Social media and digital content transform Saudi Arabia's media sector

Saudi Arabia’s media landscape is going through rapid change, primarily brought about by digital technology and the rise of social media. The internet penetration rate among Saudi nationals is estimated at around 93%, according to a 2016 joint study between Northwestern University in Qatar and the Doha Film Institute. At the same time, Saudi residents use social media for an average of five hours per day, according to an early 2016 study conducted by international internet market research firm YouGov. While traditional media still has a strong footprint and is unlikely to be pushed aside any time soon, legacy media organisations are being forced to rapidly develop their digital offerings to maintain their market share.

The regulatory environment for media in Saudi Arabia, which many consider among the strictest in the Middle East, also needs to adapt to the new digital reality. There are signs that change is happening, both with a new minister of culture and information in 2015 and the potential establishment of a media production city in the Kingdom, which could help to train a new generation of Saudi journalists.

Oversight

In 2005 a royal decree transferred jurisdiction over the communications sector from the courts to the Ministry of Culture and Information (MCI), which was given the power to suspend or close any media outlets found to have violated the Kingdom’s press laws. Since 2011 all online newspapers and bloggers have been required to obtain a special licence from the MCI in order to operate.

In early 2015 Adel Al Toraifi, the former general manager of Al Arabiya News Channel and editor-in-chief of Asharq Al-Awsat and Al Majalla magazines, was appointed minister of culture and information by the Saudi authorities. In February 2016 in an interview with MCI-run news channel Al Ekhbariya, Al Toraifi announced that the MCI was about to embark on a national programme of change aimed at reinvigorating the ministry and improving the quality of its services. In the same interview, Al Toraifi said work was under way to diversify its framework, especially when it comes to the media landscape. He added that there was a need for training for journalists, which had been neglected in recent years. Since Al Toraifi’s appointment the MCI has also launched a number of new programmes, including establishing media sources in foreign languages to convey the Kingdom’s stance on a variety of issues, as well as disseminate its cultural offerings, directly to foreign audiences.

Saudi Arabia does not allow foreign ownership of major news media outlets, so all newspapers, radio stations and television networks operating in the Kingdom are owned by Saudi nationals. That being said, the country remains a major market for panArab satellite and pay-TV, which broadcasts programming from around the region and beyond. The ownership of satellite television is widespread among both Saudis and the expatriate population.

Changing Landscape

Media organisations in Saudi Arabia are being forced to contend with significant annual drops in advertising revenue caused by the rise of digital media, as well as the digital migration of many residents of the Kingdom, especially the younger generations. The youth represent a significant proportion of the Saudi population, half of which are estimated to be younger than 25 years of age.

The internet has also impacted the way in which Saudis engage with media. According to a June 2016 report by Boston Consulting Group (BCG), just 18% of Saudi Arabia’s Generation Z (those born in 1995 or later) prefers to watch video content on television, with the remaining 82% opting for digital platforms. A full 61% of that age group does not read print newspapers, a markedly larger share than the 25% of Generation X (those born between 1961 and 1981) and 40% of Generation Y (born between 1981 and 1994). In a statement released with the BCG report, Pablo Martinez, media partner at BCG Middle East, said, “The study found that Saudis belonging to the post-millennial Generation Z have started to abandon traditional media platforms in favour of digital ones, possibly proving that new media platforms can position themselves not just as a complement to traditional platforms, but maybe even as an alternative.”

Digital Audience

According to Northwestern University in Qatar’s study, daily television viewing in Saudi Arabia dropped from 65% to 49% between 2014 and 2016, as more of the population went online to view video content. This is line with the broader regional trend; since 2014 daily viewing declined by five percentage points across the six countries the report focused on – namely, Qatar, Saudi Arabia, Egypt, the UAE, Lebanon and Tunisia – with Saudi Arabia second only to Qatar in the scale of the drop. Daily viewership in Qatar fell from 62% to 41% over that period. The report also found that watching television online was more common among those with a secondary education or higher. This trend is likely to be more pronounced as the youth population ages.

While the report found that more Emiratis and Saudis read newspapers online than the nationals of the other countries surveyed, the arrival of online media has had a big impact. This has made it even more important for traditional publications to embrace the shift to digital content. According to a report by digital audience, brand and advertising market research firm Effective Measure, the most popular site in Saudi Arabia across genres is the news site Sabq.org, which had 5.84m unique browsers visiting during July 2016.

Print Media

The Kingdom has over a dozen domestic daily newspapers, many of which are privately owned. Some key papers include, among others, the Jeddah-based daily Okaz; the Saudi Gazette, one of two print daily papers in English – the other being the Saudi Research & Publishing Company-owned Arab News – as well as Al Nadi, an Arabic-language sports and youth-centred newspaper published by the Okaz Organisation for Press and Publication. In addition, there are other publications like Al Riyadh, Al Jazirah, Asharq Al-Awsat and Al Yaum, all of which are in Arabic, as well as a number of Saudi-owned, pan-Arab dailies that are based outside of the Kingdom.

