best part of a decade. There are now however, a number of aspects of the telecoms and media industries in which convergence is recognisable as a functioning, discrete entity. Today there are in the region of 50 million IPTV subscribers. Online video portal Hulu generated more than US $100 million for the media networks and studios that back it. Video on demand is now a prerequisite for any self-respecting pay TV service. The Arab Advisors Group held its seventh Telecoms and Media Convergence Conference last month. The event has become increasingly relevant in the last three years as the ideas under discussion have evolved from being hypothetical, to fully operational active deployments. Convergence is not only about the operators however. Vendors and technology developers also have to adjust to serve the new look market. Motorola, traditionally associated with its telecoms network and handset business, is arguably the best example. According to a report by MRG, Motorola now has the largest market share globally for IPTV set top boxes (STB) and video head-ends, at 26 percent and 37 percent respectively. “The STB is an integral part of the growth plan. Motorola has now delivered 100 million home entertainment devices into the market place,” said Steve McCaffrey, VP and GM, Motorola Home. “The STB has certainly driven the topline of the business and the market share has done very well.” The company has also been acting to cement

024 JULY 2010

The majority of our market share has come form the incumbent carriers in Western Europe but now the focus for us in terms of resources and opportunities for development is in Middle East. STEVE MCCAFFREY VP and GM, Motorola Home

its position in the video market with the acquisition of two broadcast technology firms, BitBand and SecureMedia. “The goal has been to create an endto-end play in the video market and the acquisitions we have made have been designed to aide that offering across three screens,” says McCaffrey. “SecureMedia was purchased to provide a DRM solution, a software based system for devices, which is well-suited for Motorola’s smartphone technology. BitBand provides the company with a content management system.” Though McCaffrey acknowledges that there are still some regulatory issues to be straightened out in order to smooth the path for three-screen video, he is confident that the Middle East is working hard to accomplish this. “The Middle East, certainly over the last nine months, has shown a very strong drive towards video distribution systems. The onset of both wireless broadband and fi xed broadband with ultra-high speeds has driven them [telcos] to look for new revenue streams through video. That video takes several forms IPTV, cable, satellite or OTT and there is just a merger now – a blurring – of all those delivery mechanisms in the Middle East as I see it,” he claims. “The majority of our market share has come from the incumbent carriers in Western Europe but now the focus for us in terms of resources and opportunities for development is in the Middle East.” The company is not just working with telcos from the region however, McCaffrey says they are also talking with content owners such as Rotana, www.digitalproductionme.com

AAG CONFERENCE

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JULY 2010 025

AAG CONFERENCE

in order to develop an environment that left and then after that new emerging suits the media companies as much platforms will be more effective to as the telecom operators. reach audiences. I don’t share his Number of delegates at the “It was astounding to see the optimism,” says Barnett. inaugural conference in 2004. number of customers and CxO “If you look at international level executives at the conference markets where they have a more showing their commitment to the developed infrastructure, such convergence process in the region. as the US and Japan, people are The number of attendees They’re very supportive of our focus watching more TV than they were at the 2009 event. and Motorola is putting all its resourc10 years ago. I think that is a lesson es in to this region at the moment.” for this market. We can afford to be optiNewtec, CEO Serge van Herck points out mistic going forward. another form of convergence – that of the broadcast “Inevitably when you start to dance close and data worlds. Much of this form of convergence together you find you step on each others feet, and underpins the rest with IP video for example, playwe are seeing that happen,” says Barnett. “There are ing a large part in cross platform content delivery. various tensions. It is no secret in the industry that “It was my first time at the event but there was there is a lot of overbidding for content and nona lot of broadcasters and telco operators there commercial players are paying too high a price, discussing how they foresee things developing in which is damaging the market.” the future. Despite these tensions though, MBC is continu“There was a lot of discussion about the role the ing to expand the scope and depth of its work with iPhone is playing in the dramatic rise in data that telco partners, however Barnett sounds a warning is currently being sent over networks. Mobile video that there are limits to this cooperation. will also increase further especially with the num“MBC is working more closely together with ber of connected smartphones,” says Van Herck. telcos over the last year or so and with the increase The loss of voice revenues is reason enough for in 3G networks, there is a lot more interest in our the telcos to embrace media, and the new markets content. MBC also has a few co-production deals opening up to technology vendors is a strong incen- directly with the telcos. tive for them, but what is in it for media companies? “I can handle operators offering content over “If you think broadcasters will follow record broadband via subscription because it creates extra companies down the tube and that telcos will take revenues and MBC is ready to put premium content over, I beg to differ,” says Sam Barnett, COO and on to those networks, but if telcos want to get GM, MBC. “One of the telco executives said to us a involved in the FTA market – I’m not sure why they few weeks ago that broadcasters have three years would – then it is going to be a bloodbath.”

