Interactive - TV's Fifth Generation
By Hala Abdulrahman
The Arab World is at the
dawn of a new entertainment era. Communication technology revolution and the expansion
of new media in the region have led the way to the effective delivery of on-demand
entertainment and introduced a unique opportunity for passive Middle Eastern viewers
to become active users and experience the "fifth generation" of television.
After terrestrial television,
considered television's first generation, then the spread of video cassette recorders
(VCRs) in the late 1970s, representing a technological revolution in entertainment,
a third generation was introduced with Direct-to-Home (DTH) reception of analogue
FTA (Free-To-Air) channels able to reach 26 million households in the Middle East.
More recently, subscription television (Pay-TV) with digital quality and a variety
of channel packages constituted the fourth television generation.
Today, on-demand technology
makes it likely that the curtain is about to rise on the fifth generation of television
in the region. Instant gratification with total control is the key to future digital
entertainment. Television and video enjoyment must not treat audiences as passive
receivers of low-value services. The next generation of television and video services
will be on-demand and fully interactive, providing maximum convenience to viewers
and major opportunities for profit to service providers.
After years of expecting
"the big next thing," Pay-Per-View (PPV) and other new on-demand services are
being deployed aggressively in the market and at a pace that may be exceeding
The plans are ambitious,
with the introduction of Showtime's Home Cinema, the new scope of Orbit's TV Max
[see in this issue Orbit Announces
New Channels and Services], Luxsat's all-in-one Super Box, and trials
of other new products underway. Choice, convenience and quality are the new viewing
drives. Major players have taken the initiative to introduce the first Pay-Per-Day
(PPD) service in the Middle East.
Showtime's Home Cinema
Showtime, the leading
digital satellite Pay-TV network in the region, was first in using and introducing
PPV technology, a pioneering step that entailed both leadership and risk. Showtime's
Home Cinema, a service allowing viewers to select the movie they want to watch
when they want to watch it, was introduced in March 2002. Showtime subscribers
can order the selected movie from a list of movies available during the week and
watch the movie during the following day. The service offers 10 channels dedicated
to first-run movies starting every 30 minutes throughout the day. The selected
movie can be watched as many times as the viewer wishes from 9 a.m. until 3 a.m.
the next day. The service is offered for US$ 4.00 per movie. To order, subscribers
can either pay in cash in advance or use pre-paid cards and then call to activate
their account and order the desired movie.
Showtime's lead in adopting
and introducing the on-demand concept in the Middle East and North Africa, has
raised multiple questions with respect to its strategies and role as a major player
in the entertainment industry in the region. I took my questions to Peter Einstein,
Showtime's President and Chief Executive Officer, and asked him to address the
issues and provide his vision in regard to the PPV experience.
Such a leading step should have a certain concept and philosophy behind it. Could
you explain what is the concept/ strategy behind the introduction of Home Cinema
service? Was it for a marketing purpose, to upgrade existing subscribers from
lower tiers to other expensive bouquets, or an added value, or maybe to attract
new subscribers ?
All of these! As Showtime has the most stable and technically advanced infrastructure
in the Pay-TV business in the Middle East we had the opportunity to develop a
multiplexed Pay-Per-View service to offer subscribers the very latest movies.
Home Cinema is like having a movie theatre in the comfort of your own home, allowing
you to watch the movies you want at the time you want to watch them.
Home Cinema is available
to Movies Plus and Total Plus subscribers-it would be unfair to allow Sports Plus
and Showtime Plus subscribers access to Home Cinema where they could cherry-pick
the best movies without subscribing to the Movies Plus or Total Plus packages.
The mix of Western and Arabic blockbusters on Home Cinema has proved a strong
selling point for new subscribers and a real added value benefit for existing
you shed some light on the strategy behind introducing Arabic movies in Home Cinema
More than 90 per cent of Showtime subscribers are Arab nationals-so it makes perfect
sense to provide premium Arabic programming, which is why we have introduced new
and exclusive Arabic movies on Home Cinema.
