Pay or not to Pay? Free Western Entertainment Channels Seek Pay
Arab viewer is in a state of bliss. Last year ended with some
well-wrapped gifts in the form of free-to-air channels, and
there are serious prospects for introducing new ones this year.
This paper will focus on the arrival of two new free-to-air
entertainment channels, Dubai's One TV and MBC 4.(1) It will
also describe the revamp of MBC 2 and discuss the positioning
of these three channels as main competitors for paid packages
Orbit and Showtime.
These newly available
choices offer an opportunity to take an interesting look at
their positioning, marketing/promotion, price, and most importantly,
content. This paper will deal with the shaping of Western entertainment
channels available for the Arab viewer, whether through a subscription
fee or free-to-air.
Both sides of that
industry are looking to increase viewership. The free-to air
channels need proof of viewership, in the form of ratings, in
order to attract a significant portion of the Arab world's $200
million television advertising expenditure.(2) Meanwhile, the
pay-based channels need to maintain and expand their own viewership
bases, which in turn translate into subscription revenue.(3)
Given the above,
this study is concerned with One TV, MBC 2, and MBC 4 as free-to-air
Western-model entertainment channels, while Orbit and Showtime
Arabia represent the subscription-based channel packages.
It is important to
determine the mission statement as well as the course of development
of each of the channels before evaluating their respective programming
Showtime is a joint
media venture between the Kuwait Projects Company (Holding)
and Viacom Inc. The network offers "over 51 premium channels
of predominantly Western television entertainment including
four sports and four movie channels."(4)
1989 in London with its signal beamed up from Egypt, Showtime
finalized a transfer to a special facility in the heart of the
Arabian Gulf in Dubai Media City in March 2005. This move was
accompanied by a significantly bold media maneuver: Showtime's
Arab parent company announced an initial public offering which,
if successful, will see the company listed on the stock exchange.(5)
Operationally, Showtime boasts 300,000 subscribers. Those are
served with a combination of house and alternative channels.
Showtime enjoys a previous working relationship with another
pay package, ART, which is undergoing major re-structuring itself.
Both have collaborated on pay per view channels and program
Using its own words,
"Orbit Satellite Television and Radio Network is the world's
first fully digital, multi-channel, multi-lingual, pay television
service."(7) Established in 1995 by the same team that
was in charge of Star TV in Hong Kong and financed by the Saudi
Mawared Group, Orbit had a clear vision of the model and the
programming it wanted to offer well before going on air: "Orbit
was created with a sole purpose in mind: to provide a vast selection
of world-class entertainment and information in English and
Arabic, to an audience hungry for greater programmed diversity."(8)
Over the years however, this vision has been altered, given
cultural, technological, or operational hurdles.(9)
Before reaching the
position of "the world's first non-stop, free-to-air movie
channel"(10) MBC 2 went through several stages in its search
for identity. At its start in 2002, it was simply referred to
as "Two"(11) in an effort to dissociate itself from
MBC. In order to launch the channel, two presenters were moved
from MBC to join Two.(12) They were also commissioned to develop
Western-oriented shows about music and movies to accompany the
channel's offerings. Two years later, Two was re-branded "MBC
2," with a focus on delivering "the latest and greatest
movies to mass audiences in the Middle East with over 300 different
movies per month."(13)
To many, MBC 4 is
the offspring of MBC 2. It is the MBC group's fourth free-to-air
entertainment channel and has been created by picking up some
of MBC 2's most successful programs, such as the Oprah Winfrey
Show, while MBC 2 took on a new all-movies identity. MBC
4 offers a mix of "live news coverage from the United States
in the mornings and top-rated action, comedy, drama and reality
television series in the evenings."(14)
was a pioneer free-to-air channel in the Middle East, established
in the mid-1990s.(15) After revamping their flagship channel
Dubai TV, attention was turned to Channel 33, which originally
targeted the expatriate community in Dubai (see Dubai:
Watch This Space in TBS 13). Channel 33 was shut down
and replaced by a "new channel bearing a new name, a new
look and a new line-up of the best in American and British programming."(16)
The end of 2004 saw the launch of the new One TV, promising
"twenty blockbuster movies a week, (and the) most popular
series, sitcoms, reality shows and kid's programs".(17)
Given this overview,
the channels' offerings are clear: movies and comedy, drama
and reality series. The origin of these programs is exclusively
Western-modeled, with the United States and Britain being the
For any channel,
defining the target audience and tailoring programming content
to that audience is a must in order to generate advertising
One TV offers ongoing
entertainment for "the whole family," while targeting
"modern Arabs who enjoy Western-style programming, as well
as English-speaking expatriates."(18) Both MBC 2 and MBC
4 have even wider-ranging target audiences: "We want families
throughout the Middle East to become MBC television viewing
households."(19) If they can have their way, MBC is sure
that with their "premium content, families don't need to
channel hop to other stations."(20) For MBC2 and MBC4,
English language could have been a problem -- after all, they
deliberately target an Arabic-speaking audience, in keeping
with the group's motto of seeing of "the world with Arab
eyes." However, the Western series and movies have Arabic
subtitles while the topics are carefully chosen in line with
targets an Arab audience hungry for greater program diversity.