280 532

Inevitably when you start to dance close together you find you step on each others feet, and we are seeing that happen. There are various tensions. It is no secret in the industry that there is a lot of overbidding for content and noncommercial players are paying too high a price which is damaging the market. SAM BARNETT COO and GM, MBC 026 JULY 2010

The Arab Advisors Group convergence event attracts CxO media and telecom executives specifically to discuss collaboration between the two sectors. www.digitalproductionme.com

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FUJAIRAH MEDIA

SET TO PEAK

Fujairah Media is not the largest network in the region but the company’s diverse range of activities from broadcasting to operating a freezone and now to operating cinemas, has the firm on the track toward profitability. CEO Mekki Abdulla spoke to John Parnell.

n a media landscape dominated by a handful of monolithic networks it can be difficult for smaller players to get by. Nestled among these giant competitors and headquartered among the mountains of Fujairah, is the emirate’s eponymous media group. Fujairah Media has been able to survive the downturn – thanks in no small part to the timely opening of its Creative City cluster – and is now lining up a number of broadcasting and infrastructure projects to diversify its income and carve its own niche on the way to profitability. The group is a joint venture between the Fujairah Culture and Media Authority (FCMA) and Arab International Media Services (AIMS), with the latter owning a 70 percent stake and the FCMA holding the remainder. “It was formed in 2005 originally with the goal of launching radio and TV stations. AIMS provides a lot of the investment and handling the day-to-day management and FCMA offers infrastructure and licensing support,” explains Mekki Abdulla, CEO, Fujairah Media. 028 JULY 2010

“It evolved in 2007 and 2008 to include the Creative City free zone, which is now one of our flagship businesses,” says Abdulla. The company owns two TV stations with another two set for launch and a fi fth under discussion. Seven client TV stations also use the group’s facilities. “There is another channel – ABC TV – that we are doing in association with a company in America called ABC, which is going to be given its soft launch during Ramadan. It’s a free-to-air TV channel with good quality programming, including a lot of western productions that have not been purchased in this market previously,” claims Abdulla. “There tends to be four or five big players battling it out in the TV market here and to be honest they all run similar content. Frequently they are just showing different series of the same shows. Sometimes you don’t know which channel you are watching until you look at the logo. You can’t tell them apart. But they’re doing well. The aim for ABC TV is to do a different style of programming. It will be something that takes you www.digitalproductionme.com

FUJAIRAH MEDIA

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FUJAIRAH MEDIA

Fujairah Media will open the region’s first drive-in cinema in the emirate later this year. The Arabian Cinema concept will also be expanded to two additional MENA markets in the future, reveals Abdulla.

through your day. You don’t want to see a horror movie at seven in the morning, so the content will change as the day progresses. There will be a bit more thought put into the programming.” Fujairah Media also operates four radio stations with more planned. Abdulla says that it is crucial to address the Egyptian and Saudi Arabian markets in order to monetise TV content but admits that commercial goals are not the focus of all its channels. “The group does not make money from television as yet and it doesn’t expect to for a little bit longer. One of the channels that it operates, Dunia TV, is more of a window for Fujairah as opposed to something for the company to try to monetise. It is for people in Fujairah and for people from outside to learn more about the emirate. It has a very distinct purpose and this is also part of the overall strategy.” Dunia is one example but the group is also looking at more commercially driven TV ventures too. “The group also has a channel – Zoal TV – that is focusing on Sudan that has strong commercial benefits in my opinion. There has been a lot of interest from people looking to purchase it now that it has some strong audience figures to back it up. There is an opportunity for us to develop stations using our infrastructure and addressing certain niche markets. These can then be sold on or run internally. There has been a good reaction 030 JULY 2010