Showtime has always adopted
a policy of providing programming appropriate and accessible to Arabs. That is
why all our programming is subtitled in Arabic, why our scheduling is focused
on prime time in Saudi Arabia (and channels are not simply beamed-in from around
the world), why 50 percent of Showtime on-air trailers are produced with Arabic
audio, etc. The addition of Arabic movies on Home Cinema is an extension of this
Does this mean that Showtime has started to adapt a new strategy, after being
positioned as "the leading provider of the best western entertainment" for many
has been a shift in the focus of Showtime to the best in world entertainment.
We have always maintained that we would provide the best entertainment available,
especially if the content is exclusive to Showtime. With so many free-to-air channels
with some producing very good Arabic content, it is difficult to provide content
that is exclusive.
Can you describe the Home Cinema subscriber's profile? Did Arabic movies prove
to have higher buy-rates than western movies?
The Arabic movies on Home Cinema have proved a tremendous success, with buy-rates
higher than those of western movies. Key reasons for this may be that the movies
on Showtime are uninterrupted by advertising and that they are directors' versions.
The profile of Home Cinema purchasers is in line with the Showtime subscriber
Which markets proved to be the most adopting of and favorable to Home Cinema PPV
service? Could you rank these countries?
key markets for Showtime are Saudi Arabia, Kuwait, UAE, and Egypt. The launch
of the pre-paid Home Cinema card has proved especially successful in Saudi Arabia
where there are still a significant number of Showtime subscribers paying by cash.
The pre-paid card means that those subscribers can now easily make a spontaneous
decision to watch a PPV movie rather than having to plan their moving viewing
and pay cash in advance. Generally, movies in Saudi are strong, probably because
there are no cinemas in the Kingdom.
movie buy-rates reported by some international sources could be characterized
as "none in double digits," even megahits and Box Office movies. How successful
is PPV in the Middle East? Could you give an approximate buy-rate per movie or
an approximate indication of activation percentage among active Showtime subscribers?
The buy-rate for Showtime is increasing all the time-and remember that the service
has only been running for a little over six months. For the first Pay-Per-View
event-the Tyson-Lewis boxing match-Showtime recorded a higher buy-rate in the
Middle East than that achieved in the United States, which is a phenomenal achievement.
How do you evaluate the service in light of the current penetration rate? Is it
paying off as compared to projections?
We are very pleased with the success of Home Cinema to date-and the figures are
improving day by day and month by month. It is paying off because it provides
subscribers with even greater choice and offers real added value content.
will be closely aligned with Video On Demand (VOD) in the audience's minds in
terms of technology. How different is Pay Per View from VOD?
In many respects Home Cinema is a multiplexed VOD service. A subscriber's Home
Cinema account is tracked through their unique smart card number and we have made
it as simple as possible to immediately order a movie from the selection available.
Our leading edge IVR (Interactive Voice Response) system takes the consumer through
the options available and billing is made automatically either through the subscriber's
credit card or debited from the Home Cinema pre-paid card credits. The IVR then
automatically 'opens' the channels on the consumer's smart card which are showing
the selected film.
From your own experience, what are the limitations and/or problems that might
be hindering PPV growth?
Cash paying subscribers were an untapped opportunity-until we launched the Home
Cinema pre-paid card. With more transponder capacity we may look to further extend
the choice available on Home Cinema and there are other opportunities to offer
Pay-Per-View events, for example, especially after the success of Tyson-Lewis.
Pay-TV market has proved to be a highly competitive market, with some providers
offering PPV and others providing VOD and interactive TV services. What is the
market overview from your point of view in light of upcoming competition?
Showtime is the market leader in Pay-TV in the Middle East and, to complement
that, we have the most advanced technical infrastructure that we use to offer
applications and services that consumers want. For example, we are currently rolling
out our SmartTV range of interactive services that include a video mosaic, intelligent
EPG, and video games.
