TV Enters New Territory
By Hala Abdulrahman
In the summer of 2003,
Orbit Satellite Television and Radio Network announced the launch of its Direct-To-Home
broadcast services and a full range of viewing and entertainment applications
in the Egyptian market. TBS correspondent Hala Abdulrahman reviewed Orbit's offerings
and interviewed Felix Serhan, Orbit's vice president and managing director.
The pay-TV business in
Egypt witnessed a potentially significant event this summer. Orbit Satellite Television
and Radio Network, the Middle East Pay TV platform, has been introduced to the
Egyptian market with an exceptionally attractive promotional offer, an unprecedented
low monthly subscription, a free IRD, and a differential advantage in Arabic programming
production, all of which they see as a positive step towards addressing and satisfying
the viewing needs of Orbit's subscribers in Egypt.
Orbit offers two packages
in Egypt, Alfa and Mega. At LE60 the Alfa is comprised of all five Arabic channels,
CNN, and 20 audio channels. The Mega, priced at LE120 per month, offers a highly
comprehensive range of Arabic and Western entertainment including six English
movie channels, two sports channels, six English news channels, two Arabic movie
channels, three children's channels, two documentary channels, a dedicated Arabic
music channel and 20 thematic radio music channels.
Orbit Satellite Television
and Radio Network made its debut in 1994 as the world's first fully-digital, multi-channel,
multi-lingual, direct-to-home pay television service. Headquartered in Bahrain,
Orbit has offices across the Middle East and North Africa, including Saudi Arabia,
the United Arab Emirates, Jordan, Kuwait, Lebanon, Qatar, Tunisia, and now Egypt.
The Orbit footprint covers the whole of the Middle East and North Africa from
Morocco to Iran.
Orbit has signed a
distribution agreement with Digital Media Systems (DMS) to provide a full sales
structure, technical center and customer service support team for the whole Egyptian
Such a major event
in the pay-TV business has raised questions as to the reasons behind Orbit's launching
of these services in Egypt after ignoring the Egyptian market for many years,
and the preparations, opportunities, and challenges associated with such a launch.
Felix Serhan received
his Bachelors degree in Science at Alexandria University. He then worked at several
prestigious companies, such as Cooper McDougall & Robertson (UK), Thomson C.S.F-DRT,
ABC Engineering-Paris, before joining Orbit Satellite Television and Radio Network
in 1994 as director of operations and managing director of Orbit Productions in
Egypt. Mr. Serhan established Orbit Productions and has successfully built and
developed contacts and business relationships with ERTU (Egyptian Radio and Television
Union), EMPC (Egyptian Media Production City), the Ministry of Culture, Egypt
Telecom (Arento), and most of the prominent production houses in the music and
In 1998, Felix Serhan
was promoted to vice president for operations for Orbit Communications Group,
and earlier this year was appointed a board member and managing director for Digital
Mr. Serhan started by
pointing out that the launch of Orbit's services in the Egyptian market is part
of Orbit's strategy to strengthen its presence in the Arab World and the expansion
plans to leave no markets in the Middle East and North Africa untouched; it is
now time for the Egyptian audience to experience the latest technological innovations
He also pointed out that
Orbit's subscribers in Egypt will now be able to enjoy the latest blockbuster
Arabic and Western movies, award winning dramas, major sporting events, and a
host of additional functions from the latest state-of-the-art satellite receiver/decoder,
TV is now finally in Egypt, and on Nilesat. Why did it take so long to take such
a decision to enter the Egyptian market after nearly a decade of Orbit's operation
in the Middle East and North African (MENA) region?
|Felix Serhan, Orbit vice
president and managing director.
its inception in 1994, Orbit Satellite Television and Radio Network has captivated
its audience in most of the Arab world and the MENA region, has achieved a high
level of penetration around the region, and has always had the vision of the Egyptian
market with the aim of maximizing subscribers and ensuring substantial revenue
growth. Orbit channels are now received via Nilesat and Arabsat satellites, the
Alfa package is transmitted via Nilesat and the Mega package is transmitted via
Arabsat. Orbit has greatly enhanced capabilities in terms of both geographic coverage
However, let me tell you
that we have been through a great deal of preparation and tremendous efforts have
been deployed. Very long processes of preparation have taken place in terms of
legal and operation issues. We first had to strongly establish Orbit's legal entity
in Egypt. We established Digital Media Systems (DMS), which is the entity designated
for distribution, collecting subscription fees, TV production, and finalizing
licenses needed for Orbit's TV platform in Egypt. The operation's infrastructure,
licenses, and legalities, in addition to partner's agreements have been very intense.
