The Gulf Region
Contributed by Mubarak Alkebaisi
Updated February 2019
Key Takeaways
Since its launch in the Arab states of the Gulf in 2016, Netflix has achieved a relatively low market-share in comparison to non-internet broadcast services. However this region shows much promise, with high levels of internet connectivity in all Gulf nations, in addition to a rapid growth of Netflix’s and other SVODs’ revenues and subscription in this region
There are currently no strict regulations of piracy of film and television content in the region, and informal services replicate Netflix offerings which discourages subscription.
The relatively young population of the Gulf States provides streaming services opportunities for growth.
Other streaming services are more attuned to cultural differences between Gulf nations, and tailor their programming to suit. This represents a competitive advantage for these services compared to Netflix.
Market
The six Arab states of the Gulf that form the Gulf Cooperation Council (GCC: United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar, and Kuwait) compose one of the world’s fastest developing regions. The GCC states are home to 51 million people out of a population of 414 million in the Middle East and North Africa (MENA) region (MBRSG, 2018). Even though the Gulf States are often viewed as part of the MENA region, the cultural and financial particularities of Gulf states (especially the high levels of disposable income and internet usage) warrant separate consideration in assessing the arrival of internet-distributed video services.
Netflix entered this market as part of its comprehensive global expansion at the start of 2016. However, specific features of the market including its lack of content piracy prohibitions and the relatively conservative nature of its society affect Netflix alongside other similar services.
Television channels entered the Gulf region during the 1950s, first with petroleum companies’ terrestrial television channels, and then in the 1960s and 1970s when state terrestrial television channels launched and expanded. Satellite channels were introduced in the 1990s. State-channels dominated the landscape until the middle of this decade (with the exception of some privately-owned, commercial Lebanese channels) when privately-owned networks such as MBC, ART (Arab Radio and Television), and Orbit started their operations.[i] MBC became the main and most established television network in the region; its closest competitors are all state channels such as Abu Dhabi TV, Dubai TV, and Qatar TV. MBC’s main shareholders and investors are either members of the Saudi royal family, their relatives, or people associated with the Saudi royal family through business partnership, which limits the perceptions of its governmental independence.
The penetration of television in the MENA region is quite high, at 85.7 percent (Digital TV Research, 2018). Online video distribution has been growing rapidly year-on-year including use of social media services, pay-tv supplemental online platforms (e.g. Shahid which is owned by MBC), and new, ‘pure play’ online services such as Netflix, STARZ Play Arabia, Iflix, and Amazon Prime Video. The pace of growth in use of internet-distributed services is expected to surpass the video services provided by satellite providers within less than a decade (IHS Markit, 2018).
Advertising-supported, internet-distributed video services generate 65 percent of the total online video revenue as of the end of 2017, which is estimated at US$325 million, while subscription services account for the remaining 35 percent (US$175 million) (IHS Markit, 2018).
A recent report issued by Digital TV Research in February 2019 stated that there is a significant rise of streaming services both in terms of revenues and number of subscriptions. The report covered the Pan Arab World in addition to 7 non-Arab countries: Turkey, Israel, Azerbaijan, Armenia, Georgia, Kazakhstan, and Uzbekistan. It states that the revenues in the surveyed countries reached US$620 million (theoretically exceeding the revenues of advertising-supported online platforms).
The data shows that Saudi Arabia is the top Arab country in terms of revenues and subscriptions, as its revenues more doubled since the end of 2017 as it reached US$116 million (compared to US$50 million as of the end of 2017), followed by UAE (US$45 million) and Egypt (US$26 million). The revenues of Saudi Arabia and UAE show how the six Gulf Countries’ revenues are forming a significant share of the total MENA revenue despite their relatively low population (GCC countries population are merely 51 million, yet Saudi Arabia’s revenues exclusively are 5 times more than Egypt’s revenues, which has a population of 100 million) (Digital TV Research, 2019).
Netflix is the leading SVOD in the region (27%), followed by STARZ Play Arabia (10%) (ibid). Yet, despite its leading position, Netflix faces many challenges in the foreseeable future in the form of proliferation of pirated content, cultural specificities, and the potential launch of Disney’s streaming service in 2019, if Disney and other media conglomerates launching OTT services bring their offerings to the GCC.