Orbit television and
Radio Network: TV Max
Also this year, Orbit
Television & Radio Network, one of the main players in the Pay-TV industry in
the Middle East & North Africa, announced the start of its PPV service. Packaged
and branded as "TV Max," it allows the viewer to purchase access to pre-scheduled
premium programming, such as exclusive sport events and big-hit just-released
movies. The new service aims to enhance the viewing experience and give more control
over the "what-to-watch" question. Launched in June this year, TV Max has featured
some of the most recent Arabic and international blockbuster movie titles, such
as 'Ayyam al Sadat,' 'Swordfish,' and 'Training Day.'
Samir M. Abdulhadi, Orbit
CEO, stated, " The introduction of our TV Max Pay Per View service signifies a
crowning moment in the modernization process of Orbit's digital technology. It
also serves to highlight our continued quest to enhance the network's programming
bouquet" [see in this issue TBS' Interview
with Orbit's CEO].
Abdulhadi believes that
TV Max has revolutionized the home entertainment experience of Orbit's subscribers,
who have enjoyed viewing the very latest cinema titles conveniently delivered
directly into their livingrooms a few minutes after ordering. Additionaly, according
Orbit's CEO, and to further speed up the experience, the payment process for TV
Max viewers is simple and trouble free and could be made simply by having their
accounts debited on-line.
Abdulhadi states, "Now
that TV Max is established, our next task is to meet the growing expectations
of this cutting-edge service. As such, we intend to introduce over the coming
months a new wave of innovations. The service will be soon expanded to eleven
channels to broaden the choice of quality movie titles available to our customers.
We will also introduce booking via TV remote control units, which will allow customers
to order TV Max titles without having to leave their armchairs."
These innovations constitute
a continuation of Orbit's deployment of the new generation of STBs and the switch
to Digital Video Broadcasting (DVB). Orbit has transmitted in digital quality
since its inception; however, the move to DVB will offer a better image and sound
quality, as it is based on a more advanced technology than the one used in the
Envisioning the future:
In the immediate future,
the region will be witnessing the appearance of new names in the on-demand home
entertainment field offering their new interactive services with state-of-the-art
STBs and new technology and trying to establish themselves among the market players.
LuxSat Middle East,
founded in 2001, is a platform providing interactive TV services that plans to
launch its multimedia on-demand platform in 17 countries around the Middle East-North
Africa region. The platform will allow viewers to select from a menu of video
titles whenever they wish. While the title is playing they have the option to
pause, rewind or fast forward. The on-demand functionality should give viewers
more of the programming they want, with more control over the time they want to
watch and exactly the same level of control over playing as over a DVD. The service
will be launched via Nilesat. While launch dates were previously announced for
late 2001 and early 2002, commercial launch has been delayed for more than a year.
In an interview with Mohamed
Osama, CEO of LuxSat Middle East, which claims to be the Middle East's leading
multimedia on-demand distribution platform, Osama spoke about LuxSat's unique
platform, the technology behind it, and future plans. Osama is also Founder, Vice
Chairman, and CEO of Trans-Global Technologies, distributor of digital hospitality
VOD/PPV. His entrepreneurial activities started with the founding of the "Multi-dimension
Studio" in cooperation with T.N Communication. Dr. Osama is also a practicing
plastic surgeon and directs a family business representing several multinational
pharmaceutical and medical companies.
As an innovation, VOD is obviously the latest technology in home entertainment.
It is also sometimes perceived as a premium over PPV. Could you shed some light
on the VOD technology and how it works?
is set to provide on-demand personal entertainment via Push Multicast Data Transmission
Technology, a technology that gives significant advantages over traditional point-to-point
convergence. The multicast technique consists of simultaneously sending data by
satellite to end-users, a technique making LuxSat competitive versus other alternative
VOD solutions like cable or ADSL.
