The government of Abu Dhabi has recognised the growth potential of local creative industries and is planning significant investment in the sector. According to data published in Abu Dhabi’s development strategy, Economic Vision 2030, the output of the broadcasting, advertising, publishing and film industries in the Middle East and North Africa (MENA) region is expected to increase by roughly 25% annually.
AD SPENDING: While the size of Abu Dhabi’s media market can be difficult to pinpoint due to a lack of official data on its contribution to GDP, a number of sources still provide helpful key indicators. Perhaps one of the most useful guides to understanding the media sector’s size is annual advertising data. According to the “Arab Media Outlook”, a report published by the Dubai Press Club (DPC) with the assistance of Deloitte, net advertising spending in the UAE is projected to reach $664.4m by the end of 2012. This represents a slight increase from 2011, when ad spending totalled $661.1m.
Advertising in the UAE has decreased since 2010, when the DPC estimated spending to total $742.4m. However, advertising is projected to increase substantially over the next three years, reaching $784m by the end of 2015. This is equal to a compound annual growth rate of 5.7% from 2012 estimates.
At around $366.6m, or 55% of total spending, the largest share of money spent on ads in 2011 went to newspapers, according to the DPC. Out-of-home media, including the cinema, made up the next largest share, at $87.7m, or about 13%, in 2011. Ad spend for radio and digital media in the UAE reached $76.7m and $52.2m, respectively, during the same period.
Although digital media is attracting significantly less advertising than newspapers and out-of-home media, the digital media segment has undergone dramatic growth over the past several years. In 2009 it accounted for $14.6m, or around 2%, of total ad spending. This figure jumped to almost 8% of advertising in 2011 and is projected to account for $156.8m, or 20% of advertising, in 2015. This represents a compound annual growth rate of 31.6% between 2011 and 2015, making digital media the fastest-growing segment within the UAE’s media sector, according to the DPC.
Out-of-home media is projected to be the second-fastest-growing segment at a compound annual growth rate of 7.6% between 2011 and 2015. Despite lower advertising for the segment during 2011, out-of-home media is forecast to grow steadily over the near term, with money spent on ads rising to $117.6m by the end of 2015. By 2014 out-of-home media is expected to lose its place as the second-largest segment in terms of advertising, with digital media taking this position. However, at a predicted $117.6m in 2015, out-of-home media will still be substantially larger in 2015 than in 2009, when the segment accounted for $88.9m of ad spend, according to DPC figures.
TRENDS IN ADVERTISING: The Dubai-headquartered Pan Arab Research Centre (PARC) provides further details on the composition of the UAE’s media sector. According to PARC data, government organisations accounted for 23% of advertising – the largest share of spending – during the first quarter of 2012. This represents a slight decrease of around 5% in advertising expenditures for the segment compared to the first quarter of 2011. At over 80%, the vast majority of advertising paid for by government organisations appeared in newspapers. Shopping malls and retail stores made up the next largest share of ad spend, accounting for almost 15% of total advertising during the first quarter of 2012. Newspapers absorbed a little more than 50% of shopping mall and retail store ad spend.
A number of sectors have significantly increased advertising in recent years, according to PARC figures. Most notably, the food, beverages and tobacco, in addition to the construction equipment and supply sectors, have expanded advertising expenditures by 43% and 33% respectively between the first quarter of 2011 and the first quarter of 2012. The overall impact of this growth on the country’s media industry will not be dramatic due to the smaller size of these two areas.
However, the hotel, travel and tourism industry, which represented almost a tenth of total advertising during the first quarter of 2012, increased ad spending by 23% between 2011 and 2012. This growth will likely have a larger impact on the country’s media market.
YOUNGER USERS: Abu Dhabi’s media sector is heavily influenced by the emirate’s demographics. According to recent figures from the Statistics Centre – Abu Dhabi (SCAD), almost 2m people lived in the emirate in 2010. UAE nationals totalled over 430,000, representing roughly 22% of the emirate’s residents. Though a relatively small segment of the population, UAE nationals enjoy high levels of disposable income.
Strikingly, over 73% of nationals living in Abu Dhabi are under the age of 30, according to SCAD data. This younger generation is tech-savvy and remains a critical population group for media companies. Media firms must, therefore, successfully provide the younger age group with content that is relevant to their experiences in order to remain competitive.
Increasing digital content is perhaps the most common strategy companies are employing to appeal to younger media consumers. Surging internet usage and high numbers of mobile phone application downloads in the UAE indicate that the young are not the only consumers interested in digital content.
“While print media is still huge in the MENA region, the future will be digital,” said Ali Saif Al Neaimi, the CEO of United Printing and Publishing (UPP), an Abu Dhabibased company. “More needs to be done to bring down the cost of digital media so that it is more attractive for the general market.”
