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HomeFeatured BlogsPay-TV Operator OSN to Double Subscriber Base Within 5 Years, Says Ovum

Pay-TV Operator OSN to Double Subscriber Base Within 5 Years, Says Ovum

The number of pay-TV subscriptions in the Middle East and North Africa will increase from 10.6 million last year to 15.2 million by the end of 2019, according to research group Ovum.
Agence France-Presse/Getty Images

It’s no surprise a U.S. buyout firm bid for a large stake in Dubai-based pay-TV player OSN – the prospects for the sector in the Middle East and North Africa are bright, according to one set of research.

The number of pay-TV subscriptions in the Middle East and North Africa will increase from 10.6 million last year to 15.2 million by the end of 2019, according to London-based research group Ovum. Turkey and Israel account for 62% of the market currently, but OSN, with an estimated 941,000 subscribers, will grow to nearly 2.1 million customers within five years, Ovum says. Saudi Arabia alone is expected to double revenues from pay-TV to $659 million by 2019 from $294 million today.

International private equity looks to have clocked the potential. San Francisco-based Hellman & Friedman LLC. had a $3.2 billion bid for a majority stake in OSN rebuffed by its main shareholder Kuwait Projects Company, or KIPCO, according to people familiar with the matter. KIPCO owns 60.5% of OSN, while Saudi Arabia’s Mawarid Group holds 39.5%.

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Currently, the Middle East television market is largely dominated by free-to-air satellite channels, with the lion’s share of advertising spent with Saudi-owned and Dubai-based MBC. However, pay-TV revenues are expected to grow as viewers crave more premium films, hit television series and sports coverage, particularly in Saudi Arabia where cinemas and other forms of entertainment are banned.

OSN is not without challenges though. Piracy is rife in the Middle East and consumers can access video streaming services, such as Netflix Inc., from via a virtual private network. In May, OSN launched an online streaming service, recognizing the potential of the video-on-demand sector and looking to gain a head-start in a market with few major competitors.

Qatar-owned BeIN Sports is the only other major pay-TV broadcaster in the Arab world, owning the rights to swathes of soccer games including the English Premier League and Spain’s La Liga. The deep-pocketed nature of broadcasters such as BeIN Sports and Abu Dhabi Media threatens OSN’s model, as they can often outbid the commercially-run player for rights, according to Matthew Reed, practice leader in the Middle East at Ovum.

“The large number of free-to-air TV channels that are available in the MENA region, as well as a continuing problem with TV piracy, also present difficulties for pay-TV providers,” added Mr. Reed.

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(via WSJ Blogs)

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