VOD is not an extension
or premium over PPV. It is a totally new approach to accommodate a unique lifestyle,
with the drive to give the best quality and to avoid the free, non-revenue-generating
model that has challenged the point-to-point technology. The viewer sends a request
to the server, the server streams back the video content as many times as there
are user requests and the access to content is instant, as it is already stored
in the hard drive of the terminal. Digital content transmitted is stored on the
box's hard disk and is available for instant viewing. However, digital content
files are encrypted before transmission to avoid illegal copying of content.
What are you planning to offer to the viewers? And how is your service different
than existing PPV services?
is offering totally different entertainment solutions: Pay-Per-View, 3D graphic
quality online gaming, internet browsing, e-mail, music-on-demand, and news-on-demand,
with Video-On-Demand full interactivity while watching selected English, Arabic,
and Indian movies; in other words, the viewer can pause, rewind, play, and fast
forward the movie exactly in the same way the DVDs and VCRs are used. We are betting
on the convenience of the service and the enhancement of lifestyle of people who
can afford personal entertainment on demand.
Who are your business partners in terms of technology?
have business partnerships with major technology providers worldwide: Microsoft,
Intel, Compaq, 3 Com, and LuxSat International.
in terms of programs and material offered to your viewers?
have concluded agreements with major Hollywood studios for box office movies and
with major Arabic and Indian providers for library titles, in addition to other
independent film producers.
At a time when Pay-TV in the Middle East and North Africa (MENA) region has been
pointed at as a slow market and major Pay-TV players are still working hard to
acquire additional subscribers to their platforms in order to start making profits
after many years of investment, do you think that introducing VOD to the MENA
market is a wise decision ?
agree with you that the last 10 years have indicated that Pay-TV is a slow market
to pick-up and that was due to several factors; the first, is that some viewers
were not ready to pay for what they watch on TV and were satisfied with the limited
programming they have been offered by terrestrial local TV. Others, were satisfied
with the some 40 analogue channels provided through analogue FTA satellite channels.
It was not until viewers started to change their decoders, which was a hurdle,
that the acquisition curve of Pay-TV came up in the past two years. I strongly
believe that not only Pay-TV is picking up but also the games market is booming,
when the international games industry is working around a figure approaching 7
billion US$. That should be taken into consideration as a major indicator that
games, DVD, and home entertainment are absolutely booming and that now is the
time for it. Having said that, we are after the big fish and we are working on
acquiring up to half a million subscribers in the coming five years.
on your business objectives and strategies, who is your prime potential customer?
will explain it further. Today, there are still 3 million viewers using analogue
receivers; these are our potential customers. They will eventually move to digital
entertainment, where they have various options: to move to FTA digital receivers,
to subscribe to available Pay-TV platforms, or to get our unique all-in-one box.
audiences have been using various types and versions of IRDs [Integrated Receivers/Decoders]
and STB since the introduction of Satellite TV and Pay-TV platforms. Could you
give us a an idea about Luxsat's Set Top Box?
is not an ordinary STB, it is a complete station connected to a satellite TV dish,
operated by a simple handset. The station is an all-in-one satellite receiver,
3D games console, DVD, and audio CD player and Internet terminal, all operated
with a remote control.
When are you planning to launch your service?
have already started testing, with around 250 boxes in various countries in the
Middle East. We can describe them as test accounts. Through these accounts we
were able to test the robustness of the system, the quality of the service, and
the friendliness of the box through the feedback provided by these accounts.
So that means that you will launch your service commercially soon? Based on your
business plan, what is your commercial launch date?
commercial launch of the service is not yet declarable. We are still in the finalization
of legal issues in countries of operation.
a market place like the MENA region, what are the limitations, challenges, or
risk factors you are considering?
cannot think of any risk factors or limitations but the affordability of the box.
However, I need to emphasize that it is not an ordinary STB, it is a state-of-the-art
all-in-one approach to family entertainment allowing viewers to watch instantly
on-demand content with full choice, control, and convenience.
What is your vision and philosophy behind introducing VOD services in the region?
are betting on the customer's convenience, instant control, and satisfaction.
