Changing market: Print publications remain dominant, but new outfits are on their flanks

Over the last decade, through committed investments and the reduced influence of traditional media centres such as Egypt, Dubai has grown into a true hub for media production of all types. Seen as a base from which companies can serve both local and regional markets, Dubai is home to an increasingly mature, and thus far resilient, print sector, a steady broadcast industry and a growing number of film producers.

Advertising revenue in the UAE has been strong in recent years. According to the Pan Arab Research Centre (PARC), advertising spending in the first half of 2013 was up 3.6% year-on-year, to Dh2.87bn ($781m) and, in the first quarter, edged out Saudi Arabia for top spot in the Arab world.

The challenge for both media companies and advertisers alike is to discover how they can appeal to such a diverse population. Changing trends in all parts of the industry will, too, present a different set of hurdles in the years ahead. But with a population and audiences that are increasingly young, tech savvy and media hungry, and have high per-capita spending power, opportunities abound.

Print Media

 Print media, especially newspapers, remain very popular among many sections of the population in the UAE. According to PARC, newspapers accounted for 56% of all advertising spending in the country in 2012. “Arab Media Outlook 2011-15”, a report on the industry by the Dubai Press Club, found that more than half of newspaper readers receive a daily subscription. This success is far from guaranteed, however, and the local market is not immune to the challenges print publications are facing globally, such as competition from frequently free online content.

Magazines, too, enjoy wide readership in the UAE. Culture, fashion and gossip are proven genre favourites, especially among females. Friday and Weekend, two of the most popular magazines, are inserts of the Gulf News and Khaleej Times, respectively. This partly explains the country’s enviable subscription rate of 41%, a high for the region. Expatriates, who make up 90% of the population, form the majority of subscribing readers, the “Arab Media Outlook” report found.

Newspaper readership in Dubai can be split roughly between English and Arabic publications, and the English portion further still between those that target Western versus South Asian populations. Gulf News, an English paper with a mostly non-Arab expatriate readership, has the highest circulation in the UAE; two other popular English titles are Khaleej Times and The National. Top Arabic publications include Al Khaleej, Emarat Al Youm, Al Ittihad and Al Bayan. Competition is robust. Publications on special-interest subjects such as sport and fashion, recently introduced, have proved popular with readers, as well as with advertisers looking to reach a specific demographic. Foreign papers are well read in Dubai, and many titles from Western countries and India are printed locally.

Print editions are, for the moment, still the top revenue source for newspapers, but publications are increasingly providing online and other new types of content. “The interests of readers will determine the direction of the future of media companies, both in terms of content and distribution mechanisms,” Khaled A Soliman, CEO of Khaleej Times, told OBG. As media companies are plugging into more and more networks online, in a well documented shift towards the web and mobile devices, newspapers and magazines are using advancements in printing and distribution technology to find new ways to advertise in print as well. Instead of the traditional model, where papers would sell inserts and ad space for the entirety of a press run, some publications now offer campaigns that are tailored to a specific geographic area. This sort of scheme is more attractive to ad buyers who wish to target only a certain portion of the emirate.

Digital Print

 As the industry goes digital, a few publications have begun to stand out for their success in luring a web readership. In its annual ranking of online newspapers in the region, Forbes Middle East named Gulf News, The National and Khaleej Times as the top English news sites, and gave Emarat Al Youm, Al Bayan and Al Ittihad the top slots for Arabic publications. Gulf News ranked especially high on the list, with 77.11m visits – nearly three times as many hits as the next highest UAE-based paper.

Broadcast Television

 Satellite services are by far the most popular way to access television in the region. The reasons are a lack of alternatives in many places and the large quantity of free-to-air channels that are generally available. Revenues for the industry are still dominated by advertising. “Arab Media Outlook” expects pay-TV revenues to increase by 19% from 2013 to 2015, but still to account for just 23% of total TV revenue in Arab states in the latter year.

One reason for slower growth in this area is the proliferation of free-to-air satellite channels, which are the main mode of TV access for more than 60% of viewers, the same report estimates. As David Butorac, CEO of OSN, told OBG, “One trend that will shape the media industry in the Middle East will be the consolidation of its 600+ free-to-air channels, as the current model is not sustainable in the long term, and governments may take the initiative to spark the trend.” Even so, the report reckons that in 2012, 69% of UAE residents subscribed to pay-TV, up 17 points from 2009 and above the region’s average.

One of the major obstacles for pay-TV providers is that many people are priced out of their products and are considered unlikely ever to purchase premium television. With an eye toward drawing in this potential market for the first time, a new Dubai-based service called My-HD says it will offer “lowpay-TV” for around Dh199 ($54) annually after a free first year.