Abdulrahman: Have you
set up a call center and subscriber management system (SMS)?
Absolutely. Our call center, which is located in the 6th of October Media City,
has been set up to provide professional first-class services to Orbit's subscribers
enquiring about our services, and for technical support, installations, programming
enquiries, replacement, and downloading, in order to provide accurate and comprehensive
information and ensure current subscribers' satisfaction. Customer Service Representatives
are available to answer calls seven days a week around the clock.
Not only we are after
new subscribers in Egypt, but we also have developed and implemented a retention
program to minimize turn-over. The call center's mission is to increase our subscriber
base and maintain current subscribers. In addition to making sales, a major function
of the call center, our call center is a customer satisfaction center.
Abdulrahman: What is
Orbit's substantial business relationship with the Egyptian Media Production City?
We have developed a substantial business relationship with the Egyptian Media
Production City over the past few years. Our call center is there and we will
also be moving our offices to the Media Production City very shortly. It is also
important to note that Orbit TV is one of the first investors in the Egyptian
Media Production City in 6th October City, and we currently utilize and operate
a total of seven studios in the Media Production City.
you describe your general business strategy?
The pay-TV business is a highly competitive business, and the better we understand
our subscriber preferences and the competitive environment, the better we can
target the right content mix and volume to suit their specific needs and satisfy
the viewers' preferences. Our objective is to continue to grow as we aim at further
expand our subscriber base.
has been accused of ignoring the Egyptian market for many years, but this summer
Orbit decided to penetrate the Egyptian market, where only a relatively small
number of viewers actually pay for what they watch. Could you please explain your
strategy in this regard?
The Egyptian audiences have always been in the tops of our minds. With over six
million TV households, Egypt is one of the most important markets for television
entertainment. Orbit Satellite Television and Radio Network has been introduced
to the Egyptian market with an aggressive and appealing campaign capitalizing
on the very well established brand name, as well as a substantial successful history
in the MENA region and as the world's first fully-digital multi-channel, multilingual
direct-to-home pay-TV service offering excellent sound and video quality.
We have carefully studied
the Egyptian market from a qualitative and quantitative point of view in order
to determine the parameters, patterns, and factors controlling the viewing and
purchasing habits in Egypt and all aspects related to the market structure, TVHH,
the average size of the families, annual income, the number of children in the
families, the number of children under the age of 16, the working population,
activities enjoyed during free time, exposure to various media, the current TV
viewing habits, preferences, and favorite program genres. Accordingly, we have
allocated sufficient time to come up to the best communication strategy to reach
the Egyptian subscriber and disseminate the right values for each segment and
to produce programs that satisfy all Egyptian segments' needs and expectations.
Abdulrahman: Each market
has its own identity. Could you describe the Egyptian market from your professional
point of view?
carefully studying the Egyptian market, it should be noted that it is very diversified
compared to other Arabic countries in the region while the income level is low
as compared to other, oil-rich, countries. However, the Egyptian viewer is very
selective as regards the time consumed in front of television and I would also
say that he is also quality oriented, and I would say that the Egyptian audience
is much more price conscious, better informed and more exposed to pay-TV than
ever before. Our wide range of the best in Arabic and Western entertainment and
state-of-the-art decoder, and our special pricing and packaging for the Egyptian
market, make us the best choice in Egypt today. Creative marketing research and
techniques have been used to sustain the growth we have so far witnessed and we
have conducted an extensive research to study the competitive environment, and
viewers needs, expectations, and priorities to ensure a leading competitive advantage
in Egypt, at all times.
Abdulrahman: The old
high subscription fees and expensive IRD price of Orbit TV package created earlier
a barrier to entry for many of the potential subscribers in the Egyptian market.