The group does not make money from television as yet and it doesn’t expect to for a little bit longer... Dunia TV, is more of a window for Fujairah as opposed to something for the company to try to monetise. MEKKI ABDULLA CEO, Fujairah Media

from the market to Zoal TV, the audience is in place, advertising is being sold. There is money to be made if you have a plan,” claims Abdulla. “We’re not going to limit the business to Fujairah, but we’re not going to try and battle it out with Dubai. Dubai is already very good at what it does. Our main market at the moment outside of Fujairah is going to be Africa. There are lots of plans to use the platform here to help develop electronic media in Africa. The company is working very closely with marketing people to see how this can subsidised by commercial operations.” The company is now identifying sectors that would be interested in accessing audiences in Africa and identifying where these audiences might be geogrpahically and bringing the two together. Recently, the once unstoppable launches of FTA channels in the region has begun to slow. Abdulla believes this is ultimately a good thing for the industry that will reward the channels – like Zoal TV – that are underpinned by a sound strategy. “There was a point when there was a lot of money around and the attitude was ‘oh I haven’t got a TV station so I’ll open one’. It was very easy to start a TV channel and there were people happy to take the money to set these up. “It’s a good thing that there was a cull in some form just to keep the numbers down, to make the market sensible and ensure that TV is of interest to people as a marketing tool. The medium has www.digitalproductionme.com

FUJAIRAH MEDIA

done extremely well during the downturn – electronic media as a whole has excelled itself quite well. I don’t see there being a sudden upsurge. Any TV channels launched now will do so with a business plan and clear objectives,” states Abdulla. “Television – if you want to do it properly – is extremely expensive. Content is key but content is also costly if it is original and high quality. It’s a hard game and I think we will see some more stations close. We’ll also see some new ones come about with a distinct plan and longevity as opposed to more channels blending away into the hundreds of others.” Content production is another area that the group is now turning its attentions to. Th is month it hopes to launch the Fujairah Film Commission (FFC), which will promote the emirate as a fi lming location and ensure that the correct facilities are in place to support productions. The FFC is working on a set of incentives and liabilities with the Fujairah municipality and is also planning to construct a new 3000 sq/m studio facility to support TV and fi lm projects. The mainstay of the group remains its management and operation of Creative City, the media freezone in the emirate. “Creative City invites media companies with backgrounds in technology, marketing, advertising and consulting to open up there. It is very keen on start-ups and they are offered a lot of support. Most of the 250 companies registered there are

either start-ups or smaller business. The majority of the companies have between two and ten employees,” says Abdulla. There is also an uplink facility for broadcast clients, TV and radio studio infrastructure and cable connectivity throughout the region and to the US in cooperation with Kuwait’s Gulfsat. “At the turn of the year we are hoping to build some more facilities based on the business park concept. These will be simpler spaces. Th is means partners don’t need to tie themselves to complex infrastructure if they don’t need it. Or, in the opposite case they can have an as elaborate set-up as they require. They will also be offered flexible rent and leasing terms to provide some investment protection for them.” With a number of competing media freezones in the Middle East, Creative City is by no means the largest, but this is not necessarily a disadvantage, according to Abdulla. “At the end of the day one of the key differentiators between our offering and other freezones in the region is that we are a lot smaller and our aspirations are less than some of the big players. “It does not try to compete with the major freezones, it has found its own niche in a way and tries to offer very personal relationships. It doesn’t loom over its partners like Big Brother. The aim is to develop an environment so people can turnaround their companies quickly and get their business running efficiently.”