Internet provider TV (IPTV) has also grown more popular in recent years. Both of the telecommunications companies operating the UAE, du and Etisalat, have been pushing their television service aggressively as part of a “triple-play” package that includes internet, phone and television. In 2012, du’s TV subscriptions were at 122,000, up more than 100% from 2008.

Local Viewers

 Tview is the UAE’s first audience measurement system. Launched in 2012 as a non-profit partnership between many local media companies, it provides a detailed look at what viewers are watching. Rich in hard figures, it marks an important step in the maturation of the industry, by allowing for an objective measure of viewership on which advertisers can base their placement decisions.

Viewership patterns in the UAE are highly segmented among the different demographic divisions. Overall, however, data from tview’s first annual report in 2012 show broader trends. MBC accounts for six of the top 10 channels, while Asianet’s stations, which are number one among South Asian expatriates, are the second and 11th most watched. Zee Aflam, which also caters to the South Asian population, is number seven. Abu Dhabi Al Oula and the state-owned Dubai TV round out the top 10.

Specific programmes that attracted high viewership were as diverse as the UAE population itself. According to tview, spin-offs of foreign shows, such as “Arabs’ Got Talent”, “Arab Idol” and “The Voice”, were among the most watched. Also popular was foreign content imported directly from Hollywood. Asianet had a few original South Asian programs on the top-20 list. As elsewhere in the region, several Turkish serials consistently ranked among the top programmes, with “Fatma” coming in at number three. Television remains the main source of news for many in the region.

Radio

Though they comprise but a small slice of advertising revenues, locally broadcasted radio stations in the UAE and Dubai have increased their number in recent years. Besides those in Arabic, there are stations that transmit in English, Urdu, Farsi, Hindi, Filipino, Malayalam and Russian. All local stations are state-owned yet independently operated. In addition to these, several regional stations can be received in the UAE, such as the BBC, Radio Sawa, Radio Monte Carlo (RMC) and Sout Al Khaleej.

Advertising

Advertising spending, though hard hit by the global recession, has recovered in recent years. Compared to global averages, however, advertising spending per capita is much lower in Arab countries, and according to the “Arab Media Outlook”, there is reason to anticipate further growth.

Following the recession, media advertising spending has held strong in the UAE for the last three years, and print revenues have remained reliable. According to PARC, advertisement outlays in the federation were up from $1.45bn in 2011 to $1.58bn in 2012. Spending on print media increased from 2011, making up roughly 71% of total expenditure. Newspapers alone accounted for $887m. Thanks to expatriate readers, English newspapers outperformed Arabic ones in 2012, selling $499m worth of adverts compared to $388m. Both were up from the previous year.

The smaller slices of advertising spending have behaved differently. Outlays on radio ads were down 3% from 2011, to $50m, though that is still much higher than in 2010, which saw only $36m spent. Television advertising also saw a decrease from 2011, down 6% to $156m, though it too was up from a low in 2010, when total advertising spending stood at $149m. Government and charity organisations were top spenders in 2012, accounting for 23% of all advertising revenues; in the private sector, the top three segments were retail, tourism and automotive.

Web Streaming

 Even as locally and regionally produced television programming seems to be entering a period of growth, the industry as a whole may well be outflanked by web streaming services. Ahmed Saeed Al Mansouri, director-general of Dubai Media Incorporated (DMI) TV, told OBG, “Trends in the UAE show an increasing preference towards online services rather than traditional TV, using services such as Watch Live, Video On Demand and Catch Up TV.”

In addition to DMI’s offerings, ICF lix, a web platform offering unlimited streaming content, was launched in 2012 from its headquarters in Dubai. Modelled after successful companies such as Netflix, ICF lix is the first streaming service available in MENA that is not operated by an established television network (MBC, for one, has a streaming service that mostly mirrors what it broadcasts). Where ICF lix sets itself apart, however, is the diversity of its content. Its panoply includes the productions of Hollywood, Bollywood and clusters of Arabic content that it has dubbed “Jazwood”. This variety allows it to appeal to the vast majority of the expatriate and local communities all at the same time, something its traditional broadcast competitors cannot replicate. At a monthly charge of $5, it is also more affordable than a pay-TV subscription, if dependent on fast broadband.

Pay-for-service firms aside, free websites, both legal and illegal, are extremely popular in the region. In the long term, these could pose a significant challenge to television ad revenues. Saudi Arabia, for instance, leads the world in per capita use of YouTube, with an average of three hits per person per day. Most importantly, this trend may become more pronounced in future, given that about half of the region’s population is under 25 years old, the demographic in which digital use is the most prevalent.