However, the package you have now introduced in Egypt was a surprise and has even
been describedby the other playersas a "price war." What is your comment?
believe that it is very inappropriate to use the term "price war." The question
of price is a critical issue and in many ways, the key element of the marketing
mix. Sometimes the subscriber is forced to make tradeoffs between price, content,
and features. Let me explain. Price was a breakthrough strategic tool in our acquisition
campaign in Egypt. We were considering two different scenarios in our pricing
strategy: scenario number 1 was to offer one price for all channels, and scenario
number 2 was to offer a choice of two different packages satisfying the Arabic
programming preferences of one segment of the Egyptian market and another package
for the English programming for a second segment. Pricing was basic. So we have
developed a strategy offering two propositionsthe monthly subscription fees
of 60 Egyptian Pounds for Alfa bouquet and 120 Egyptian Pounds for the Mega bouquet,
considering advanced payment for at least 4 months. Credit card holders can pay
on a monthly basis. An additional sum of 250 Egyptian Pounds represents a refundable
fee for the set-top box. On top of all that, TV Max, Orbit's pay-per-view service,
is available to all Alfa and Mega subscribers, offering the very latest Arabic
and English blockbuster movies. We have studied the competitive environment and
found that pricing, programming, and packaging are fundamental in our marketing
strategy and we are not simply offering TV channels.
Abdulrahman: So, what
are the other services you are offering to your subscribers?
Let's agree that we have emphasized the need to greatly expand and streamline
our regional growth process. We have then developed a comprehensive integrated
plan to improve our competitive edge through introducing additional services.
Orbit offers a wide range of interactive applications such as Pay-Per-View (PPV)
and voting as well as other features including two-level parental control allowing
parents to control which films, programs, and channels their children can or cannot
watch. In addition, there is a seven-day Electronic Program Guide (EPG) with detailed
program information. Subscribers can assign favorite channels and set automatic
reminders for favorite programs. Orbit's platform provides a wide variety of new
interactive services, Internet browsing, and video games. We will provide booking
and downloading via remote control units very soon. Video-On-Demand and instant
on-line account debit are additional interactive services that will be offered
in the future.
Abdulrahman: Does that
imply that TV Max PPV and all other interactive services are considered to be
a key incentive for subscribers acquisition and adoption of the new set-top box?
Max represents a milestone for our platform. Orbit Satellite Television and Radio
Network has achieved a high level of penetration around the MENA region, maximizing
subscriber numbers and ensuring substantial revenue growth capitalizing on the
introduction of new technology represented in the set-top box. The first receiver
introduced to Orbit subscribers, back in 1994, used MPEG 1.5, and was, at that
time, a considerable revolution in the pay-TV business in the Arab world. It was
manufactured by Scientific Atlanta and was the first digital receiver offering
the best audio and video quality. The current Integrated Receiver/Decoder is essential
to Orbit's full MPEG 2 digital video broadcasting compliant transmission. The
present set-top box, the XD-300, represents an innovation in home entertainment,
allowing subscribers to receive all Orbit channels as well as the full range of
free-to-air channels from Nilesat and Arabsat, which offer 450 free-to-air channels,
which is of prime interest to a wide segment of the Egyptian market. It also offers
a complete range of family entertainment. This set-top box is the only one with
embedded Conditional Access, with home theater Dolby digital surround quality,
and with the potential to receive other satellites in the future. The XD300 is
designed with the future in mind. Let me explain further: the advanced technology
of the box allows it to be upgraded automatically via satellite, keeping the decoder
up-to-date with the latest in technological innovations. Orbit has always been
at the forefront of technological innovation, and this state-of-the-art platform
offering DVD quality picture and sound will seriously enhance our viewers overall
enjoyment of the best TV entertainment the world has to offer.
has been described as a relatively slow market in the Middle East and North Africa
region, specially given the fact that the audience is not acquainted enough with
the "pay to watch idea." How do you evaluate this statement in light of Orbit's
projected penetration of Egypt?
After carefully analyzing the Egyptian market, we have identified a huge opportunity
to generate incremental revenues. I would simply say that over 50 percent of our
projections for the year 2003 have already been realized for the Egyptian market.
Our forecast estimated our acquisition would reach 50,000 subscribers by the end
of 2003. We have already tested the market and the feedback is highly promising.
Abdulrahman: What are
your projections for the next two years?
We have studied the situation carefully and I would say that our projections are
to reach 150,000-200,000 subscribers by the end of 2004 and over 350,000 subscribers
by the end of 2005.
