It’s a sunny afternoon in Beirut and you’re sitting in a café, waiting for a friend who is running fashionably late as usual, but it doesn’t bother you because now you have time to catch the latest episode of The Big Bang Theory on your smartphone. This is the attraction of video on demand (VOD): the convenience of watching whatever you want, at any time and on any device. Provided there is internet, of course.
In the Middle East, millennials are increasingly turning to online for entertainment and internet usage has been exploding in recent years. Saudi Arabia and the United Arab Emirates rank among the top countries for YouTube views per capita in the world. With the introduction of American VOD provider Netflix to 130 countries, including inside the Middle East, at the beginning of this year as well as regional and local players that already exist in the market, online streaming has nowhere to look but up. And although it’s taking them a while, advertisers are slowly catching on to this. Members of the advertising industry in Lebanon agree that spending on digital advertising is rising, albeit from a low base, with estimates for 2015 ranging between 8 and 10 percent of total advertising spent in the country.
The challenges of VOD in the Middle East
There are other advantages to advertising online. “The targeting is so efficient that you can really target who you want. It’s much cheaper [than TV] and it’s more efficient, especially when you’re targeting millennials,” says Daniel Habib, co-founder of Iron Heyoka, an online production house that creates corporate videos for clients in addition to original web series. “I don’t know any millennials who still watch TV,” he adds.
On the consumer side, it also makes sense to pay for this content, according to Nasri Atallah, managing director of media and publishing at Keeward, a digital production company that partners with a number of brands including Iron Heyoka. “I think what’s shifted over the last few years is people just aren’t willing to pay stupid amounts of money to see a film or to download a piece of music, but Spotify and Netflix [work] because it seems like the right amount to pay to do something legally and have a nice experience,” Atallah says. A Netflix subscription can set you back as little as $7.99 a month for the basic package, which is less than the average price of a cinema ticket in Lebanon today.
Regional VOD platform Cinemoz, however, argues that online payment is still a challenge as many Arab users don’t own credit cards, which is why the company has chosen to rely on advertising for revenue. Cinemoz founder and Chief Executive Officer Karim Safieddine explains that “advertisers are addressing the millennials by a landslide. The only reason why we’re generating very sexy revenues is because we cater to that demographic; they are the new consumers.” The company, which started in 2011, is hoping to close the year with more than $1 million in revenues.
Another challenge has been the notoriously unstable internet connection in Lebanon and other countries in the region, but tech-savvy VOD service providers take this into account when they develop their software. Eli Khoury, the chairman of Lebanon-based content provider M Media, addresses this issue: “We have spent a lot of time on the back engine. Today you could watch it even on the weakest internet [connection] without cuts.” The M Media website is currently in beta mode – with all videos available for free – and plans to launch fully once they have reached their targeted amount of content.
The potential of the internet
VOD requires considerable financial investment as well, particularly when it comes to purchasing rights from major Hollywood studios. Starz Play Arabia Chief Commercial Officer Danny Bates says that the Middle East and North Africa (MENA) service, which was launched in 2015, has invested a significant amount so far, though he is unable to reveal the exact figures at this time. Starz Play Arabia announced on May 23 at a press conference in Dubai their partnership with Samsung TV, banking on the popularity of their smart TV range in the region, particularly in the Gulf. The majority of their 720 hours of Arabic content was in fact produced in the Gulf, but they are looking to expand with Syrian and other Levantine content in the near future.
This has implications for the Lebanese film industry. As the road to distribution remains unclear (see story page 68), the fast-rising VOD segment is one that Lebanon has the opportunity to exploit. Most film producers and distributors that Executive talked to agreed that there are fewer barriers to bringing a film to an online platform when compared to the struggles of securing a theatrical release. Although the latter currently offers much greater financial gains, online prospects are looking good, with new platforms springing up annually that are thirsty for Arabic-language productions to feed the demand.
The Middle East market is avid for content, attests Cinemoz’s Safieddine, whose site currently boasts an average of 2 million views per month. Finding enough Arabic content is proving to be a main challenge for Cinemoz. “It’s improving, but today the volume of Arab films released yearly is not enough to sustain the viewership that we are reaching today,” says Safieddine.
Following in the footsteps of global VOD giants, Cinemoz is co-producing several original series to be released in early 2017 on their new brand TVmoz. “With the help of our analytics, we have a much better idea of what our audience wants,” says Safieddine, adding that the web series line up includes a zombie show and a sci-fi comedy, among others.
Internet speed notwithstanding, Lebanon has achieved some success online. Shankaboot, which according to As-Safir aired as the world’s first Arabic web-based series, ran from 2010 to 2012 and won a Digital Emmy Award. In recent years a number of players have ventured onto the field, among them Iron Heyoka. The progress has been slow, but the future looks bright. Referring to their rapidly increasing business in producing corporate videos, Iron Heyoka’s Habib enthuses, “It’s like Lebanon woke up two days ago and figured out there’s internet; it’s crazy.”