The local media sector has grown exponentially since the government set into motion a series of expansion initiatives in 2000. The emirate has emerged as a regional centre for the media industry over the past decade, competing with more established countries such as Egypt and Lebanon as the government actively seeks to diversify the economy into new areas. Revenues for the first nine months of 2012 in the region amounted to some $12.7bn, a 22% increase over the same period in 2011, according to a study by PARC, a media research firm specialising in the region.
Parallel investments in IT, telecoms and transport infrastructure have helped the emirate position itself at the cutting edge of digital media and production facilities. Broadband and mobile coverage are among the highest in the world and will form the backbone of growth in the media sector going forward.
A business-friendly environment, coupled with political stability and a location at the crossroads of the Middle East, Asia and North Africa, have helped Dubai grab an increasingly significant share of the global media industry. The government continues to drive reform in the sector and is currently drafting a new media law that is expected to strengthen the regulatory environment. Regional competition from Abu Dhabi and Qatar will be a challenge going forward, but demand from the Arabic-speaking population regionally and globally forms a huge market that is largely untapped.
PRINT MEDIA: Newspapers and magazines are currently thriving in Dubai and the broader MENA region, dominating advertising expenditures and accounting for almost 40% of total spending in 2012, according to the “Arab Media Outlook 2011-15”. The future of the sector is less secure, however, as newspapers and magazines are expected to decrease as a proportion of total ad spend in the region – and indeed globally – as digital media continues to grow.
These same trends are visible in the local UAE market, where advertising in newspapers alone was $343m out of a total of $664m in 2012 according to the “Arab Media Outlook”. This is expected to decrease by almost 1.7% by 2015. Magazines will face even stronger pressure as advertising expenditures are expected to drop by more than 3%, from $50m in 2012 to $47m in 2015.
NEWSPAPERS: The UAE had 14 daily newspapers with a total circulation of over 1m in 2011. While the total number of publications has remained relatively constant, there have been some new launches and some closures. The print version of Emirates Business 24/7 shut down in 2010, though it has re-emerged in a digital format. Similarly, sports magazine Sport 360 was recently launched in the UAE and was able to quickly expand to a circulation of 35,000 readers, according to BPA Worldwide. Advertisers are drawn to publications that target a niche market such as sports fans or key demographics such as the South Asian population. Furthermore, publications that audit circulation figures have an advantage as companies can accurately determine the value of their advertisements.
A recent Ipsos survey showed that 80% of readers rely almost entirely on printed publications for the news. Gulf News overtook Al Khaleej in 2009 to become the most widely read newspaper in the UAE, with almost half the population reading it daily. Al Emarat, Al Youm, Khaleej Times and Al Ittihad round off the rest of the top five newspapers by readership. Distribution is still mainly via subscriptions, with close to 50% of readers subscribing rather than buying newspapers daily.
Magazines in the UAE and the broader GCC region have expanded against a global trend of decline in sales over the past few years. The Arab world is a unique market, particularly for fashion and celebrity lifestyle magazines that target women. According to the Dubai Press Club (DPC), the Arabic women’s magazine segment represents 75% of total circulation in the region and has been attractive for publishers. Other segments of the population also offer a base for publications tailored to specific demographics.
There are indications that the resilience of the newspaper and magazine sector will diminish as digital media gains a stronger hold in Dubai and the broader region. The global financial crisis also had a significant impact on magazines in the UAE, pressuring 31 titles to shut down in 2009 and a further 25 in 2010. Abdul Hamid Ahmad, the editor-in-chief of Gulf News, highlighted this point to OBG, noting that the newspapers and magazines that innovate and drive viewership to digital media sources will be best positioned over the next five years. Others will inevitably have to shut down.
TELEVISION BROADCASTING: Unlike the broader regional trends, television accounts for a relatively small portion of advertising dollars spent in the UAE. The “Arab Media Outlook” estimates that revenues from advertising on television will remain fairly constant at approximately $25m until at least 2015. Television is a uniquely complex market in the UAE and the broader GCC region because of the diversity within the population. Given the fragmented market, operators with a regional or global presence have been more successful in the UAE because they and their advertisers are able to take advantage of a wider consumer base. Local TV accounts for only 4% of total advertising revenues in the UAE and is unlikely to grow significantly in the near future.