Abdulrahman: Are your
projections reachable, in light of the current economic situation and changes
lately witnessed in Egypt?
We are absolutely positive about those projections. I have just mentioned that
over 50 percent of our projections for the year 2003 have already been realized
for the Egyptian market. I would also say for example that since our launch in
Egypt, we are getting over 2800 calls daily enquiring about our bouquets and subscription
started as the leading fully digital Pay TV operator offering a wide range of
the best Western content. A few years later, it moved towards introducing Arabic
programming in its line-up and later still towards increasing its Arabic production.
Do you intend to further increase Arabic content on your platform?
is king and it is content which determines the value of any provider in the entertainment
business, and specifically in pay-TV. Since our debut, we have continually enhanced
and renewed our programming, because excellence is at the heart of the value we
deliver to our subscriber. We have produced a large variety of programming that
appeals to the general viewer, but recently more targeted shows are multiplying.
We are developing a differential advantage for Orbit by the production of programs
to satisfy the viewing needs of Egyptians.
Besides our ongoing efforts
to extend our subscriber base in all other countries of operation, we realize
that our continued success depends on local production and developing new shows.
To ensure a competitive edge, we created a differentiated advantage over the other
pay-TV operators. This involves the offering of unique pan-Arab content programming
that our competitors lack. Orbit strives to secure unique entertaining and informative
programming tailored to its subscriber's needs and preferences and communicating
directly with Arab viewers in all markets. We are continually developing new programming
line-up to satisfy and maintain our current existing subscribers and attract new
ones through offering a wide variety of high quality programming that educates,
entertains, and informs its audience. "Diversity" is the word, simply because
we are targeting varied, diverse, and mixed segments of the population in Egypt
and in all our markets. We offer something for everyonenews, health, science,
arts, history, movies, music, public affairs, current issues and, of course, sports.
about sports as one of the major drivers in the pay-TV business in the Middle
East and North Africa region, what does Orbit have to offer to its viewers in
Although we have not yet formally made any announcements, I wish to share with
you that we have made decisions regarding a wider programming choice. Let me take
this opportunity to disclose some news: two new sports channels will be added
to our current bouquetsOrbit Sports Channel, which will offer a comprehensive
coverage of major regional sports championships and tournaments, and an ESPN channel.
Additionally, talks are underway with a major sports broadcaster, but we are not
ready to announce the name yet as negotiations are still on-going.
you shed some light on Orbit TV and Radio Network's plans for the future? Are
there any plans to add new channels to Orbit's existing channels?
We strive to enhance our service through pursuit of a brand new channel line-up
offering a new combination of channels. We also strive to introduce extra new
channels to offer added value to Orbit subscribers and develop first-rate bouquets.
Very soon, we will be launching new channels" Fann" ("Art"), an Arabic channel
featuring different kinds of art, and Cinema 2, a new Arabic movie channel showing
new Arabic releases. Moreover, a complete new branding has been made to our channels:
"Al-Thania" ("Channel Two") will be changed to "Al-Safwa" ("Elite") channel, showing
cultural, religious, political, and current issues programming, and "Al-Thalitha"
("Channel Three") has been changed to "Al-Yom" ("Today"), which will be a family
channel with a special emphasis on young adults. This new branding is associated
with a new programming line-up exclusively tailored and carefully customized in
an attractive and unique manner to satisfy needs and demands of the majority of
Abdulrahman: It is
unclear how the other players will react to Orbit's penetration of the Egyptian
market, but we can absolutely say that "competition has became stronger."
competition would not hinder our growth. The only limitations from my point of
view would be unfair competition in terms of prices in the market. For us, we
are not in a war, we are addressing our prices to accommodate all segments of
the Egyptian market and not only the privileged. Another point that I would really
like to highlight in this regard is "monopoly" in terms of sports events of major
interest to the Arab viewers in the region. Working together and not competing
with each other is the key to success. Personally, I believe that the future may
possibly see mergers of multimillion-dollar pay-TV businesses resulting from strong
business relationships. Deals could be reached between players who share the same
visions, which in my opinion, could generate billions of dollars for the pay-TV
business in the region. Such a step could of course create larger and stronger
entities. Our objective is to continue to grow as we aim at further expanding
our subscriber base. TBS
Hala Abdulrahman is
a TBS Cairo correspondent.