"They are delivering a product attractive to a small, well-traveled,
bilingual and well-off elite who understood that one must expect
to pay for quality."(21) Then there is Showtime, with the
same quality and ease of access. The channel has for a long
time been positioned as a bouquet of Western programming. As
CEO Peter Einstein states, "We wanted to position it as
Western programming made for the Middle East."(22)
target audience is a bit ambiguous. In actuality, all marketers
seem to agree that the audience that really counts is situated
in Saudi Arabia. In a study released in September 2004, the
Arab Advisors Group revealed that close to 89 percent of Arab
households in Saudi Arabia have satellite television. Furthermore,
close to 16 percent of Arab households in Saudi Arabia have
a pay TV subscription. The same study also reveals that 90 percent
of surveyed households prefer to watch satellite television
programming in Arabic or with Arabic subtitles. Only 10 percent
of those surveyed preferred the English language.(23)
One may conclude
that there is a near consensus, with slight variations, on the
target audience. In fact, a vast market exists for these channels,
but realistically, in the game of winning viewers, the competition
has enabled many of the advances taking place in the Middle
Eastern television media landscape. Yet, it takes the vision
of television programmers to combine their knowledge of the
audience with technological insight in such a way as to offer
the formula that will generate the audience's adoption of a
particular media platform. This paper's study of the "game
play" will focus on two battles these channels have to
fight in order to maintain their audience and achieve a larger
piece of the ratings pie.
For both free-to-air
and pay channels, generating viewership numbers is of prime
importance. In the cases of One TV, MBC 2, and MBC 4 their goal
is to achieve ratings, whereas Showtime and Orbit aim to subscribe
the largest number of households. In order to gain market share,
the channels engage in a battle to provide the right content
for the right target.
There is also an
in-house battle being fought within each organization to adequately
reform their financing structure. The battle for financing is
mainly about restructuring and redistributing the channel's
resources to both maximize the return on investment and allow
adequate funding for sustained growth.
The Battle for
On a macro level,
subscription television is at a competitive disadvantage when
compared to free-to-air channels. On one hand, there is the
historical bias of Arabs who believe broadcasting should be
a free service. This may have been one of the driving forces
behind widespread channel piracy in the Levant and North African
countries.(24) On the other hand, subscription rates have reached
rock bottom for all providers, making the battle over incentives
and costs seem irrelevant.
At the same time,
it is possible to argue that in pursuit of advertising dollars,
free-to-air entertainment channels are pitted against various
other channels that also provide music, sports, and news. Moreover,
thematic channels have not been advertisers' favorites. Most
media-buying units within advertising agencies believe that
audiences are only attracted to specific programs usually available
on more general channels. Against this backdrop, what are the
current practices and future tends of Western entertainment
Orbit is faithful
to its motto of focusing on quality for the subscriber's money.
First, Orbit is diversifying its programming source in the hope
of attracting new demographics. For instance, Orbit is serving
a number of previously overlooked expatriates residing in the
Gulf region, who are not satisfied with traditional free-to-air
media. A case in point is the introduction of two Filipino channels.
More importantly perhaps is Orbit's search for alternative sources
of entertainment material, most notably its deal with Chum TV,
a Canadian media company and content provider; the contract
provides Orbit's Hollywood channel with a three-hour block of
entertainment segments. Besides these two approaches, which
are closely related to programming, it does not seem that Orbit
is willing to pursue other sources of financing besides the
traditional subscription fee.
Unlike Orbit, which is aggressive on various fronts, Showtime
is seeking primarily to put its efforts into developing its
motto of "one box, one card, and one platform." In
other words, it is planning to put to use its technological
capability to serve its customers using Internet and Electronic
Program Guide (EPG). Interestingly, Showtime is moving towards
an initial public offering (IPO), with a valuation estimated
at $2 billion. This offering will secure additional capital
which will be re-invested in acquiring a larger market share.
The outcome of the IPO and its benefits are yet to be seen.