Okaz is the largest newspaper in the country by market share, accounting for 19.7% of the newspaper market in 2015, according to data compiled by Paris-based global market research firm Ipsos, up from 14.1% in 2005. Al Riyadh, owned by Al Yamamah Press Establishment, came in a close second, with 18%.

Arab News, meanwhile, had a market share of roughly 3.8% in 2015, up from 3.1% in 2005.

Going Down 

Print sales in the Kingdom have steadily declined over the last decade. The overall value of print sales in the country dropped by 14.3% between 2005 and 2015 from $407.6m to $271.2m, with Okaz losing 14.3% of its print sales in 2015 alone, despite maintaining its leading market share, according to Ipsos. The second- and third-largest daily newspapers by market share, Al Riyadh and Al Jazirah, lost 11.2% and 14.7% year-on-year in print sales, respectively. Almost all of the major newspapers and magazines in the Kingdom now have websites, as well as other digital offerings, as publishers have started to migrate online in response to shifting media consumption patterns. Second on the list of websites in the Kingdom, with the highest number of unique browsers, according to a July 2016 report by Effective Measure, was Al Riyadh’s online platform alriyadh.com, with over 3m unique browsers. Okaz’s digital platform came in seventh with 1.3m unique browsers.

Silver Lining

Many industry insiders believe the decline in print media has not affected Saudi Arabia or the region as badly as other parts of the world. “We all know that print is in decline, but it is not as drastic in Saudi Arabia as it is in Europe and the US now,” Wael Al Fayez, deputy general manager at the Saudi Research & Publishing Company, one of the biggest publishing houses in the Kingdom, told OBG.

However, he admitted that media companies are working to deal with new challenges. “Over the last eight years print media in Saudi has lost over 50% of its ad spend as per research reports from ZenithOptimedia. Revenue does come in from other sources, but advertising is the main one,” he added.

The rise of social media has presented another challenge. “Companies like Google, Facebook and Twitter do take up a big share of digital in Saudi Arabia and the region, over 50% of digital advertising spend. It is tough to compete with them, but we are trying to offer something unique to our readers,” Al Fayez said. “We all know that we need to work harder to have unique digital offerings for our readers and our clients. We need to constantly come up with features that will make people come to our websites.”

Other Publications

In addition to daily newspapers, the Kingdom has a number of weekly and monthly publications, the largest of which, Sayidaty, a weekly, Arabic-language women’s magazine published by the Saudi Research & Publishing Company, has a 43% share of the weekly market. While it too has suffered in recent years, losing 21.6% of its print sales between 2014 and 2015, the publication has made strong inroads into the digital media segment, with its online usership soaring. The publication reported 160% growth in the number of page views between April 2013 and April 2014, when it hit nearly 40m, with digital revenue accounting for 7% of total revenue. As of July 2016 it had 13.27m monthly page views, 96.6% of which were through mobile devices, according to Effective Measure. “Sayidaty.net launched its first website in 2004-05,” Al Fayez told OBG. “But it was not what we or visitors wanted from the product. Traffic was quite low, and it was not crossing the 1m page views per month threshold, so we started making drastic changes. Over the past six years traffic has grown to over 100m page views, and it is the number one women’s lifestyle magazine in the region.”

“It is a very strong product, and we are doing a lot of spin-off products on the digital side. We just launched the first e-commerce magazine platform. It is the first magazine in the region to jump on the e-commerce wagon.” Al Fayez added that one of the strengths of Sayidaty is that it is not just focused on Saudi Arabia but on the wider region. “We have a UAE edition, and the magazine does very well in the GCC and North Africa. Traffic-wise, it is split across the Middle East and North Africa,” he said.

There are also a number of other notable developments in the print media industry. In a positive move for the Kingdom, in February 2014 the Saudi Gazette appointed the country’s first female editor-in-chief, Somayya Jabarti, who formerly worked as the paper’s deputy editor. Before moving to the Saudi Gazette, Jabarti was the executive editor and managing editor at competing newspaper Arab News.

Television

Television remains the primary source of news for most Saudi nationals, as well a major source of entertainment. State-owned Saudi television broadcasts four free-to-air channels, as well as one pay-TV channel. In addition to this, most residents of the Kingdom have access to satellite television, despite satellite dishes being technically illegal. It is estimated that 97% of households with television sets in Saudi Arabia receive satellite channels, according to an April 2015 report, “Terrestrial Broadcasting and Spectrum Use in the Arab States”, by London-based Plum Consulting. At the same time, between 25% and 37% of homes also subscribe to some form of pay-TV. Satellite television is dominated by the Saudi-owned, free-to-air, pan-Arab broadcasting company, Middle East Broadcasting Centre (MBC), which also broadcasts the popular Al Arabiya channel. While Al Arabiya broadcasts primarily news, it also offers talk shows and documentaries. MBC also has a range of other channels, including general family entertainment, films, news, music, Bollywood films and sports. In 2014 MBC paid SR4.1bn ($1.1bn) for the rights to broadcast Saudi Arabia’s Professional Football League and King’s Cup matches for the following 10 years. The deal is a lucrative one as, according to a 2013 Ipsos report, the top-10 most viewed channels in the Kingdom at the time were all sports. A 2014 report by consultancy Deloitte, “Television’s Business Model: Fit for a Digital World: Middle East Perspective”, found that in Egypt, Saudi Arabia and the UAE, 68% of pay-TV subscriptions were for sports channels, followed by 55% for movies.