It [Creative City] does not try to compete with the major freezones, it has found its own niche in a way and tries to offer very personal relationships. It doesn’t loom over its partners like Big Brother. MEKKI ABDULLA CEO, Fujairah Media

FUJAIRAH MEDIA PROJECTS EVENTS AND TOURISM One of the group’s companies Fujairah Events and Entertainment is constructing the Arabian Cinema drive-in concept in Fujairah plus two additional MENA sites. The company is also developing a sound and light show in the mountains to serve as a tourist attraction. The events company is also running Ramadan activities in Fujairah.

ensuring adequate infrastructure is in place for those that come to the region including the development of a 3000 sq/m studio.

FREEZONE EXPANSION Creative City will be expanded to offer business park facilities. New industry sectors could also be catered for.

AFRICAN MEDIA DEVELOPMENT NEW TV AND RADIO LAUNCHES A number of new TV and radio channels are on the table for the group that could double the groups output.

The company has already enjoyed some success on the continent and is now looking to expand it operations serving African markets.

FILM COMMISSION

NEW MEDIA

The company will take a leading role in the emirate’s push to attract productions from the Gulf and internationally. The commission will also be responsible for

The firm’s new media division is in active negotiations with the TRA regarding several initiatives to discuss how it can add these services to its package.

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MOBILE TV

ROADMAP TO MOBILE

Mobile TV has taken two contrasting paths in Europe and the US in terms of technology and business models. But what is the correct route for the Middle East with a platform full of dead ends?

complicated business model and an even more complex technical backdrop have made mobile TV a difficult format for telcos and broadcasters alike. In the Middle East, there have been only a handful of roll-outs with limited success. Outside the region, the situation is not much different. Europe embraced mobile TV very early with most opting for the DVB-H broadcast standard. Results were mixed. “There are only a few services on air based on DVB-H or DAB/DMB, but a lot of countries are still waiting for the analogue switch-off to make new spectrum available,” says Stefan Wallner, strategic TV market development manager for transmitters at Harris. Wallner was involved in early trials of the technology in the UK, Switzerland and Australia. “With DVB-H, a separate transmission network is called for, factoring in an additional expense to the business model,” explains Wallner. The emergence of the new terrestrial standard in Europe, DVB-T2, will allow broadcasters to use the same network for regular and mobile services, dramatically reducing the costs incurred during the implementation stage. The DVB organisation is also renewing its efforts on the mobile front with the formation of the DVB-NGH (next generation handheld) working group. Wallner says this could lead to renewed flexibility and new opportunities to make mobile TV more flexible. The high cost of network roll-out led many services to pursue a subscription based model.

When coupled with premium football content, a decent subscriber base was built in Italy with the operator claiming that its ARPU increased by 20 percent as a direct result of the service. “DVB-H has only been successful in very few cases, such as in Italy with H3G. H3G has a significant customer base of around 1 million users – around 15 percent of its subscribers,” says Hadi Raad, principal, Booz & Co. “H3G, also has a successful roll-out of DVB-H in Austria with one million subscribers, about 10 percent of its customer base. In the Middle East, Mobison launched a DVB-H service in Iraq back in 2009 with limited adoption in the region of 10,000 subscribers. The DVB-H consortium in the UAE, which inludes telcos, broadcasters and tech fi rms, is still in a trial phase.” There is evidence however, that a free-to-air (FTA) model for mobile TV Europe would fare better (see boxout). Overall subscriptions struggled and several operators in Europe opted to switch off their mobile broadcast services and offer video content via the 3G networks instead. Th is of course results in a huge data strain in the network. A different approach in the US has allowed services to gain a little more traction, albeit in a fairly understated way. The main difference in the two approaches – aside from the disparate broadcast standards – is the content approach. “Here in the US the user wants localised content, news sports and weather,” says Jay Adrick,VP of broadcast technology, Harris. JULY 2010 033

MOBILE TV

An individual mobile TV user will experience a better quality of service over LTE, but serving the mass market with mobile TV over this type of network will require a large investment. HILAL HALAOUI Principal, Booz & Co.