In theory, free-to
air entertainment channels rely on advertising as a main if
not the only source of financing. In practice, two main forms
of advertising have been adopted so far on all three channels:
spot advertising and sponsorship. While MBC 2 has opened up
the doors for its sister channel MBC 4 to profit from the creation
of theme nights and show branding; One TV did not lag far behind
in adopting the same strategies. Sponsorship has become very
limited given the time and place of insertion. Competition,
instead, is focused at the creative design and flow between
promotions, sponsorships, commercials and program content. Ironically,
all three channels are represented by companies belonging to
the Choueiry Group.(25) To some this may constitute a hindrance
to competitiveness as all three channels adopt the same programming
approach and the same sales strategies. Others argue that this
could eradicate the "discounted ads syndrome" whereby
the Choueiry Group will maintain a tight control on the discounts,
if any, given on either channel.(26)
In the battle of
financing, each channel has uncharted territories worth exploring.
MBC 2 and MBC 4 have started combined marketing and promotional
activities - cross-promotional in particular. This will prove
substantial in minimizing promotional costs. Similarly, the
channels are marketed as a combination using exclusivity as
incentive. In other words, in the game for ratings the MBC group's
combined market share will most likely be a strong proposition
The Battle for
These channels rely
solely on acquisition as a source of material. There is no development
of programs or series. The other aspect of the channels' content
is on-air promotion. These have proven to be an arena for a
different type of competition, one that is beyond the scope
of this analysis. International acquisition is associated with
various factors including but not restricted to: territory for
which the material is acquired, number of households/viewers,
and type of encryption, if any.
OneTV has inherited
a niche audience that is predominantly comprised of expatriates.
Its lineup of reality television and American-based series has
disturbed an audience familiar with soaps and British series.
This reaction has caused the channel to respond and to adjust
its scheduling accordingly.(27) The channel is establishing
its identity. One TV has gone to extremes to disassociate itself
from Dubai Television in an attempt to avoid repeating the mistakes
made by Channel 33. However, One TV will revise its scheduling
and try to cater to an expatriate community that may require
locally produced entertainment. If achieved, One TV would have
a unique product not available to any of its competitors.
By launching MBC
4, MBC 2 managed to share the burden of competing head-on with
One TV. Consequently, MBC 2 has reinvented itself as a free-to-air
movie channel that caters to over 120 million viewers.(28) In
doing so, it has raised the bar for movie rights in the region.
These have been steadily increasing over the last fifteen years.
Distributors will not only be going for the highest bidder but
also for the channel that will be ready to buy a back catalogue
of older movies. With solid financing, MBC 2 will be ready to
outbid its competitors. MBC 4 stands to benefit from MBC 2's
negotiating advantage. Indeed, many of the movie distributors
also are handling syndicated programs. MBC 4, through consolidation
with MBC 2, stands to compete against One TV.
Orbit has turned
to two strategies to reestablish its entertainment channels.
On the one hand, it has looked for alternative sources of entertainment
material, such as deals with Chum Television International.
On the other hand, it has positioned itself as the forerunner
in providing the latest series and films. Its introduction of
the "first-see TV" campaign is an attempt to focus
viewers' attention on the exclusivity and quality associated
with Orbit. This elite content, aired just six months after
its release, comes at a high financial cost, but one that Orbit
is willing to bear in order to maintain its share of the market.
When it comes to
Western-origin entertainment, Showtime has a competitive advantage.
It repackages the productions of Viacom, the parent company
of MTV, Nickelodeon, Paramount Pictures, UPN, CMT, and others.
Showtime Arabia's task therefore is to focus on selecting, scheduling,
and promoting their series and movies. This programming heaven
is allowing Showtime to explore additional content such as pay-per-view,
Internet, and interactive options. These could well be the next
revenue-generating tools for pay packages that are facing growing
competition from free-to-air channels.
The satellite landscape
in the Middle East is a rapidly expanding pan-Arab business.
The study of this emerging competition between pay packages
and free-to-air channels requires thorough research and increased
transparency. As a platform for such study, this paper has attempted
to provide a sense of the competition and dynamics at play.
In closing, we look into the future, based on personal observation
and discussions with industry insiders.
It is true that millions
of programming hours are available for these channels, but only
very few seem to attract programmers in the region. Consequently,
bidding for programs has resulted in soaring prices and an attempt
to secure program sources for as long a period as possible.
Long-term exclusive agreements will ensure that a continuous
stream of series or movies is secured.
