The economic growth which the Middle East and North Africa (MENA) region has witnessed in the past years has trickled down to many of its industries particularly the broadcasting industry. The vast technological developments in the media industry have improved broadcasting, and increased the region’s demand for High Definition TV (HDTV).
HDTV is just another era in the natural evolution of Television, exactly the same as the major evolution from Black & White to Color TV was. There were other significant evolutions in the TV technology over the last three decades such as the changes from Analog to Digital technologies, but many of those were not necessarily noticeable by the public and most of them were happening in the background, at the broadcaster side of the chain.
Viewers at home may have noticed with time a change to better qualities of picture and sound, and how they changed their TV set from a bulky CRT TV screen to a slim Plasma or LCD one, or how they are receiving TV now thru Satellite or over cable instead of (or in addition to) Terrestrial transmissions. However viewers did not necessarily know that the equipment used to produce and distribute TV content have gone thru radical changes from tube cameras to CCD and CMOS capturing devices, and from analog video and audio processing systems into sophisticated IT-based digital platforms. On the other hand, the advent of HDTV is much more obvious to the TV viewer at home. The wider screen with 16:9 aspect ratio, the much sharper and crisper image full of details, without forgetting better (and maybe surround) sound quality, cannot arrive unnoticeable.
In the MENA region, few players in the TV industry have acknowledged the strategic significance of HDTV. Standard definition satellite channels currently have a monopoly over the viewership, though viewers have invested in HD-ready flat screens. HDTV will be adopted by many providers especially in light of the increase in demand which has been escalated in the recent economic slump that made home entertainment an area where consumers investing more. Home entertainment is regarded as a cheaper alternative than other entertainment facilities. This increased adoption will have a direct impact on the growth of satellite-carried HDTV channels in the region.
Until very recently, the demand for satellite capacity exceeded the supply, and according to Euroconsult and the London Satellite Exchange, nearly 100 % of satellite transponders in the region were being used in 2008. There was recently some limited supply such as Arabsat’s Badr-6 launched in 2008 and Atlantic Bird 4A (located at 7° W and branded as Nilesat 104 and Noorsat). Hence, new satellite construction plans to increase capacity have been made for the next few years including Arabsat’s Badr-5 (2010) and Badr-7 (2012), Arabsat-5A (2010) and Arabsat-5C (2011), Nilesat-201 (2010), and Yahsat-1A and 1B (2011).
The region’s broadcasters have already plans to evade the capacity constraints which they have faced through initiatives which will help them increase their market share and improve the quality of their services. Arabsat’s capacity is expected to double due to its plans to launch a new satellite per year from now until 2012 making its fleet the youngest in the region. On the other hand, NileSat plans to launch a new satellite, Nilesat 201, a 28-transponder satellite (24 in the ku band, and 4 in the ka-band) in 2010.
Abu Dhabi, the newest entrant to the regional Satellite market, has established “Yahsat”, a Private Joint Stock company fully owned by Mubadala, an investment arm of the government of Abu Dhabi. Yahsat has designed the region’s first hybrid satellite systems to offer telecom, internet, corporate data and broadcasting services to ME, Africa, Europe and South Asia by 2011. Yahsat-1A, due to be launched early 2011, has 23 BSS Transponders for DTH and occasional Broadcasting, branded as “YahLive”. This large upcoming capacity will be able to easily accommodate new broadcasting trends such as HDTV.
In addition to the extra supply of Satellite Capacity in the MENA region, new advances in the video compression techniques are tremendously decreasing the need for very high satellite bandwidth for HDTV. A typical 36MHz transponder would have enabled only 2 MPEG-2 HDTV channels a few years back (at 18 Mbps each), but the introduction of MPEG-4 compression is a key enabler for wider transition to HD services. With the 2nd Generation MPEG-4 HD encoders, 4 HDTV channels can be easily carried on one transponder (at 9 Mbps each), and with the 3rdGeneration MPEG-4 HD encoders being introduced to the market these days, the same transponder will be able to carry 6 HDTV channels (at 6 Mbps each). It is becoming closer and closer to the number of SD channels multiplexed on one satellite transponder.