While the creation and circulation of digital content is still in the early stages, fixed and mobile broadband usage in the country is expected to continue to rise. The ability of digital media to attract both consumers and advertisers should follow as a result. The average internet user in the UAE will spend 2.3 hours per day online during 2012, according to DPC statistics. This figure is up slightly from 2009, when the average internet user spent 2.1 hours per day online. Males typically spend more time online than females, and users who spend over three hours online per day are often under the age of 35. News Group International (NGI), a news management firm based in Dubai, reports that current internet penetration in the UAE is approximately 70%.
SURFING THE WEB: Obtaining information was the most popular online activity among UAE internet users in 2009. Indeed, almost 50% of time online was spent searching for information. This trend has since shifted, with social networking becoming the most popular use for the internet in 2012. The DPC reports that almost 32% of time online is now spent on social networking sites, compared to 24% in 2009. Obtaining information now consumes slightly less than 30% of internet activity in the UAE. Watching TV programmes and videos online has also become increasingly popular. Up from 3% in 2009, TV programmes and videos accounted for almost 6% of online activity in 2012.
Although social media is growing worldwide, including in the Arab region, it has become particularly popular in the UAE. In terms of Facebook usage, the UAE is the regional leader. 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 NGI, around 70% of regional Facebook users are between the age of 15 and 29.
SOCIAL MEDIA: While the data is not as recent, the Dubai School of Government’s “Arab Social Media Report”, ranked the UAE in early 2011 as having the 9th-highest Facebook penetration in the world. Penetration rates were only slightly higher in the US and the UK, which were ranked seventh and eighth, respectively. Facebook usage is even higher among internet users. The DPC reports that almost 80% of internet users in the UAE access social networking sites regularly.
In addition to Facebook, Twitter and Google+ also remain relatively popular in the UAE. Almost 20% of the population uses Google+ and a little more than 30% uses Twitter, according to DPC figures. The rise of Google+ has been particularly impressive due to its recent launch in 2011. Considering the successes of sites such as Facebook, Twitter and Google+, it is surprising to note a much lower LinkedIn penetration in the country. At 2%, this figure might be higher if an Arabic version of LinkedIn were offered.
The rapid growth of social media in the UAE has not gone unnoticed among industry leaders and investors. Not only do social media tools give users a platform to engage with friends, the same websites allow businesses to connect with consumers. Social media provides firms with an inexpensive and pinpointed method of advertising. Accurate and up-to-date consumer behaviour research can also be easily and inexpensively carried out through the use of social media tools.
The National, an English-language daily news source based in Abu Dhabi, has seen significant benefits from social media. The newspaper uses a Facebook widget on its webpages, which serves as a convenient way for readers to share articles with their friends. Although sharing an article does not directly result in revenue, it typically drives more readers to The National’s webpages, and receiving more online readers has a direct impact on advertising. “The benefits of social media are substantial,” said Fadl Al Tarzi, the chief operating officer at NGI. “Those companies that understand social media trends and, more importantly, recognise how to use social media to their advantage, will gain a significant edge over competitors,” he recently told OBG.
Despite the benefits, not all businesses operating in the UAE have seriously addressed the opportunities available through social media. In fact, research released in December 2011 by DLA Piper, a global law firm, noted that only around 40% of companies with a UAE presence used social media tools. Furthermore, most companies using social media in the UAE were not deriving the full benefits of such efforts. These trends will likely shift, however, as social media continues to evolve and companies better understand the benefits and disadvantages of engagement.
GOING MOBILE: UAE residents are also accessing digital media through mobile phones. The DPC’s “Arab Media Outlook” observes that 73% of the population owns a smartphone or a tablet, and of this demographic more than 75% download applications. Although the largest percentage of those who download applications categorise themselves as someone who does so “less often”, almost 25% download applications once a week. Game applications, followed by utility and education remain the most popular among UAE smartphone users. The majority of mobile phone applications purchased in the country in 2012 cost more than $1, and a little more than 10% of free applications downloaded have been developed within the MENA region. Market research across the UAE, Saudi Arabia, Egypt and Morocco reveals that 80% of mobile phone users prefer using content in Arabic, with only 20% favouring English. A similar preference can be found among internet users in the UAE, with 85% of nationals favouring Arabic over English content, according to recent DPC data.
ARABIC CONTENT: Businesses have recognised the demand for Arabic digital content. Twitter launched an Arabic version of its website in March 2012, and Arabic Twitter is already more popular among UAE residents than its English-language version. Facebook has been available in Arabic since 2009. Both websites are part of a growing trend towards greater Arabic content online. NGI noted that Arabic digital content has grown from an estimated 0.2% of total online content in 2008 to around 2% at present. Thus, despite a sizeable increase over the past four years, online Arabic-language content has yet to match the proportion of Arabic speakers consuming digital media.