However, the rapid growth of Netflix in terms of market-share and penetration, revenues, and the general growth in all aspects might play a role to offset some of these challenges. This growth is expected based on many reasons such as: a growing population under the age of 30 (comprising 70 percent of Saudi Arabia’s population and not less than 60 percent in other countries) (MBRSG, 2018) who are mostly internet-natives and prefer watching content online and dislike watching traditional television sets; the positioning of Netflix as a frame of reference for other streaming services; and the generally positive reaction among existing Netflix subscribers in the region.
Regulation
Because satellite channels that have prioritized advancing both the state and public interest have dominated the region’s television, commercial television channels remain largely unregulated.
Piracy of films and television series is common in MENA and the Gulf region, and copyright enforcement is minimal. Competing in the region consequently makes Netflix and other SVOD services at risk of having their content pirated and made available for free download from websites and social media accounts that specialize in providing the content of Netflix and other SVOD services for free (Buccianti, 2017). A recent report by MUSO stated that 5.13 billion visits to piracy sites in MENA had been recorded as of the end of 2015 (MUSO, 2016), with growth since then expected.
Pirated content can be accessed easily either through websites specialized in providing such content or through brick and mortar DVD stores offering mostly pirated film and TV content. Websites offer easy downloading that allows anyone with basic technological literacy to download films or television shows with one-click with no need for download software or torrents. Meanwhile, DVD stores can be found in any shopping area and offer pirated copies of film and television content for cheap prices ranging from US$1.3 to $2.6 per copy. Such stores are licensed by Ministries of commerce in the Gulf states. Even though selling pirated content is legally forbidden, the authorities mostly turn a blind eye to such activities (with the exception of Qatar which is very strict with such stores).
The lack of laws regulating commercial television in general and SVOD services in particular might be an advantage for Netflix. It does not face local content quota regulations as is the case in the European Union, hence investments in local content are voluntary.
Patriot Act with Hasan Minhaj
A recent exception was the Saudi government’s demand that Netflix remove an episode of Hassan Minhaj’s show Patriot Act. The episode was titled Saudi Arabia, and Minhaj directed severe criticism toward the Saudi royal family and Saudi Crown Prince Mohammed bin Salman (MBS) in particular. The press release issued by Netflix officially announced that they pulled the episode from their Saudi Arabia’s library citing that this particular episode infringes laws in the Kingdom.
This might be an indication that regulatory intervention by Gulf States is likely to be focused on censoring content that criticizes or offends their policies.
Viewing Habits
According to a report publish by Ipsos in 2017, 71 percent of their sample in MENA prefer watching SVOD services content on their smartphones, 57 percent on desktop/laptop, 23 percent on their tablets, and 27 percent on a television whether via Smart TV, connected devices, or consoles (Ipsos, 2017). These statistics underline the importance of internet infrastructure in the region, in terms of pricing, network coverage, limited/unlimited packages.
The programming offered is mostly Netflix’s original content in addition to other content notably: Breaking Bad, Prison Break, Friends, Sherlock, the Lord of the Rings franchise, and Christopher’s Nolan Batman trilogy.
According to responses from interviewees and some social media posts and comments, the most watched Netflix content includes: House of Cards, Stranger Things, Designated Survivor, Prison Break, Breaking Bad, Crown, La Casa de Papel (aka Money Heist), and Narcos.
The cast of Jinn, the first Arabic original Netflix series (photo from Variety, 13 August 2018)
As for the Arabic content, Netflix announced that it is producing an Arab TV series named Jinn in addition to some already-released stand-up comedy specials. Jinn and a stand-up comedy by famous Lebanese comedian Adel Karam were not well-received by the Gulf’s audience, as they are from the Levant region and seen as not being associated with the Gulf culture and society. Such perceptions highlight the heterogeneity in the MENA region. One comment on Netflix’s Instagram post about Jinn captures this sentiment: “Why they are making a Jordanian TV series? Who is going to watch it except Jordanians? What about the accent? I wish it will be in “Fusha” formal Arabic, if it is in the Jordanian accent it will be unwatchable”!