To address network concerns (there are at least six digital TV standards active in the US) the company has developed transmission hardware with standards software-defined. Adrick says Harris is now developing waveforms to suit all of the mobile standards. Th is also allows for upgrades to equipment, expanding its lifespan. Th is also reduces the cost for broadcasters but Adrick says that there is still work for the content owners to do to ensure a healthy ROI. “It’s crucial to be able to monetise mobile TV through multiple revenue streams, not just a monthly charge for the service. It’s important to be able to measure your audience and provide feedback to advertisers,” says Adrick. The platform could also serve as an information portal. Harris is working with software developer Roundbox to develop applications such as traffic reporting. Roundbox also develops a number of widgets, TV guides and weather bulletins. The Middle East is lacking the terrestrial TV network infrastructure to fully (and cost effectively) deliver mobile broadcast services via DVB-T2. The MENA region is however well served by cellular communication networks with 3G and even 4G networks fairly well-established. Long Term Evolution (LTE) technology has been touted by some as the most likely means to serve video content (streamed or on-demand) to customers in the region. The mobile broadband standard can reportedly offer speeds of up to 100Mb/s. These networks are still a few years away from being commercially accessible in the region and are by no means an ideal solution.

“A mass adoption of mobile TV over LTE networks will create a large burden on the network,” says Hilal Halaoui, principal at Booz & Co. “An individual mobile TV user will experience a better quality of service over LTE, but serving the mass market with mobile TV over this type of network will require a large investment.” Halaoui suggests that the ideal network for the Middle East would be a hybrid broadcast model. Halaoui says that a standard such as DVB-H in conjunction with satellite based SDMB technology would best serve the region. But the success of the network is not technology dependant alone. “There needs to be strong content distributed through tailored and rich channels. Practically, subscribers to such a mobile TV service, would like to benefit from roaming capabilities, where they can view their favourite channels even when they are abroad. Another issue is the handset technology which would preferably be the same device customers use for making mobile calls. Such a service would also need to be affordable, and within the reach of key segments, especially young people. These are the main ingredients for a successful mobile TV service in the Middle East.” Much has been said of the telcos’ assumed role in establishing the networks, but Halaoui rightly points out that the incentive for broadcasters to increase their role in adoption of the service is far from compelling at present. “Broadcasters do not yet see the volumes that they do through the traditional screen – in terms of the amount of subscribers or the number of eyeballs for advertising. The overall ecosystem for

FTA MOBILE TV COULD END THE STALEMATE: SURVEY A survey by semiconductor firm Telegent Systems uncovered a healthy appetite for FTA mobile TV content in the UK. Fifty-eight percent of respondents identified one or more environments in which they would be likely to view FTA mobile video content, with on the train/bus, while queuing and while at work proving popular answers. This figure leaps to 80 percent when you focus on the 18-24 age group and 76 percent amongst 25-34 year olds. “The availability of mobile TV in the European market contrasts sharply with ‘developing’ markets such as Africa, Asia and Latin America where it is proving extremely popular,” says Samuel Sheng, president and CEO, Telegent.

034 JULY 2010

“To date European operators and consumers have been understandably held back by regulatory and standards confusion, unproven technologies and the costs associated with building and operating mobile specific TV platforms. All of these issues can be avoided by using the existing broadcast TV infrastructure and building the receiver technology into the handset. “Major events like the World Cup are now focussing the spotlight on mobile TV around the world,” continues Sheng. “It’s an event that you want to see live, wherever you are, but once the last ball has been kicked, it’s likely that more people in Lagos than London will have access to live mobile TV. By the time the Olympics come round in 2012 that situation ought to be reversed.”

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MOBILE TV

Despite DVB-H take-up being sluggish at best in Europe so far, the majority of commentators agree that some form of broadcast standard is needed to complement a 3G (or LTE) based two-way service.

