The media sector in Abu Dhabi looks set for continued growth as ongoing efforts to attract major international companies to twofour54, the emirate’s dedicated media free zone, continue to bear fruit. Expansion efforts are underpinned by the rollout of the physical infrastructure required to support the sustainable growth of the sector, as well as the numerous initiatives in place to foster the emergence of a local talent base. Meanwhile, the international partnerships forged by media players in recent years will ensure that the aims outlined in the Abu Dhabi Plan to cement the emirate’s reputation as a prominent media hub in the region are met. Looking ahead, the continued migration of media away from print towards online resources has resulted in a corresponding shift in advertising revenue streams, and although the MENA region has historically lagged behind in this regard, the GGC is now looking forward to a significant growth in digital advertisement spend.
On Set
The media zone twofour54 was established in 2008 as a platform to support the development of local media, expand non-oil GDP and encourage Arabic-language content creation in the private sector. The zone’s remit includes laying the foundations for a sustainable industry that attracts top-name, high-quality projects both nationally and internationally, and translates into stronger local production capacity. To achieve this, efforts have focused on building up the necessary infrastructure – lighting companies, special effects teams, transport services, and so forth – in tandem with a strong emphasis on content creation.
To facilitate this growth twofour54 has established a host of ancillary creative services. One of these, the Creative Lab initiative, was developed as an online community for those looking to enter the sector and where members can gain access to services ranging from guidance and training to project funding and personnel sourcing. Opportunities for members include volunteering and job shadowing, which allows the community to develop skill sets, working for either niche specialities or big-budget films. Today, Creative Lab’s membership runs into the thousands, with participants involved in a variety of media segments including film, television, music, community projects and digital apps. “With time, we realised funding wasn’t the biggest gap young filmmakers faced,” Fatima Al Yousef, acting head of outreach and creative lab, talent development, at twofour54, told OBG. “Often times, we found it was more specific support that was needed, so more time is spent now on development. We see ourselves as the bridge between talent and opportunity in the media space.” With increased numbers, Creative Lab moved to develop a physical space, called #TheLab, where individuals now come work on their projects free of charge, and enjoy a series of workshops throughout the year.
Strong Growth
The free zone’s efforts have largely paid off. The output of locally produced content has grown enormously in recent years as players have flocked to set up in the free zone. In total, the MZA has licensed close to 600 companies since its creation, with the zone currently home to more than 450 businesses. In addition, there is a freelance community of around 600 people, with twofour54 running a freelancer licensing programme that makes it easier for foreign professionals to obtain visas in order to participate in media projects on a freelance basis. The MZA has provided work visas for the approximately 3800 foreign staff of firms working in the free zone.
The zone’s production studios have been running to near full capacity for the last three years, with utilisation ratios currently at about 92%. At present, the zone has a total of 59,000 sq metres of studio space, and, including the space used by twofour54, 50,000 sq metres of this is currently occupied. As such, expansion is the order of the day, and two new backlot sets were built in 2016. There are also plans for a new twofour54 campus to consolidate the free zone’s facilities, part of the master plan to develop the southern part of Yas Island, announceStrong Growthin May 2017. Future efforts will likely focus on developing a film studio in Abu Dhabi, thereby allowing for the construction of large-scale sets for film and TV production, according to Paul Baker, executive director of film and TV services at twofour54. “For us to be able to capture more economic expenditure it is important to be able to offer as wide a level of infrastructure as possible,” he told OBG.
Key Players
In order underpin its content creation drive twofour54 has developed the media sector’s ecosystem in three areas: marketing and communications, audio-visual production and digital, with the balance of companies in the free zone reflecting this mix. CNN is one of the most high-profile groups currently operating out of the zone, and in 2016 the broadcaster unveiled a newly upgraded facility there. The media giant’s reconfigured Abu Dhabi headquarters, fully equipped with the latest HD cameras, is home to CNN’s flagship current affairs programme, Connect the World with Becky Anderson. Speaking to local press at the unveiling in April 2016, Anderson described the reconfigured studio as “a versatile, high-tech hub that is the perfect base for our Middle East operation”. Image Nation is another major company based in the free zone. Launched in 2008, it is a subsidiary of the MZA and has quickly joined the world’s leading feature film producers through its international division while also playing a key role in building the foundations of a strong local film industry in Abu Dhabi. To this end the company’s local division – Image Nation Abu Dhabi – oversees training and internship programmes designed to encourage local talent. To date, Image Nation’s major local productions have included the film From A to B and documentary He Named Me Malala, while international co-productions include 2011’s The Help and 2012’s Men in Black 3.