As for the Arabic content, Netflix announced that it is producing an Arab TV series, Jinn, in addition to some already-released stand-up comedy specials. Jinn and a stand-up comedy by famous Lebanese comedian Adel Karam were not well-received by the Gulf’s audience, as they are from the Levant region and seen as not being associated with the Gulf culture and society. Such perceptions highlight the heterogeneity in the MENA region. One comment on Netflix’s Instagram post about Jinn captures this sentiment: “Why they are making a Jordanian TV series? Who is going to watch it except Jordanians? What about the accent? I wish it will be in “Fusha” formal Arabic, if it is in the Jordanian accent it will be unwatchable”!
Netflix also hired the makers of the Oscar nominated movie Theeb, likely in pursuit of quality content. However, Theeb was not a big success in Arab theatres, nor was it received positively in reviews. Theeb might be successful in an eye of a Westerner jury, but among the Arabic audience it was perceived as much-alienated from Arabic storytelling culture.
Netflix also released two episodes of Comedians of the World in January 2019 featuring two comedians from Saudi Arabia (Ibrahim Alkhairallah and Moayad Alnefaie) that received a positive reaction from the Gulf’s region audience.
Internet Pricing and Availability
Internet penetration is above 80 percent among all of the Gulf countries, with Qatar and Bahrain having the highest rate (98 percent) and Saudi the lowest (80 percent), alongside UAE (94 percent), Kuwait (89 percent), and Oman (82 percent). The number of mobile subscriptions exceeds the population in the Gulf region (Salem, 2017). This internet availability paves the way for a sustainable ecosystem for SVOD services usage in this region, especially when we consider that mobile is the main device for viewing.
Netflix offers three kinds of packages that are consistent with other regions: one screen, standard definition, for $7.99 per month; two screens, HD, for $9.99; and four screens, HD/Ultra HD, for $14.99 per month. Even though the prices are in US dollars, consumers in this region are used to paying in this currency in many internet platforms. The prices of the internet subscription are insignificant for the majority of the GCC population, especially the citizens.
Most ISPs in the region provide high quality internet connections with high-speed packages (10 Mbps is perceived as the standard/basic speed among most ISPs). However, most ISPs claim to employ a fair-usage policy whereby download speed is set to slow down whenever individual excess usage of internet occurs. This might affect the usage of Netflix and other SVOD services, especially if the subscribers in question are downloading and streaming heavily. There is a perception among users that this rule is just written on contracts for the ISPs’ legal protection and that the download speed rarely slows down (this was stressed especially from users in Kuwait), while some users reported that download speed slows down on some occasions and that the fair-usage policy is real (this was mentioned by some users in Qatar).
In any case, neither internet availability, penetration, Netflix packages’ prices, internet availability, internet prices, nor speed are believed to be a challenge for Netflix in this region. One might argue that in the case of Saudi Arabia, these statistics and numbers reflect the environment in major urban cities of the country, as internet availability, penetration, coverage and speed remain questionable in some towns, villages and rural areas. The same could be said about countries with rural areas such as Oman and UAE.
Content
There are currently no reliable statistics regarding the size of the MENA Netflix libraries, but it is believed to be much less than the content offered in the libraries of USA, UK, and some European countries. For example, even some of Netflix’s original TV series such as Hemlock Grove are not available in their MENA libraries. This can be related to geographic licensing discrepancies, as licenses are either owned by non-internet broadcast networks (especially OSN), or by the streaming service which entered the market before Netflix; STARZ Play Arabia.
A second concern relates to content that might infringe Islamic and the Gulf Arab norms, such as content perceived to be promoting incest, homosexuality, and islamophobia. Such content may be regarded as offensive, especially if tangential to plot and main storylines, or if such content seems to be imposed forcefully and aggressively on the audience to change their viewpoint.