MBC's four channels
and Al Arabiya are realigned in a way that locks the viewer's
remote control to that particular family of channels. Any channel
that loses one member of the family will, programmers hope,
gain another member. Consequently, advertising will be sold
by the bundle across channels on a combined rating.
A Single Platform
Pay television could
be forced through mergers, acquisitions, or alliances to provide
a single platform. Showtime stands as a main leader with a bold
move towards an IPO, various ventures with ART, and a "combo"
offer with Orbit.
Added value for the
subscriber's money will be a trend. Pay-package customers will
be tempted with more options, particularly interactive elements
such as long-form Electronic Program Guides (EPG), games, interactive
on-line options. In addition, high-speed Internet, and more
pay-per-view programming will help reduce the gap between one
package and another. Ultimately, this will set the pay-package
offers apart from those that are free-to-air.
The viewers are declared
winners in the competition between pay packages and free-to-air
Western entertainment channels. The viewers are offered more
choice, competitive prices, and added value for money. Now,
more than ever, their remote controls can surf freely over an
expanding spectrum of channels.
Joe Khalil is a media consultant with more than
fifteen years of professional television experience with MBC,
CNBC Arabiya, MTV, and Orbit. For seven years he was an instructor
at the Lebanese American University where his teaching and research
focused on transnational broadcasting, programming, and production.
He is a graduate of the College of Communication at Ohio University
where he presented a master's thesis on television in multicultural
societies. Please address all comments to firstname.lastname@example.org.
1. One anecdote amongst professionals had it that "One"
TV was so called because it was designed to trounce channel
3. Paid packages are reluctant to give away subscriber numbers,
which more often than not include hotel rooms. Only Showtime
came out with figures in the 300,000 household range.
4. Showtime's website, http://www.showtimearabia.com
5. Strategiy, the marketing and advertising analysis firm, quoting
KIPCO, reported on March 25, 2005 that Showtime "
hired Morgan Stanley and Goldman Sachs for an initial public
offering which could value it [Showtime] at up to $2 billion
. . . ." No further information was available at time of
publishing. Strategiy. "KIPCO confirms Showtime Arabia
IPO." March 27, 2005 (http://www.strategiy.com/mnews.asp?id=20050327114024).
6. Showtime has already collaborated with ART in carrying its
Arabic channels as a special package as well as coast-sharing
televised sporting events.
7. Orbit website, http://www.orbit.net
9. The failure of Orbit's BBC Arabic venture was of particular
concern; however, changes occurred throughout, including the
type of set-up box, the channel's headquarters in Italy, etc.
10. MBC 2 website (http://www.2onthenet.com).
11. Initially, the channel was simply referred to as "Two"
until last December when the channel started re-positioning
itself as "MBC2."
12. Razan Moghrabi moved to Channel Two to present Razmania
which included Top of The Pops and Raya Abi Rached moved to
host Stars on Two until Two's reshuffle prompted her come back
to MBC 1 with Scoop.
13. MBC 2 website (http://www.2onthenet.com).
15. Dubai TV's presence on satellite consists of four channels
available on Arabsat, NileSat, and Hotbird.
16. One TV website (http://www.onetv.ae).
19. Mohammed El Mulhem, MBC Group director of Marketing, in
an official company press release.
21. Abdallah Schleifer. "Does Satellite TV Pay in the Arab
World Footprint? Exploring the Economic Feasibility of Specialized
and General Channels." Transnational Broadcasting Studies,
Fall 2000. (tbsjournal.arabmediasociety.com/Archives/Fall00/Schleifer_Paris.html).
22. Abdallah Schleifer and Sarah Sullivan. "Interview with
Peter Einstein, CEO, Gulf DTH/Showtime". Transnational
Broadcasting Studies Fall 1999 (http://tbsjournal.arabmediasociety.com/Archives/Fall99/Interview/interview.html).
23. Arab Advisors Group. "Saudi Sat TV and Radio Survey
- September 2004" (http://www.arabadvisors.com).
24. Abdallah Schleifer, Fall 2000.
25. Owned by Antoine Choueiry, this group represents media sales
for more than ten television channels including LBC, MBC, Dubai
TV and Al Jazeera in addition to print publications including
Al-Hayat, Annahar, Al-Safir.
26. Discount syndrome refers to the practice of media representatives
offering discounts on their price list of inventory of advertising
space. Usually, this is done in return for large and/or exclusive
27. In February 2005, it was particularly interesting how the
channel responded to radio and press public requests to reschedule
the soap operas The Bold and the Beautiful and The
Young and the Restless.
28. MBC2 is marketing itself as the world's only free-to-air,
24-hour movie channel. This claim could not be verified by the
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