“Arabic online media content is quite minimal at the moment,” said Al Neaimi. “We would like to see an increase in Arabic content, particularly from international media sources, as this will serve a gap in the market,” Al Neaimi added.
One key player in the production of Arabic-language content is Abu Dhabi Media (ADM). A government-owned holding company, ADM is in the process of creating a strategy focused on Arabic content production. Although the firm is already a highly successful arm of the emirate’s media sector, ADM believes that greater Arabic content production will increase the firm’s competitiveness as most of ADM’s audience speaks Arabic.
Abu Dhabi Media Investment Corporation (ADMIC) – a private investment firm owned by Sheikh Mansour bin Zayed Al Nahyan – recently expanded Arabic-language content when the firm formed a joint venture with the UK broadcasting firm BSkyB. Earlier in 2012 the two companies launched Sky News Arabia, a 24-hour news channel broadcasted in Arabic. Based in Abu Dhabi, the news network has an editorial staff of 400 based in 12 bureaux. The channel is accessible to 50m homes throughout the region, according to BSkyB figures. Viewers are also able to watch Sky News Arabia broadcasts online or via a smartphone or tablet.
TELEVISION: The launch of Sky News Arabia marks a significant development for not only Arabic content production but also for the emirate’s burgeoning TV industry. A number of channels are broadcasted from Abu Dhabi, including Abu Dhabi Al Oula, ADM’s leading general entertainment and free-to-air network; Abu Dhabi Sports TV, also free-to-air; and National Geographic Abu Dhabi, an Arabic-language, free-to-air channel launched in mid-2009. Six of ADM’s channels will soon be broadcast in HD through the satellite services of YahLive, a UAE-based satellite broadcast firm. ADM and YahLive signed a partnership agreement in February.
Almost 50% of the UAE’s population watches between one and three hours of TV every day. UAE nationals typically watch more than this, with over 50% viewing between three and six hours of TV per day—more than any other nationality in the UAE. The DPC calculates that TV advertising will increase at a compound annual growth rate of 1.4% between 2011 and 2015.
The most popular programme genres viewed in the UAE are news and drama. While Arab expatriates watch news programmes more than any other, UAE nationals prefer drama. Accounting for roughly a tenth of TV genre popularity, sport broadcasts are becoming an increasingly key driver of pay-TV revenues.
Pay TV has increased over the past three years. In 2009, 52% of the UAE’s population subscribed to pay TV, with the highest percentage – over 33% – subscribing to Etisalat’s E-Vision. Movies were cited as the most common reason for subscription-based TV. In 2012 almost 70% of UAE residents pay for premium channels. Pehla, a pay-TV provider in the MENA region and in Europe, has become the most popular subscription service by a small margin, and sport has replaced movies as the most common reason for premium TV subscriptions, according to 2012 DPC statistics.
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 discourages 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, known as tview. The official launch took place in October 2012. According to The National, around 850 homes will take part in the ratings system. Each home will be equipped with a TV monitoring device known as a “people meter”, and companies will be able to access minute-by-minute audience data from the previous day.
KEEPING PRINT ALIVE: Although digital media is becoming an increasingly popular platform among advertisers, print newspapers remain remarkably strong in the UAE. The DPC expects newspaper advertising to subside only slightly – at a compound annual growth rate of -1.7% – between 2011 and 2015. Just as importantly, the DPC predicts print newspapers to still be the dominant advertising platform in 2015, accounting for almost 44% of total ad spending.
The three most read newspapers in the UAE are Gulf News, Khaleej Times and Al Emarat Al Youm, respectively. An English-language daily, Gulf News was launched in 1978 and targets a non-Arab expatriate audience.
Khaleej Times was also founded in 1978 and maintains a strong readership among Indian expatriates. An Arabic-language paper, Al Emarat Al Youm first began publication in 2005 and is owned by Dubai Media.
The National is another relatively recent entrant to the UAE’s newspaper industry. Established in 2008 and owned by ADM, The National is supported by more than 250 journalists working out of a number of local and foreign bureaux. Although the newspaper does not anticipate gaining as large of a readership as Gulf News or Khaleej Times, The National reported a subscription base of over 35,000 in 2011, according to the paper’s yearly advertising guide.
One of the more recent entrants into the print market is Sport360°, an English-language daily published by Gulf Sports Media and based in Abu Dhabi. Launched in 2010, Sport360° is the first English daily sports newspaper to be published in the UAE.