A final challenge Netflix faces is that MENA is not a one homogenous market, but the Gulf region, Egypt, North Africa, Iraq and Levant, each have a different character that warrants different treatment. One of Netflix’s competitors, STARZ Play Arabia, has done so by tailoring its content according to every MENA region/subregion. For example, STARZ Play Arabia is offering more Egyptian films and TV series for their audience in Egypt, French drama for their Franco-phonic audience in North Africa, and more Gulf and Bollywood content for their audience in the Gulf as there is a huge amount of Indian and South Asian expatriates living in the Gulf region. This variation of content based on geographical differentiation has borne its fruits for STARZ Play Arabia, as this strategy both boosted the company users’ numbers and revenues.
Consumer and Press Reaction
Netflix’s launch in the region in January 2016 came with much anticipation among early adopters including technology-savvy audiences, film-geeks, youngsters, and people who had used Netflix while studying abroad, especially in the US. Most of the aforementioned audience used the service before the regional launch either while abroad or in their home countries by using a VPN.
Generally, the reception of Netflix among subscribers in Gulf states has been very positive, and Netflix has been associated with disruptive styles of storytelling and film making in the film and TV industry.
Subscriber Estimates
Recent data from Digital TV Research found that the number of SVOD services’ subscribers in the MENA region (with 7 non-Arab countries such as: Turkey and Israel included) reached 11.31 million subscriptions as of the end of 2018, with Netflix at 3.11 million subscriptions, followed by STARZ Play Arabia with 1.09 subscriptions (Digital TV Research, 2019). As for Amazon Video Prime, it had 10 times fewer subscriptions than Netflix as of the end of 2017 study (Digital TV Research, 2018). Arab countries form 4.13 million of MENA’s total subscription amount, with Saudi Arabia estimated to has almost half of it with 2.11 million subscriptions (Digital TV Research, 2019).
Local Netflix Office
As of January 2019, there is no local office for Netflix in the Gulf region in particular or in MENA in general. Even though there are some talks that Netflix is operating through proxy agencies in the region, with one located in Dubai (UAE) and the other in Jeddah (Saudi Arabia), there is still nothing official announced apart from Netflix mentioning their regional EMEA (Europe & Middle East) headquarters in Amsterdam (Netherlands).
Netflix also hired the makers of the Oscar nominated movie Theeb, likely in pursuit of quality content. However, Theeb was not a big success in Arab theatres, nor was it received positively in reviews. Theeb might be successful in an eye of a Westerner jury, but among the Arabic audience it was perceived as much-alienated from Arabic storytelling culture.
Netflix also released two episodes of Comedians of the World in January 2019 featuring two comedians from Saudi Arabia (Ibrahim Alkhairallah and Moayad Alnefaie) that received positive reaction from the Gulf’s region audience.
Internet Pricing and Availability
Internet penetration is above 80 percent among all of the Gulf countries, with Qatar and Bahrain having the highest rate (98 percent) and Saudi the lowest (80 percent), UAE (94 percent), Kuwait (89 percent), and Oman (82 percent). The number of mobile subscriptions exceeds the population in the Gulf region (Salem, 2017). This internet availability paves the way for a sustainable ecosystem for SVOD services usage in this region, especially when we consider that mobile is the main device for viewing.
Netflix offers three kinds of packages that are consistent with other regions: one screen, standard definition, for $7.99 per month; two screens, HD, for $9.99; and four screens, HD/Ultra HD, for $14.99 per month. Even though the prices are in US dollars, consumers in this region are used to paying in this currency in many internet platforms. The prices of the internet subscription are insignificant for the majority of the GCC population, especially the citizens.
Most ISPs in the region provide high quality internet connections with high-speed packages (10 Mbps is perceived as the standard/basic speed among most ISPs). However, most ISPs claim to employ a fair-usage policy whereby download speed is set to slow down whenever individual excess usage of internet occurs. This might affect the usage of Netflix and other SVOD services, especially if the subscribers in question are downloading and streaming heavily. There is a perception among users that this rule is just written on contracts for the ISPs’ legal protection and that the download speed rarely slows down (this was stressed especially from users in Kuwait), while some users reported that download speed slows down on some occasions and that the fair-usage policy is real (this was mentioned by some users in Qatar).