Television broadcasting generates the bulk of revenues from advertising, but pay-TV subscriptions have increased dramatically from just above 50% in 2009 to over 69% in 2012. Sports and movies are two major drivers behind this growth. The GCC region is playing an increasingly global role in the sports industry, with sovereign wealth funds, private investments and media conglomerates such as Dubai Media Incorporated (DMI) and Al Jazeera all involved in the sector. The growth in paid subscriptions represents a trend that will help diversify income for broadcasters, particularly in an uncertain global financial environment where advertising spend can fluctuate. DMI is the dominant media organisation in Dubai and is the parent company of a number of print publications, radio stations and television channels. DMI has traditionally targeted a local audience, but is increasingly catering to an international audience in Dubai.
INCREASED VIEWERSHIP: Figures from the DPC indicate that the number of hours spent watching TV has increased in the UAE, from 2 hours on weekdays in 2009 to 2.5 hours in 2012. MBC, Dubai TV, Al Jazeera and Fox Movies are among the most watched TV channels. Zee TV is the most popular channel amongst nonArab expatriates, reflecting the large number of South Asians that are living and working in the UAE. Another major player is OSN – a pay TV network in MENA that offers coverage of events taking place in sports and international entertainment.
One challenge facing the UAE’s television industry is a lack of reliable data on television viewership. Without a clear system for measuring ratings, advertising can be difficult to price, which can discourage spending on advertisements. However, efforts are now under way to effectively address the problem.
In July 2012 the Emirates Media Measurement Company (EMMC), a joint venture between ADM, Etisalat, Rotana Media, Sharjah Media and the Dubai-based telecoms company du, initiated the roll-out of a TV audience measurement system, now known as tview. The official launch took place in October 2012. According to The National, around 850 homes throughout the UAE will take part in the ratings system.
Radio is also re-emerging in popularity, accounting for just under 12% of advertising spending in the UAE. The “Arab Media Outlook” reports that the number of radio channels has increased from 24 stations in 2009 to 38 stations in 2012, covering several languages, including Arabic, English, Hindi, Urdu, Malayalam, Russian and Tagalog. HUM FM, a Hindi channel broadcast, is the most popular radio channel in the country with over 25% of radio listeners tuning in.
LOCAL PROGRAMMING: There is significant demand for local TV programming in Dubai and the broader region. “Arab Idol” is one of the most-watched programmes in the UAE and reality television shows such as “The Entrepreneur” are gaining popularity.
Partners for the series include the local companies Dubai Silicon Oasis and Dubai One and global brands like Sony Pictures and Ernst & Young. Significant investments to establish production facilities in free zones are likely to help sustain the participation of local content developers over the long term.
Political news channels and shows also garner much attention in the UAE and the broader MENA region. Political upheaval related to the Arab Spring in 2011 contributed to increased popularity of these programmes. In fact, interviews with industry professionals and consumers suggest that these events may have had a positive impact on political commentary quality.
DIGITAL MEDIA: The biggest trend that is poised to transform the sector, however, is the shift towards digital media channels. Advertising across online and other digital platforms grew from 2% of total ad spend in the UAE in 2009 to 8% in 2011 and is expected to grow even further to 20% by 2015. Most magazines and newspapers are adopting a strong online presence.
Gulf News is currently the most visited news site in the country, followed closely by Times of India and Al Jazeera.
Dubai has invested in high-speed broadband and mobile technology, creating infrastructure that will drive the digital revolution. More than 65% of the population own a smartphone and almost 78% own a laptop, according to the “Arab Media Outlook”. Internet access is estimated to cover more than 78% of the population in the UAE, according to the World Bank’s World Development Indicators, up from only 24% in 2000. The UAE is among the top 50 countries in the world in the Networked Readiness Index with a fibreto-the-home network that connects over 56% of the population. Approximately half the population spends more than two hours a day on the internet and almost 3% spends more than five hours a day.
However, content development has not been taking advantage of the full potential of this infrastructure. Online editions of newspapers, for example, are rarely differentiated from the print versions, which dissuades repeat visits during the day. A recent poll by global research company Ipsos found that 25% of respondents read news online more than once a day. Capturing this viewership is critical to driving revenue growth. Digital advertising currently has a disproportionately small share of advertising spend. These are indications that the digital media market presents tremendous opportunity and is likely to expand very rapidly as more publications leverage the digital infrastructure.