Economic Incentive
The Abu Dhabi Film Commission (ADFC) offers a 30% cash rebate to international production companies for qualifying expenditure on all projects made in the emirate. Qualifying expenditures include below-the-line costs for things like on-the-ground spending on, for example, air conditioning when shooting in desert locations, transportation, accommodation and catering services, among other things. “The rebate makes us very competitive globally, compared to other production centres, and is very attractive both financially and in terms of the clarity surrounding it, with all applicants treated equally and clear guidelines provided on qualifying costs,” Greg Sweeting, chief legal officer of twofour54, told OBG. The success of the scheme can be measured by the big-budget productions that have been produced in the emirate. These include Star Wars: The Force Awakens, Fast and Furious 7 and upcoming Netflix-produced War Machine, starring Brad Pitt, as well as numerous Bollywood productions and a host of episodes of international TV shows, including the UK’s Top Gear and the US’s The Today Show. The rebate’s success has been underlined by the economic boon it represents for Abu Dhabi. Star Wars and Fast and Furious 7, for example, generated over Dh400m ($108.9m) worth of press value for the emirate, according to Baker.
Budding Talent
In addition to the above, the ADFC’s 30% incentive requires that all productions take on UAE nationals as interns on set before they can benefit from the rebate, thereby feeding into twofour54’s wider efforts to foster the development of a local labour pool equipped with the skills required by international companies. twofour54 runs various outreach initiatives with local universities, especially with media studies programmes, and it has built a strong internship network, courtesy of the more than 450 firms currently operating in the free zone. The authorities are confident that by showcasing the opportunities available in the media sector they will succeed in attracting the best local talent. “We want to show young people that there are new and alternative job opportunities available to them that would not have been available to their parents’ generation,” Sweeting told OBG. In total, twofour54 facilitated internships for 75 Emiratis in 2016, with interns placed either in productions with commercial media companies or at business units of the Media Zone Authority (MZA). In 2016 the media zone invited US TV executives to run interactive sessions with young writers and directors as part of its workshop programme, facilitated by Creative Lab. Also in 2016, twofour54 organised its first summer camp for children aged 9-12 interested in the media sector. “More and more Emiratis are coming into the industry professionally and contributing to the content being created here,” Maryam AlMheiri, CEO of twofour54, told OBG. “For example, Emirati creative talent was involved in the editing of four of the nine Arabic drama productions that were in post-production at twofour54 in 2016.”
Strategic Partnership
twofour54’s role in the wider economy is underscored by its links with companies operating outside the immediate field of media. Flat6Labs, for example, is a start-up accelerator benefiting from its location in the free zone to help kick-start new businesses for both local and foreign entrepreneurs, which could have positive knock-on effects for filmmakers looking to work with Emirati firms. The company was initially founded in Cairo in 2011 and has since enjoyed significant success, opening offices in Abu Dhabi, Jeddah, Beirut and Tunis. Since it was launched in Abu Dhabi in 2014, more than 750 start-ups from 60 different countries have applied to Flat6Labs’ accelerator programme. The positions available in each cohort are extremely competitive, with places awarded to both local and international applicants in a bid to ensure that quality levels meet international standards. The company’s fast-track process includes mentorships with volunteers from leading UAE businesses and turns what would typically take two years into a five-month cycle. Its target is the $30,000-50,000 investment range, with Flat6Labs then taking an equity stake of 7-15%. By the end of 2016 Flat6Labs had completed three cycles of its five-month programme, with the 14 companies that have graduated collectively securing more than $3m in follow-on funding for expansion. In addition to company acceleration through Flat6Labs, twofour54 also has other initiatives centred on the pre-acceleration side of incubation and more academic aspects, in particular in partnership with New York University Abu Dhabi. “All these partnerships are about trying to link up a broader innovation entrepreneurship culture in Abu Dhabi,” Sweeting told OBG.