In any case, neither internet availability, penetration, Netflix packages’ prices, internet availability, internet prices, nor speed are believed to be a challenge for Netflix in this region. One might argue that in the case of Saudi Arabia, these statistics and numbers reflect the environment in major urban cities of the country, as internet availability, penetration, coverage and speed remain questionable in some towns, villages and rural areas. The same could be said about countries with rural areas such as Oman and UAE.
Content
There are currently no reliable statistics regarding the size of the library, but it is believed to be much less than the content offered in the libraries of USA, UK, and some European countries, for example even some of Netflix’s original TV series such as Hemlock Grove are not available in their MENA library. This can be related to geographic licensing discrepancies, as licenses are either owned by non-internet broadcast networks (especially OSN), or by the streaming service which entered the market before Netflix; STARZ Play Arabia.
A second concern relates to content that might infringe Islamic and the Gulf Arab norms, such as content perceived to be promoting incest, homosexuality, and islamophobia. Such content may be regarded as offensive, especially if tangential to plot and main storylines, or if such content seems to be imposed forcefully and aggressively on the audience to change their viewpoint.
A final challenge Netflix faces is that MENA is not a one homogenous market, but the Gulf region, Egypt, North Africa, Iraq and Levant, each have a different character that warrants different treatment. One of Netflix’s competitors, STARZ Play Arabia, has done so by tailoring its content according to every MENA region/subregion. For example, STARZ Play Arabia is offering more Egyptian films and TV series for their audience in Egypt, French drama for their Franco-phonic audience in North Africa, and more Gulf and Bollywood content for their audience in the Gulf as there is a huge amount of Indian and South Asian expatriates living in the Gulf region. This variation of content based on geographical differentiation has borne its fruits for STARZ Play Arabia, as this strategy both boosted the company users’ numbers and revenues.
Consumer and Press Reaction
Netflix’s launch in the region in January 2016 came with much anticipation among early adopters including technology-savvy audiences, film-geeks, youngsters, and people who had used Netflix while studying abroad, especially in the US. Most of the aforementioned audience used the service before the regional launch either while abroad or in their home countries by using a VPN.
Generally, the reception of Netflix among subscribers in Gulf states has been very positive, and Netflix has been associated with disruptive styles of storytelling and film making in the film and TV industry.
Subscriber Estimates
Recent data from Digital TV Research found that the number of SVOD services’ subscribers in the MENA region (with 7 non-Arab countries such as: Turkey and Israel included) reached 11.31 million subscriptions as of the end of 2018, with Netflix at 3.11 million subscriptions, followed by STARZ Play Arabia with 1.09 subscriptions (Digital TV Research, 2019). As for Amazon Video Prime, it had 10 times fewer subscriptions than Netflix as of the end of 2017 study (Digital TV Research, 2018). Arab countries form 4.13 million of MENA’s total subscription amount, with Saudi Arabia estimated to has almost half of it with 2.11 million subscriptions (Digital TV Research, 2019).
Local Netflix Office
MENA in general. Even though there are some talks that Netflix is operating through proxy agencies in the region, with one located in Dubai (UAE) and the other in Jeddah (Saudi Arabia), there is still nothing official announced apart from Netflix mentioning their regional EMEA (Europe & Middle East) headquarters in Amsterdam (Netherlands).
Suggested Reading
Buccianti, A (2017). Arabic Storytelling in the Digital Age: From Musalsalat to Web Drama?, in Hagener, M., Hediger, V. and Strohmaier, A. (ed.), The State of Post-Cinema. London: Palgrave MacMillan.Khalil, J. and Kraidy, M. (2017). Arab Television Industries. London: BFI Publishing.
Digital TV Research, (2019). MENA SVOD revenues to triple. Digitaltvresearch.com
IHS Markit, (2017). Pay-tv spending spree in Middle East and North Africa, IHS-Markit.com
Free data from:
http://broadcastprome.com/news/starz-play-tops-netflix-in-mena-market-share-ihs-study/
Ipsos, (2017). OTT and premium online video services in MENA, Ipsos.com
MBRSG:
[i] ART and Orbit were subscriber funded channels; ART has been basically dissolved, while Orbit merged with Showtime Network to form OSN (Khalil and Kraidy, 2017).