mobile TV is still in its infancy, limited availability of handsets; underdeveloped market productions tailored to small screens; and difficulties in mobile advertising business models, and this is creating caution among broadcasters and mobile operators, alike,” adds Halaoui. “At present the mobile distribution channel for broadcasters does not represent a substantial revenue source. The complexity lies in many areas, and it is mostly inherent in a business model, where a partnership is needed between broadcasters and mobile operators. For mobile operators, the partnership model with broadcasters is still a nascent one.” The broadcasters and telcos still have time to create viable business models as network infrastructure is developed. But what is the correct choice for the region and can DVB-H really succeed in the region after its patchy record elsewhere? “The main driver for operators to roll-out DVB-H is the lower cost-per bit in high-traffic video applications. The network is more profitable if it is utilised for voice applications. Th is would suggest that operators would be better off using their telecoms network for the delivery of voice and data services, and another with a lower cost per bit, for the delivery of video and other broadcast services, such as DVB-H,” says Raad. “However, due to the need for specific DVB-H compatible devices – of which there are few – DVB-H faces significant challenges from streaming mobile TV services, that run on 3G or LTE. The www.digitalproductionme.com

The future of broadcast technologies such as DVB-H is questionable. It’s already too late for DVB-H to succeed in many markets. It could have been successful, few years ago, before operators started their investments in 3G and LTE. HADI RAAD Principal, Booz & Co.

future of broadcast technologies such as DVB-H is questionable. It’s already too late for DVB-H to succeed in many markets. It could have been successful, few years ago, before operators started their investments in 3G and LTE.” Raad can envisage one scenario that could revive DVB-H as one component of a broader mobile video strategy. “If devices such as DVB tuners that could integrate with existing handsets become widespread then there could be some growth. The business model could simulate then that of the hybrid STB in the fi xed business, where users use their satellite dish for FTA content and their two-way IPTV connection for premium pay content, with DVB-H playing the role of satellite and the mobile internet acting as the two-way connection.” Regardless of the eventual technology used to deliver mobile content to the masses, the broadcasters and the rights owners maintain a constant advantage – the domination of the content itself. Th is is something the telcos are well aware of. “To secure their own position, [telecoms] operators will need to leverage their key assets: their customer relationships, customer analytics, investment capabilities, and infrastructure,” says Raad. “The mounting business generated by applications is more than just another growth opportunity. It is an imperative, a necessary component of the future of the business, in which operators must actively participate in order to thrive and not just become utility-like pipe operators.” JULY 2010 035

TECHNOLOGY

TESTING TIMES Solid test and measurement infrastructure is essential to keep advertisers and audiences happy. Getting the right balance between thorough safeguards and costly overkill is just one challenge broadcasters face in an environment of emerging formats and rising expectation.

036 JULY 2010

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TECHNOLOGY

he downturn may have helped produce larger TV audiences and longer total daily viewing hours, but for broadcasters, the value of each individual subscriber (or in the case of FTA channels every eyeball) is higher than ever. In the current climate, customer retention is vital to ensure that ground gained, can be held. “Poor video service impacts viewership significantly and therefore can be very damaging to a TV operator and its business,” says Ralph Bachofen, VP of sales and head of marketing, Triveni Digital “Viewers needn’t be particularly discerning to notice issues with digital TV signals. Common issues that are particularly visible to subscribers are video tiling, lip sync errors, missing audio channels, intermittent tuning, and missing components. As most TV operators have probably discovered, viewers very rarely tolerate interruption or degradation in the quality of picture or audio,” claims Bachofen. “For the TV operator, the key to keeping the viewer – whether discerning or not – satisfied is to analyse not only video, but also audio, data, and metadata, examining the MPEG transport layer continuously and comprehensively,” he says. So with plenty of errors still to spot with digital transmissions, are viewers now more aware of these problems and more likely to act on them than they were in the days of analogue? “Audiences today are much more savvy. They have seen how good digital television can be and they become vocal when it does not meet their expectations,” says Steve Nunney, managing director, Hamlet. “The broadcaster’s unique selling point, is quality, with reliable high resolution and freedom from dropouts and stutters. Why would you want to risk that unique high ground?” he asks. Viewers may be aware of problems and naturally become frustrated by them, but changing channel and cancelling subscriptions are quite drastic measures. Each viewer must have a threshold for quality of service that if not satisfied, triggers a response. What affect does this have on a broadcasters reputation? “A pretty catastrophic one. Customers have a high threshold before they do anything about a problem but if issues remain consistent for months, they will suddenly start experiencing a lot of churn,” says Simen Frostad, president, Bridge Technologies. “Then the more catastrophic loss is when you lose the signal for hours, which is a terrifying prospect. Both scenarios can be pretty disastrous