Similar to newspapers, magazines in the UAE will likely face a slight dip in advertising over the near term. The DPC forecasts advertising to fall by a compound annual growth rate of -3.1% between 2011 and 2015. Despite the expected decrease in ad spend, several high-profile titles, most notably MENA editions of Good Housekeeping and Cosmopolitan, entered the UAE market in 2011. Largely due to the global economic crisis, magazines focused on current affairs were the most commonly read among UAE residents in 2009. However, fashion has become the most popular magazine topic in the country, with celebrities and culture coming in second and third place, respectively. UAE subscription rates are around 40%, a figure high for the region, according to the DPC.
PUBLISHING: A robust printing and publishing industry provides further evidence that print media in the UAE has remained strong despite the surge in digital content. Indeed, the region’s printing and publishing sector is expected to grow substantially over the next several years. “The Middle East and Africa are the future for the print industry,” said UPP’s Al Neaimi. “The population is large, growing and the majority of people in these markets still use print media to gather information.” One notable opportunity for publishers in the region is the translation and publication of English, German and other foreign language books into Arabic.
One of the country’s largest printing companies, Abu Dhabi-based UPP is positioning itself to meet the growing printing needs of the region. It aims to increase its competitiveness by moving towards security printing for ATM cards, driver’s licences, fingerprints and SIM cards. “There is strong potential for security printing as the product value is very high and there are few players in the market,” noted Al Neaimi. The firm anticipates a 35% profit on its investment in security printing equipment and technology, and plans to eventually expand its security printing arm to include passports.
Established in 2006 and owned by ADM, UPP also publishes more traditional products, such as magazines, books, directories and catalogues. The Financial Times, National Geographic, The National and Zahrat Al Khaleej, an ADM-owned women’s magazine, are several of UPP’s regional and international clients. In addition to its investments in security printing equipment, the firm has invested in pre-press, press and post-press equipment, as well as software upgrades.
ON THE AIRWAVES: The UAE’s radio market, as measured by advertising, has contracted moderately since 2009. Ad spend totalled around $81m that year and decreased to $76.7m in 2011, according to the DPC. However, the industry is expected to grow considerably over the near term, with advertising projected to reach over $94m in 2015. The number of stations in operation has increased from 24 in 2009 to 38 in 2011.
Radio Mirchi, a Hindi-language station, is one of the newest stations to enter the market. Launched by Bollywood actress Rani Mukherjee in February, Radio Mirchi broadcasts from Abu Dhabi through an agreement with ADM. The new station is owned by Entertainment Network India and aims to break even in two years.
MEDIA FREE ZONE: Abu Dhabi’s media sector is now taking steps to become a regional top destination for content production, and the emirate’s twofour54 is playing a leading role in this initiative. Launched in 2008, the government-owned media and entertainment free zone operates with a mission to facilitate the development of Arabic media content in Abu Dhabi.
Twofour54 provides services for regional content creators. Twofour54 tadreeb is a training academy with over 200 courses on offer ranging from video journalism and digital audio techniques to social media skills and writing for radio programmes. Courses can be customised to specific needs and are made available on demand. The academy aims to train new talent, as well as increase the skills of existing media professionals.
Twofour54 tadreeb recently expanded with the development of a new animation academy. Set up through a partnership with Cartoon Network and the UK’s Bolton University, the Cartoon Network Animation Academy is in its second year and trains students to graduate as work-ready employees. According to twofour54, around 55% of its animation students are from the UAE, with the remainder hailing from the region. The twofour54 Gaming Academy is another recent addition to tadreeb’s line-up. The academy provides a 16-month, full-time course through a partnership with the French video game publisher Ubisoft and the SAE Institute, a privately-owned Australian media college. Roughly 40% of the Gaming Academy’s students are locals.
Abu Dhabi’s media and entertainment free zone provides regional content creators a number of other services. Twofour54 ibtikar offers financial support to both individuals and companies operating in the Arab media sector. Twofour54 tawasol helps media professionals by providing office, residential and travel services, as well as by securing set-up needs through coordination with government officials. Content producers are also able to access production and post-production facilities, digital archiving and media asset management technology through twofour54 intaj.
OUTLOOK: Media companies are facing tremendous change as the world becomes more connected and increasingly demands digital content. Shifting trends have created challenges, as well as promising areas for new investment. Twofour54’s gaming and animation academies are examples of the variety of opportunities emerging in the UAE’s media sector. The demand for video games, particularly those with Arabic content, is growing, and there is an unfulfilled demand in the region for TV programming that targets children. “While the difficulties of adjusting to rapidly shifting trends in the media sector should not be overlooked, these changes are providing more opportunities for growth than closing doors,” said Al Tarzi. “The media sector is only becoming more sophisticated and advanced.”
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