Gaming
The gaming segment in the MENA region is growing faster than the global average, outpacing Russia, China and South Korea, and it is set to triple in size to $4.4bn by 2022, according to PwC subsidiary and consulting firm Strategy&. twofour54’s dedicated games academy for local developers is capitalising on these trends to position the emirate as a regional hub for content creation in the segment. In addition to these efforts, twofour54 has also taken a more hands-on approach, in March 2016 acquiring a stake in the online gaming start-up Unnyhog. The start-up was among the seven companies to graduate in 2015 from the first cycle of Flat6Labs’ incubator programme, and in December 2016 the firm was accepted at the California-based YC ombinator incubation programme, where its products are now undergoing further development. Unnyhog is one of several gaming companies to have benefitted from such investment in recent years, with twofour54 also acquiring stakes in Falafel Games and Jawaker in 2014 and 2011, respectively.
Meanwhile, Ubisoft, one of the top international publishers of video games, has been operating out of twofour54 since 2011, and by September 2016 the firm’s office there had expanded to employ 60 people from 26 different countries. Ubisoft has launched two games since it established itself in the emirate. The first, CSI: Hidden Crimes, was launched in May 2014 and has had close to 30m global downloads, making it one of the most successful mobile apps to be fully developed and produced in the Arab world. The company later followed up on this success with the launch of NCIS: Hidden Crimes in September 2016.
International Reach
A major development in April 2016 saw the MZA consolidate the mechanisms by which it supports Emirati and Arab film productions, placing responsibility for the fund awards solely with Image Nation Abu Dhabi. Previously, the fund had been operated jointly by the SANAD film fund and Image Nation. The move capitalises on Image Nation’s combination of local talent and production knowledge, as well as its relationships with firms such as Participant Media, Hyde Park Entertainment, Warner Bros. and Singapore’s Media Development Authority. In 2015 Image Nation pledged to invest Dh400m ($108.9m) in the emirate’s film and television industry by 2020, with the company investing Dh30m ($8.2m) in 2014.
Meanwhile, in November 2016 Image Nation entered into a partnership with the China Intercontinental Communication Centre to establish a $300m film fund, the first foray into the media industry under the newly minted $10bn strategic investment fund launched by China and the UAE in 2015. The deal is aimed at fostering closer collaboration between Image Nation, Chinese companies and other international media players, and it is expected to significantly boost the exchange of talent between the two nations via a dedicated training programme aimed at media talent. In addition, the agreement will see the creation of China-focused programming on Image Nation’s and Discovery Communication’s Quest Arabia channel.
Abu Dhabi Media
The emirate’s media giant, Abu Dhabi Media, was established in 2007 and today is one of the fastest-growing multi-platform media and entertainment organisations in the Middle East. The company operates and manages 25 brands across the broadcast, publishing, radio and digital segments. Its newspapers include the UAE’s first Arabic daily, Aletihad, and English-language daily The National. Abu Dhabi Media’s television channels include the popular Al Emarat Channel and Abu Dhabi Sports. The firm’s most recently introduced channel, Abu Dhabi Drama, was launched in 2010 and broadcasts Arab drama series, as well as international series dubbed into Arabic.
Newspaper Circulation
According to the “Statistical Yearbook of Abu Dhabi 2016” from the Statistics Centre – Abu Dhabi (SCAD), the number of local newspapers distributed in 2015 was 69.83m, up from 69.72m in 2014. While local newspaper circulation in the emirate has grown since 2012, the rate at which it has expanded has slowed. SCAD figures indicate that between 2012 and 2013 circulation increased by 34%, contracted slightly by 0.5% between 2013 and 2014, and then grew marginally at 0.16% from 2014 to 2015. According to US auditing firm BPA Worldwide, the Dubai-based, English-language daily Gulf News was the highest circulating newspaper in the second half of 2014 in the UAE at 108,295. Meanwhile, Arabian Business English had a circulation of 24,875, while Gulf Business’ circulation was 23,264.