Media Free Zone

 Dubai has three free zones dedicated to media that form a cluster called TECOM. They are Dubai Media City (DMC), Dubai Studio City (DSC) and International Media Production Zone (IMPZ).

DMC is home to many leading print, digital and broadcasting companies, including CNN, MBC, the Associated Press and, more recently, Ticketmaster, Euronews and Getty Images. It also attracts companies in related and support industries, and has benefitted from its proximity to Dubai Internet City (DIC), which hosts many tech companies that are critical to expanding the general media’s digital footprint.

DSC, the free zone focused on broadcast, production, music and entertainment, has been the site of some of TECOM’s most ambitious growth strategies. The centrepieces of Dubai’s push to attract foreign films and develop into a true movie-making hub were the opening of three new sound stages in DSC in 2013. The first of them, and the smallest at 4500 square metres, opened in April. MBC signed a deal to obtain exclusive rights to that stage, which would serve as a new base of production with the goal of producing 40 series of original content over the next five years. The second and third stages opened together in October 2013. They are each 7600 square metres and are separated by an elephant door, a set of large sliding panels that can be removed to turn the two stages into a single 15,200-square-metre space. Both of these stages will be leased out on a per-production basis. DSC has also constructed several warehouses to support the work on the sound stages and set aside 762,000 square metres to serve as a back lot for outdoor shooting. DSC is currently home to 18 boutique studios as well as other companies, ranging from regional broadcasting networks to independent animation and postproduction firms.

Marking its 11th year in 2013, the IMPZ provides support services for media production in the UAE. It is home to printing houses, graphic art studios and specialty packaging plants, among other businesses.

Film Development

 Film production is currently less developed in Dubai than television, but that is changing. There has been dramatic growth in recent years, after the emirate played host to the Hollywood blockbuster “Mission: Impossible 4 - Ghost Protocol” and several Bollywood films. There is a specific niche the emirate hopes to occupy, as Jamal Al Sharif, managing director at DSC, told OBG: “Film is a mature industry, and we will not become Bollywood and Hollywood in one night. In fact, we probably will never become Bollywood or Hollywood, but one thing we can be is the bridge that connects the two. The UAE has that capability. Just as an example, there are 158 flights a week to India. That is very important. For the last big Bollywood production, there were no challenges getting the crew over here.”

Local Labour

 One challenge that the film industry faces is a lack of locally based labour to work large-scale film or broadcast productions. To attract major operations, Dubai must have the local talent to make up at least part of the crew, and this will require a large pool of freelance professionals. Currently there are restrictions in the immigration law that in practice limit work visas to those who have a contract in the UAE. Though there is a provision that allows freelancers to apply for a visa, it is difficult to obtain and, for most, prohibitively expensive. This effectively bars foreign industry professionals from moving to Dubai on their own, depriving the emirate of the skills they might bring. “As media companies have shed some of their head-counts in recent years, freelance employees are an important aspect of the media industry,” Mohammad Abdullah, managing director for TECOM’s media cluster, told OBG. “We’re working to find the best way to further our policies with respect to what types of visas and allowances can foster this increasingly relevant component of the workforce.” The government has acknowledged this problem, but it is still unclear when any action will be taken.

One encouraging development the government has implemented is the creation of the Dubai Film and TV Commission (DFTC). This body acts as a one-stop shop for foreign productions looking to come to the emirate. In the past, a production hoping to shoot in Dubai would have to deal with one authority for regulations, another to determine what incentives are available, and yet another to search for local staff. Now this can all be accomplished through DFTC. Ease of operation is even more important in Dubai than at other locations, such as Abu Dhabi, that offer direct cash incentives to foreign productions. Dubai, at present, offers only soft incentives such as free or discounted airfares and hotel stays, and waived visa fees.

Outlook

In the last 15 years, Dubai has transformed itself into a competitive media hub in the MENA region. However, a global trend towards digitisation, and growing regional competition, mean that constant innovation will be necessary if a dominant position is to be maintained. Both print and broadcast providers will need to adapt to competition from internet-based services, and be more responsive to changes in customer habits and demands.

In addition to well-established print and broadcast media, the nascent film production industry looks ripe with opportunities going forward, especially given the government’s investments in production infrastructure. Despite the challenges, notably a more competitive global marketplace, trends are generally positive, and most indications point towards Dubai’s media sector continuing to see significant growth.

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The Report: Dubai 2014

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