According to market research, the MENA region had the highest revenue growth in the global commercial satellite industry in 2005. The region has some of the largest satellite providers in the world; for example, Arabsat is ranked 9th in the world. The total number of TV channels in the region exceeded 510, and according to the Arab Advisors Group, the number of free-to-air (FTA) channels grew by 270% between 2004 and 2007 of which 71% are privately owned. These channels increase the challenges for pay TV, and are aggressively acquiring the premium content rights normally reserved for subscription services thus fueling high competition. The main HDTV cost hurdle for FTA channels are related to upgrading head-end infrastructure, and securing Satellite Capacity, yet High Definition infrastructure suddenly looks like a bargain compared with the huge cost of rights for drama series, movies and sports for example.
Television is considered a free commodity for more than 90% of the households in the MENA region who acquire TV services using cheap set-top boxes incapable of running an EPG, let alone MPEG4 HD channels; hence, HD-ready MPEG4 Set Top Boxes need the right marketing before the benefits of HDTV can be exploited. The FIFA World Cup for example, already available in HD, is a great opportunity to improve the market for HD in the region. Using the right HD packaging and pricing, and effective marketing campaigns, hundreds of thousands of households all pointing to a range of satellite frequencies carrying HD content could be easily acquired by deploying HD-capable MPEG4 boxes, but premium HD content must be available after the end of the competition.
Facing the situation where end users have welcomed the HD new technology at their homes by buying HD-capable flat screens and HD-ready STB’s, and broadcasting platforms have provided flexible capacity, the production phase in High Definition is the critical element in the value chain that is still missing. The adoption of High Definition production and broadcasting technical infrastructures has become inevitable nowadays and this is evident with the major broadcast equipment manufacturers having more than 85% of their pipelines in High Definition.
Assuming that high costs would constitute a major challenge for adopting High Definition technology at the TV production side is closer to an illusion rather than a serious constraint. This is especially due to that fact that producing in High Definition will encounter a maximum of 25% additional costs compared to producing in Standard Definition. This figure is decreasing at a continuous and significant rate. If we try to take a step back and assess the FTA TV market so far, we notice that rich governments’ backup is a primary source of monetization for FTA TV channels in the region. On the other hand, there have been lucrative imbursements to earn exclusive rights for sport leagues and events. Taking these points into consideration, we realize that HD implementation costs would constitute a relatively light burden of the total budget allocated for the media industry in the region. Additionally, pay-TV business model would emerge in the market as a main source of TV monetization, alleviating a considerable amount of the cost burden especially on the end-user’s side. Interestingly, knowing that our regional media industry did not suffer from the economic slump as much as the international media industries creates an opportunity for the region to reduce the gap with the international standards of the media industry – assuming “catching up” with these standards would be an exaggerating description.
Finally, we need to ask ourselves a very important question: “What is needed to accelerate HD adoption in the region?” The proliferation of numerous High Definition media production facilities including “twofour54 intaj” in Abu Dhabi, are expected to supply world-class production facilities and push the regional media market forward into a closer resemblance of the global scene. Some regional broadcasters have also already invested or investing in HD production and playout facilities, although broadcasting is still dominantly in SD. In the meantime, HDTV is becoming “Standard Television” globally, and sooner or later every broadcaster will have to be broadcasting HDTV to its viewers. The time will come very soon when any available HD content, including archive content, will be of great commercial value. The wisest decision for broadcasters is to start building their libraries from both acquired and internally-produced content in HD formats to be ready for the next phase of HD delivery, which is approaching very quickly.
Hasan R. Sayed Hasan, Head of twofour54 intaj
- Ousama El Ghazzi, Business Analyst, twofour54, for his research and valuable efforts in producing this paper
- Grande, Nick. World Cup 2010: The Silver Bullet for MENA HDTV. ChannelSculptor FZ LLC, 2009
- Euroconsult & LSE. Satellite Capacity Shortages Confirmed in Dynamic Middle East & North Africa, 2008
- MEB Journal, 2007