Digital Growth
The global media landscape has witnessed a rapid transformation over the past two decades with the rise of the internet and the emergence of fast-evolving mobile technologies. As the total number of hours spent consuming media on a daily basis continues to grow worldwide, the internet is quickly becoming the preferred channel. Local news reported in May 2016 that in the MENA region 41% of daily media consumption was via online resources in 2015, up from 39% in 2013. Television, radio and print accounted for 30%, 12% and 17%, respectively, in 2015. The daily consumption of print was 20% in 2013.
In the online segment the trend has increasingly been towards mobile-based browsing, and in a report titled “Arab Media Outlook 2016-2018”, Dubai Media City dubbed 2016-18 a “mobile first” period for the MENA region. This trend towards mobile has been particularly apparent in the UAE, where the smartphone penetration rate of 78% is one of the highest globally. As such, 50% of web traffic in the country is now from mobile devices, compared to 44% for laptops and desktops, and 6% for tablets, according to Global Media Insight.
Meanwhile, of the approximately 5.4m active social media accounts in the UAE, close to 4.6m are mobile accounts, indicating that almost 85% of social media users in the country are accessing their accounts through their mobile devices. The shift to mobile has underlined the importance of developing mobile-friendly products that evolve in line with consumer habits. Research by Google, for example, shows that 34% of those under the age of 25 in the UAE now watch videos on their smartphones several times a day.
Social Media
The rise of social media has been a key factor accompanying the growth of general online media, with users increasingly coming to rely on their social media platforms to source and access news stories. For example, a 2016 study carried out by Northwestern University in Qatar across six Arab countries – Egypt, Lebanon, Qatar, Saudi Arabia, Tunisia and the UAE – found that 62% of respondents regard social media as their most important sources of news and information. This trend is most pronounced among young adults, with 75% of users aged 18-24 regarding social media platforms as important sources of news, compared to 40% for those 45 years old or older.
Given the popularity of social media among young adults, figures such as these are particularly relevant for media sector players in the Gulf region, where a young population has favoured the use of social media among the general population. Indeed, in the UAE, where 34% of the population is under 25 years of age, social media has a penetration rate of 56%, almost double the global average of 29%. As the region’s younger people increasingly migrate from more traditional platforms in favour of their Facebook and Twitter feeds, a vibrant social media presence has become the order of the day for the region’s media companies as they move to attract and retain consumers in this crucial demographic.
Advertising
Although the drop in oil prices since mid-2014 has slowed advertising spend in the region, the UAE still remains the largest advertising market in the Middle East, according to the Dubai Lynx MENA Showcase book. In 2015 advertisers spent a total of $531m in the country, compared to $312m in Saudi Arabia and $144m in Qatar. Newspapers and television still lead the way in terms of advertising revenues in the MENA region – accounting for roughly $4.1bn, or nearly 80% of the region’s total ad spend – according the Northwestern University in Qatar study.
While online ad spending was initially slower in the MENA region than in other parts of the world, online advertising growth has outperformed the global average in recent years. Total internet advertising spend over the past five years has grown at a compound annual growth rate of 39% in the MENA region, compared to a global average of 18% over the same period. Although this figure admittedly comes from a much lower base point, forecasts suggest internet advertising spend in the region will continue to expand strongly in coming years. The internet’s average share of advertising spend worldwide is 30%. However, in the UAE the internet’s average share of advertising spend stands at 12%, slightly above the GCC average of 11% – indicating significant room for growth. Indeed, a 2016 report by Orient Planet Research expects the GCC’s combined internet advertising spend to grow by 20% in 2017.
Outlook
The future looks healthy for Abu Dhabi’s media sector, with the economic benefits of twofour54’s efforts to create a vibrant international media hub in Abu Dhabi underlined by the economic benefits that “made in Abu Dhabi” content provides in the form of increased tourism and employment opportunities.
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