Our customers will enjoy a consistent experience. We have the first call center
directly connected to the CRM [Customer Relations Management] application. Different
portals will allow customers to be in easy reach of the customer center, which
they can reach by phone, fax, e-mail, or through the web.
become a key part of Pay-TV providers' strategic vision
In addition to offering
movies on demand, other services will also be introduced. Home shopping, Internet
access via television, e-mail, and online gaming figure among other potential
has been understood so far as simple entertainment, offering changing camera angles
on a soccer match or tournament, participation in quiz shows and online games,
plus the Electronic Program guide (EPG). In fact, however, interactive solutions
could carry much more than entertainment services and offer a wide variety of
business-to-business and business-to-consumer application services, plus educational
facilities, distance learning, and much more.
While companies are launching
new technology that will transform television, it will take some time for the
consumers, or at least the majority of consumers, to learn about and get used
to new ideas in using the applications and to use all the new features.
Smart TV is the interactive
television platform launched by Showtime in June 2002. Services offered are limited
to video games, EPG, and channel guide. However, the service will be extended
to include news services, horoscopes, and other enhanced information services.
On the other side, Orbit
has also joined the parade with their new STB and interactive Mosaic feature [see
in this issue Orbit Announces New
Channels and Services]. Orbit also has announced other soon-to-come
interactive applications, including electronic games, but further details, such
as the kind of gaming experience they will provide, are yet to be disclosed.
June also witnessed the
commercial launch of Orbit's new Internet Via Satellite (IVS) service. Accessed
through a separate 'black box' connected between the dish and PC, IVS allows Internet
access at around 250Kbps, five times faster than a good telephone connection to
the Internet. The service is operated independently of Orbit's TV services and
will be soon available in all territories.
The Future promises
a lot of movement
Media analysts forecast
that the number of VOD-enabled subscribers in the United States will exceed 39
million in 2005, up from more than 800,000 digital cable subscribers now using
such services commercially.
Though the case is quite
different in the Middle East and no clear estimates are available for the region,
next year the region is likely to witness additional operators launching their
PPV/PPD and on-demand services targeting hundreds of thousands TV households and
aiming at an audience looking for more convenience, control, and interactivity.
Once on-demand companies
start in, the race will begin, moving aggressively to install digital STBs in
consumer's homes. However, such changes require a lot more than just technology
and innovation: content-related issues, customer retention, and customer service
management are the real challenges lying ahead for newcomers.
In order to maximize revenues,
high-profile content must be acquired for VOD platforms. The audience will not
accept just "normal" content shown on other FTA channels and presented to them
under another name. The audience is also very price-conscious, exposed to better
programming than was the case a few years ago, and highly selective when it comes
to paying to watch. Also, content offered via PPV and on demand must be suitable
for Gulf tastes, preferences, and traditions. While no-one can deny the value
of adding different types of content, library titles will not appeal to more than
10 to 15 percent of the audience; industry statistics indicate that that 50 percent
of VOD buys are new releases.
Pay-TV has secured a limited
audience in the Middle East. Optimistic voices come up with high expectations
that on-demand services will be the fastest-selling product and that the potential
is huge. In a region where the number of dish receivers is relatively low and
at a time when satellite penetration in Egypt, for example, is at under 10 percent
compared with 15 to 50 percent in the Gulf, it is difficult to predict the future
of this new entertainment technology, especially with a market where only a small
number actually pays for what they watch on TV.
Using satellite technologies,
companies are rushing into 2003 with plans to launch their high speed, advanced
technology on the Middle Eastern niche market. It seems likely that VOD will begin
large-scale commercial deployment over the coming year and that 2003 will definitely
witness success stories, new entrants, some who simply survive, and failures.
In an unpredictable market
no-one can be sure which player will be left standing after the smoke clears.
To survive, it will take more than the best technology or "big-name" business
partners to succeed. It is the vision and a real understanding of the motivations
and concerns of users that will lead to the success stories and point to which
player will take the biggest piece of the VOD revenue pie. TBS
Hala Abdulrahman is a
TBS correspondent based in Cairo.