Social Media

The Kingdom also has one of the highest levels of mobile telephone penetration on the planet, estimated at roughly 180 subscriptions per 100 residents, and this has had a strong impact on the rise in digital engagement. As previously mentioned, it is estimated that on average Saudi residents spend roughly five hours per day using social media, making it one of the largest social media markets in the Middle East. It has an estimated 2.4m Twitter users, with more than 40% of all Twitter users in the Arab world living in the country, as well as 10% of all Facebook users in the Middle East, according to the research and teaching institute, Dubai School of Government. A January 2015 BBC report noted that Saudi Arabia also has the highest per capita rate of YouTube use of any country in the world. In terms of the most popular social media sites, 38% of the 4000 people surveyed by YouGov in early 2016 said they used Facebook the most out of all social media platforms, followed by YouTube, Snapchat, Twitter and Instagram.

Social media is also being successfully used by the government. One recent example of the power of social media was its use during the build up to the launch of Saudi Arabia’s Vision 2030 reform plan. Alongside traditional media, Twitter was used to stoke anticipation and engage the population in discussions. According to France-based social media monitor Semiocast, almost 200,000 Twitter users in the Kingdom took part in discussions about Vision 2030, with more than 860,000 messages posted. The rise in social media engagement within the Kingdom offers immense opportunities for organisations able to harness it to their advantage. This could mean media outlets and advertising agencies, or retail businesses and companies operating in other sectors.

Advertising

Advertising spending per capita has traditionally been comparatively low in the GCC, and Saudi Arabia is no exception. In 2014 advertising spending per capita was just $38 per person, compared to $520 in the US and $313 in Japan, according to the 2014 PwC report, “Global Entertainment and Media Outlook 2014-18”. However, the report predicted that advertising spending in Saudi Arabia would rise by 2.8% per annum between 2014 and 2018, compared to 2.7% in the UAE and 2.5% in the US. In 2015 Saudi Arabia saw a total ad spend of $1.1bn, the second highest in the Arab world after the UAE, not including pan-Arab media, according to the Pan Arab Research Centre; however, this was down 11% year-on-year and marked a decrease from $1.28bn in 2014 and $1.39bn in 2013. Newspaper adverts totalled $775m for the year, while television accounted for $50m, magazines $46m and radio $25m. Newspaper advertising saw a drop in value of 7% year-on-year in 2015, down from $831m, while magazines declined by 14%, from $54m, and television was down 27% from $69m. This points to a changing landscape that is challenging many media organisations that rely heavily on advertising revenue. “There is a shift from newspaper ads as the traditional platform for advertising towards social media,” Mohammed Al Khereiji, CEO of Al Arabia, the largest Saudi-owned out of home advertising company in Riyadh, told OBG. “Saudis are some of the biggest users per capita of digital media in the world, which is changing not only how individuals interact, but also how companies and consumers interact. Digital media is a large part of the future of advertising and we welcome new opportunities for digital and social media advertising that can help ensure more success for our outdoor market share.”

Additional pressure has been felt in 2015 and 2016, due to the economic situation in the Kingdom, with the drop in oil prices affecting government revenues and advertising budgets. In an interview with the Saudi Gazette in February 2016, Fahd Al Aqran, editor-in-chief of the Arabic-language daily Al Madina, said newspaper print advertising in Saudi Arabia had taken a strong hit due to reduced government revenue. “There was a considerable decrease in advertisement spending in the last quarter of 2015... most companies that place advertisements depend on government spending, which has declined,” he said.

However, many in the advertising industry still feel optimistic about the future. “The decision to allow foreign retailers to open up their own stores in the Kingdom is a great development, which will create a need for more advertising and help spur job growth in this sector,” Al Khereiji told OBG. “However, it can be difficult advertising here given the cultural and religious restrictions. But that just means that people have to be creative. Advertising is a new business in Saudi Arabia, so people do not know it well, and that is reducing its draw for Saudis. The lack of human capital right now is a challenge, and it will take time to educate people about this sector and increase its attractiveness. However, to meet the challenges in this marketplace, as a company we have invested in creative talent to transfer skills and knowledge to Saudis, hence helping develop a qualified national workforce in line with Vision 2030.”

Outlook

The media landscape in Saudi Arabia is in a period of change, with traditional media organisa¬- tions seeking out new strategies in order to thrive in the digital world. Online-only publications and tradi-tional outlets with a strong and creative online plat¬form are likely to flourish in this new environment, especially if they can expand their presence beyond the Kingdom’s borders. The rapid rise in digital engagement by Saudi citizens is a cause for optimism for the companies and media outlets that are able to capitalise on it, and advertising spending is likely to grow in the coming years, even within the context of a more cautious overall economic environment.

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The Report: Saudi Arabia 2016

Media chapter from The Report: Saudi Arabia 2016

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