“The rapid progress and enormous diversity of digital solutions, as well as convergence of media, along with the growing demand for premium local and regional content offer an extremely promising future for the the regional broadcast industry,” Mohammad Abdullah, the managing director of the media cluster at TECOM, a hub for a number of media-related businesses and free zones, told OBG. “Therefore, it is imperative to adapt to this rapidly changing scenario if the sector is to capture any new emerging opportunities,” he added.
ADVERTISING: Dubai’s advertising industry has shown some resilience in the wake of the financial crisis and is positioned to continue growing over the next three years. Advertising expenditures have yet to return to the peak of $1.2bn in 2008, but an expanding population with significant purchasing power will remain an attractive market for companies in the Middle East. There is also significant room for growth in the digital advertising space, and Facebook’s entrance into the market is expected to give the segment a boost as social media is increasingly used to advertise products.
SOCIAL NETWORKING: More than 90% of internet users in the UAE use social networking sites. Approximately 21% of users visit a social networking site four to five times a day, compared with just 3% in 2009, and the UAE leads the Arab region in Facebook penetration.
According to the DPC, 54% of the UAE’s population uses Facebook, a full 16 percentage points above Qatar, the country with the second-highest penetration rate in the Arab region. The UAE is well above the regional average of 8% penetration. According to News Group International (NGI), a news management firm based in Dubai, around 70% of regional Facebook users are between the age of 15 and 29.
Most large companies are engaging with their customers through these networks but small and medium-sized local firms are still catching up. Advertising models have focused on banner and display advertisements and are only now shifting towards content or search-based marketing. Facebook recently announced its aim to expand its presence in the GCC region by establishing an office in Dubai. Other global firms like Google and Yahoo! also have a presence in the UAE and are working with the public and private sectors to strengthen digital marketing approaches in the region.
DEDICATED FREE ZONES: Dubai’s government has drawn on the success of its free zone development model to set up several dedicated spaces to attract private sector funding into the media sector. Dubai Media City was opened in 2001 and has helped establish Dubai as a base for global players in the media industry. ITP publishing, for example, moved its headquarters to Dubai Media City. The publishing house employs more than 600 staff globally and produces more than 75 weekly and monthly magazines, among them Cosmopolitan Middle East, Esquire and Good Housekeeping.
Similar to Dubai Media City, Dubai Internet City also plays a role in the emirate’s media sector by developing a solid foundation for the growth of information and communications technologies and businesses in Dubai. The presence of these industries enables media businesses to leverage innovations along the entire range of services to help drive growth in the sector. Facebook, for example, recently opened an office in Dubai Internet City, joining other global players such as Google and Microsoft. These companies will help accelerate Dubai’s adoption and consumption of digital content, driving advertising and sales on digital platforms.
“Dubai offers many benefits to media companies,” David Butorac, the CEO of Dubai-based television network OSN, told OBG. “There is a positive regulatory environment, Media City provides a connectivity hub, the market is skilled, sovereign risk is low and there is a high accessibility to the region.”
FILM & PRODUCTION: Dubai’s nascent film and production industry also has significant potential for growth. Thanks to a boost in television adverts and the approval of 877 film and photography requests, the nation earned $40m from film and TV production in 2011. According to Nayla Al Khaja, the founder and CEO of D-Seven Motion Pictures, three key attributes make Dubai a natural home for the film industry: accessible urban and natural environment, a diverse population with more than 220 nationalities, and weather that allows filming year-round. She also highlighted gaps, however, such as the need for more public support in the absence of private funding into the sector.
A third free zone, called Dubai Studio City, was set up to cater to businesses producing local content aimed at the Arabic-speaking market. It has quickly expanded to serve as a base for international filmmakers. Dubai Studio City has the infrastructure and, increasingly, the talent pool required for production ranging from Hollywood-style studios and sound stages to warehouses and office space to production and post-production facilities. Local demand for Arabic-language movies is strong, but lags behind demand for Hollywood and Bollywood movies. This is partly an indication of the demographics of the UAE, but also points out core strengths of the existing production and distribution channels.
The free zone is now home to more than 1680 professionals in the media industry and is expected to continue expanding as more companies enter the UAE. Jamal Al Sharif, chairman of the newly established Dubai Film and TV Commission and the managing director of Dubai Media City and Dubai Studio City, told OBG that the emirate’s approach to the media sector was to assess the entire value chain of the sector and then work with private partners and influence government policy to bridge any gaps. With this approach, Dubai has been able to develop the media sector along the entire spectrum of services, from production to distribution.