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The CA operator is always the first person to say ‘no it’s not the CA’ and it is then up to the broadcaster to try to prove it. So again the philosophy is to have a particular level of monitoring and analytics capabilities at all kinds of production points where you transform the signal one way or another. SIMEN FROSTAD President, Bridge Technologies

from a commercial point of view, especially if the slow trickling kind of problem where you have a consistently bad signal – artefacts every ten minutes for instance – slowly this will take its toll and audiences will turn elsewhere.” Keeping audiences happy is only one part of the incentive for maintaining a high quality of service with advertisers also keen to ensure their wares are presented in all their glory. “Without audiences and advertisers, you do not have a business,” says Hamlet’s Nunney. Audiences have a huge choice of channels, and a huge choice of sources of entertainment and information and advertisers want their products to look good. “They take enormous care to make their commercials striking and the packshot colourimetry to be precise. They will be reluctant to pay to put their commercials on a channel tat does not reflect that care. If they do book commercials and are not happy with the way they are transmitted, they will not pay,” claims Nunney. “The message is clear: if you attract an audience then you will interest advertisers; if you look after those advertisers, you will keep them booking slots; if you take advertising revenue, you will have a profitable business. That is why quality matters.” Theoretically, the best possible achievable quality in digital TV should be perfection, but is this an achievable goal for broadcasters or a technical and commercial implausibility? “Technically, perfection probably is achievable in a digital TV network and can be ensured through the proper use and placement of intelligent monitoring devices,” says Triveni’s Bachofen. “However, it simply is not feasible to deploy monitoring devices everywhere in a network. Hence, TV operators can strive instead to achieve a cost-effective balance that leverages both tactical analysis and strategic monitoring.” This a sentiment echoed by Nunney. “First, we have to consider what perfect means. All digital television is, by its very nature, a compromise, first in the sampling rate at the time of capture, then in the degree of compression that is imposed to make it practical to transmit. “A lot of very clever and experienced minds have gone into developing those compression algorithms to ensure that they are as close to perfection as it is possible to be, so that the viewer sees and hears excellent quality. It is then up to the broadcaster to make the most of the technology available to achieve that ‘perfection’,” says Nunney. JULY 2010 037

TECHNOLOGY

The Boomtown Productions 3D camera rig used to film the promotional film for the Dubai Metro. Getting 3D right on location is crucial to ensure good results with T&M tools an essential part of that process.

Audiences today are much more savvy. They have seen how good digital television can be and they become vocal when it does not meet their expectations. STEVE NUNNEY Managing director, Hamlet 038 JULY 2010

“It means accurate testing of signals at every point where they might get distorted: on the shoot, during post production, as graphics are added, and so on. Ensuring that sound and vision consistently fills the available dynamic range and gamut, can only be achieved through excellent attention to quality control.” Frostad believes in the deep monitoring either side of a conditional access system too. “The CA operator is always the first person to say “no it’s not the CA” and it is then up to the broadcaster to try to prove it. So again the philosophy is to have a particular level of monitoring and analytics capabilities at all kinds of production points where you transform the signal one way or another,” explains Frostad. So while perfection may be an attainable goal, it is one that is beyond the call of duty for broadcasters that can reach acceptable quality goals by deploying their monitoring systems intelligently rather than copiously. “You don’t need tonnes of equipment you just it all to be in the correct places in the network,” says Frostad. “Broadcasters need to have valid monitoring on all the key points on the network. The market is starting to reach maturity and the operators that know what they are doing will have adequate equipment in their network. They already know they need to maintain a decent service.” Frostad believes that as a minimum, monitoring must be deployed at all the handover points on a network, such as either side of a leased fibre optic line to avoid any “finger pointing”. Accountability is a secondary benefit of an adequate monitoring

