Middle East and Africa rapid digital TV conversion continues, but few pay

Despite the recent social and political turmoil, rapid conversion to digital TV continues in the Middle East and Africa, according to a new report from Digital TV Research Ltd. Digital TV penetration for the 18 countries covered in the Digital TV Middle East & Africa report is already approaching two-thirds of the total.

Middle East & Africa TV households by platform (mil.)

                     2010  2011  2012  2013  2014  2015  2016
                    ----- ----- ----- ----- ----- ----- -----
Digital cable subs    1.2   1.4   1.6   1.8   2.0   2.2   2.4
Analog cable subs     1.2   1.0   0.8   0.6   0.4   0.2   0.0
Pay IPTV subs         0.3   0.7   1.2   1.7   2.3   2.9   3.5
Pay DTH               9.2  10.2  11.0  11.6  12.2  12.6  13.1
Digital free DTH     36.3  37.2  37.8  38.5  39.1  39.8  40.3
Analog terrestrial   34.3  32.1  29.8  26.7  23.2  20.3  17.9
Primary FTA DTT       1.2   2.8   4.7   7.5  10.7  13.4  15.7
Primary pay DTT       0.0   0.2   0.5   0.8   1.3   1.7   2.2
                    ----- ----- ----- ----- ----- ----- -----
Total                83.8  85.6  87.4  89.3  91.2  93.1  95.1

Source: Digital TV Research Ltd

Report author Simon Murray said: “We forecast that digital penetration will reach 81% of TV households by 2016. Eight countries will achieve 100% penetration (and Israel will be the first to reach it – this year). Another bonus for the region’s TV industry is the high birth rate, with nearly 20 million TV households to be added between 2006 and 2016.”

More than 40% of TV households watch free-to-air DTH signals. There are 500 FTA channels serving the Arab world, many of which do not operate in a true commercial environment as they are funded by their local government or by a wealthy patron. Many FTA (free-to-air) DTH homes receive illegal transmissions of legitimate pay TV services. FTA DTH penetration varies will be highest in Jordan (86%), Algeria (85%) and Morocco (82%) by 2016.

Murray added: “Only 15% of TV households (analog and digital combined) are actually paying for legitimate TV signals. This proportion will climb only gradually to 22% by 2016. Even so, the number of pay TV homes will nearly double between 2010 and 2016 to 21.2 million, due partly to the boom in TV households.”

Legitimate pay TV revenues for the 18 countries will grow by more than US$1 billion between 2011 and 2016 to US$5.9 billion. However, the 2016 total is only US$1.98 billion once Turkey, Israel and South Africa are excluded.

Middle East & Africa pay TV revenues by platform (US$ million)

                   2006   2011   2016
                  -----  -----  -----
Digital cable TV    456    576    564
Analog cable TV     376    256      1
IPTV                  6     52    586
DTH               2,065  3,897  4,570
DTT                   0      8    183
                  -----  -----  -----
Total             2,903  4,777  5,904

Source: Digital TV Research Ltd

DTH will continue to dominate pay TV revenues, taking 77% of the 2016 total (though this is down from 80% in 2010). Pay DTH penetration will climb to 13.7% by 2016, adding 4 million subs between 2010 and 2016.

Cable TV is not a big business in the region. Penetration is less than 3% of TV households and this proportion will fall over the next five years as competition increases. This competition will lead cable TV revenues to fall over the next five years, especially in Israel where the government is pushing DTT to force down pay TV subscription rates.

The number of paying IPTV homes will overtake cable subs in 2015. IPTV revenues will grow tenfold between 2010 and 2016 to reach US$586 million.