This strategy has already been successful in attracting global players to Dubai. FremantleMedia Enterprises (FME), for example, opened its first office in the Middle East in Dubai in 2011 and is producing hit shows such as “Arab Idol”, which airs on MBC1.
The biggest win for Dubai’s film and production cluster was the recent filming of the fourth instalment of the Mission: Impossible series. The film has promoted a new dimension of Dubai’s credentials as a global city and has had an important role in expanding Dubai’s appeal beyond business to diverse sectors such as media and tourism. The film has been screened to millions of viewers globally and has helped make the instantly recognisable Burj Al Khalifa a landmark across the world. Dubai Studio City’s preliminary estimates suggest that Mission: Impossible pumped nearly $25m into Dubai’s economy. The true value to the local economy in terms of additional tourism and related developments, however, will likely be significantly higher.
DUBAI FILM & TV COMMISSION: The Dubai Film and TV Commission was created in 2012 to help consolidate the sector strategy and leverage the film industry to drive broader economic growth. The commission will issue film permits and will include the head of Dubai Studio City and Dubai Media City as its chairman and additional committee members from the Department of Tourism and Commerce Marketing and the Department of Economic Development, among other groups. The extensive mandate body includes a focus on developing and attracting quality human resources to work in the sector. The commission is expected to streamline procedures and set up an incentive scheme to promote Dubai as a production centre.
MEDIA EDUCATION: While initiatives such as the dedicated media free zones have helped improve the environment for private participation in the media sector, developing the human capacity and resources to manage the sector is still a constraint. Media and journalism are not always seen as options for a career, but the government and private education institutions are gradually establishing programmes to train journalists and educate future participants in the sector.
Dubai International Academic City, a free zone specifically dedicated to the education sector, already offers a variety of courses through its partner institutions. Universities in this free zone currently offer programmes in audio engineering, filmmaking and animation, mass communication and media studies.
Media conglomerates in Dubai are dealing with the shortage of trained professionals by developing new programmes to help educate young professionals in the field. Dubai Media, for example, has set up a programme to take on student interns as photographers, sound artists and mainstream journalists. Some 40 students completed the programme in early 2012, and DMI is planning on expanding it to up to 50 students for 2013.
PIRACY & INTELLECTUAL PROPERTY: Protection of intellectual property including music, film and TV content is a challenge for countries in the Middle East. It is particularly problematic for Dubai as the emirate seeks to shift towards a knowledge-based economy.
The UAE’s Ministry of Economy is working towards restructuring the intellectual property rights frameworks for the country in order to curb rampant piracy, which affects content developers and distribution channels. Illegal set-top boxes, for example, allow clients to by-pass paid television services in Dubai and access channels at cheaper rates. In a recent interview, David Butorac, chief executive of OSN Network, estimated that “pay-TV piracy in the MENA region cost operators more than $500m (Dh1.8bn) a year in lost revenue”.
The government is taking this threat seriously with a well-publicised crackdown on illegal transmitters and other digital content. Organisations such as the Arabian Anti-Piracy Alliance also help raise awareness and enforce copyright regulations. These efforts are likely to help pay-TV service providers increase subscriptions and boost their revenues.
OUTLOOK: The resilience of the media sector through the worst economic crisis Dubai has endured points to strong fundamentals that will continue to support the sector as it progresses forward.
Dubai’s ability to develop an enabling environment within which the private sector can thrive will continue to attract investments. Ongoing support from the government and an increasingly transparent industry are likely to help with continuing to attract foreign participation in the media sector.
However, ensuring the protection of intellectual property rights and controlling piracy are likely to be vital for the development of paid content for television, online and other platforms as the sector continues to expand and evolve in new ways.
Digital media will most likely be the fastest-growing medium in the near future, but traditional print and broadcasting also present significant opportunities in terms of content creation, production services and advertising. The proliferation of smartphones and tablet computers will influence how companies interact with consumers and open new avenues for the sector.
It remains unclear whether Dubai can capitalise on its momentum to firmly establish itself as a centre for film and production. Dubai Studio City faces some competition from neighbouring emirate Abu Dhabi’s twofour54 and the more established regional players such as Lebanon, Egypt and Morocco. Furthermore, a dependence on foreign labour drives up the cost of filming and production in Dubai. The free zone’s core strategy of providing a business-friendly environment in a politically stable country, however, has helped Dubai develop a more competitive edge and attract investors.
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