environment allowing the point of failure – and the responsible party – to be readily identified. Having adapted to the digital television environment and the increased scrutiny of the HD world, test and measurement equipment manufacturers are now having to develop the tools necessary for 3D broadcasting as well. “We’re interested in 3D monitoring. Though it does require some added signalling, 3D is contained within the MPEG stream just as any other video signal would be, and 3D content is subject to the same rules as 2D content,” says Bachofen. “The basic timing and buffer models, for example, are the same for 2D and 3D broadcasts. At the video level, further syntax – the nature of which depends upon the system being used – enables the actual 3D viewing experience. Triveni Digital monitoring and analysis systems can be employed both for conventional broadcasts and for new 3D services.” Hamlet’s Nunney believes much of the work in broadcasting acceptable 3D content must be done during the production itself. “The message we are getting loud and clear from everyone who is doing stereo 3D, is that it is vital to get as much right as possible on the shoot,” says Nunney. “Fixing things in post is really not a practical proposition – the costs are too large. You must get the basics – black level, gain for example – right on location, and they have to be perfectly matched between the two cameras in a pair. That means you need a tool like the Hamlet VidScope 3D, that lets you measure these parameters independently but also compare them directly, so you can quickly but very accurately ensure the perfect match.” www.digitalproductionme.com

THE MOST COMPREHENSIVE FAMILY OF DIGITAL TV MONITORING, MEASUREMENT AND ANALYSIS PRODUCTS IN THE WORLD

www.bridgetech.tv

DATA

260

700

SUBSCRIBERS

Rest of World: 20.5 % Western Europe: 15.6 % North America: 15.3 %

REVENUE 130

350

SUBSCRIBERS IN MILLIONS

REVENUE IN US$ BILLIONS

China: 26.3 %

Rest of Asia/Paciﬁc: 22.3 %

DISTRIBUTION OF PAY TV SUBSCRIBERS

DATA

2009 2014 IPTV USERS AND REVENUES SOURCE: In-Stat/Infonetics Research

GROWING PAINS

Geographical shifts, together with changes in platform popularity, will transform the pay TV market

he pay TV market is set to continue growing during the next three years. The distribution of revenues geographically and by platform look set to shift however, according to two recent studies. A report by research firm In-Stat found that Asia currently dominates the global pay TV industry with more than half of all subscribers. China alone has more than a quarter of all pay TV subscribers globally with a 26.3 percent share. North America has 15.3 percent and Europe 15.6 with the final 20.5 percent distributed through out all other markets. The study also found that the pay TV sector will continue to enjoy strong growth with IPTV takeup accelerating slightly faster than that of cable and satellite platforms. “By 2012, there will be nearly 750 million pay TV subscribers worldwide,” said Norm Bogen, analyst, In-Stat. “Asia will continue to represent over half of all subscribers through to 2014. By this time the total number of subscribers is expected to reach 855 million.” According to a study by Infonetics Research this growth will mean that the global video services market will be worth $250 billion across satellite, cable and IPTV platforms by 2014.

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750 million Number of pay TV subscribers worldwide by 2012.

855 million Number of pay TV subscribers worldwide by 2014.

$250 billion Value of the pay TV industry by 2014.

SOURCE: In-Stat, Infonetics Research

“Increased competition among video service operators will help keep monthly subscription fees in check, which will offset some of the growth expected from incremental revenue via video on demand, digital video recording, and ‘start-over’ services,” said Jeff Heynen, directing analyst for broadband and IPTV at Infonetics Research. “However, the biggest threat to revenue growth is the continued rise of online (over-the-top) viewing, where users can simply eliminate their monthly TV subscription in favour of streamed programming delivered over the Internet via sites like Hulu and YouTube, and aggregating by services such as Boxee.” The research also found the average revenue per user (ARPU) for telco operated IPTV services was lower in almost all regions, when compared to that of cable and satellite providers. Despite this, Infonetics confirms the findings of the In-Stat report stating that IPTV will enjoy a healthy period of growth in the coming years, helping to bolster the revenues for the telcos as fi xed-line service incomes continue to dwindle. Revenues will grow at a slightly higher rate than subscriber numbers as additional value-added services such as VOD, 3D and HD content begin to drive additional earnings for operators. www.digitalproductionme.com

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