Communicate spoke with Richard Fitzgerald, CEO & Founder of Augustus Media, to discuss what's in store for the streaming business in 2021.
What are your predictions for the streaming business in the region in 2021?
There was a time when space in the MENA streaming industry was up for grabs, where incumbents didn’t really embrace streaming. But main players like Netflix, Shahid, OSN, Starzplay, and VIU have since claimed their turf for different reasons. So, for a completely new brand to enter the streaming space, is it now too late? What does the current streaming landscape look like and do we expect to see more ‘carriers’ to the streaming space?
Big US media companies have yet to set their sights on the region, instead of licensing to more local platforms. Take HBO Max, in the news recently for their decisions regarding Cinema vs Streaming. They have already licensed out to OSN, as has Disney. And we don’t see plans for a global rollout of Peacock. Another service that won’t be coming to the region is Quibi - a ‘quick bites’ streaming platform that raised over $1 billion in investment. It both launched and shut down within the space of the year.
Then we look towards the niche players. Media companies are looking at what we call OTT. But this is really a connected TV trend - a CTV trend. This year, Brightcove released a report stating that only 5% of Saudi households had connected TVs, a statement disputed by many streaming platforms like Starzplay who claimed to see larger figures. And that’s just on a brand level. But what about the streaming ecosystem?
If this was the ‘Year Of Streaming’ we may have expected more development. Where is Roku in this space, or similar? It’s all happening at a Telco level. We have to ask the questions - Where’s Du’s Android TV box? What happened to Etisalat switch TV? What is the strategy here, if any? When will the nine million households in the UAE have connected TV boxes?
The transition from channel flipping to app flipping is going to have the biggest impact. So, we look to the depth of content available in the region, and there has been a significant investment of late into Arabic content. All the above brands, from Amazon Prime, OSN to Apple TV all have their streaming content strategies I’m sure, but I don’t believe any are as fixed as Netflix.
Ted Saranderos, Co-CEO of Netflix, has already stated that every penny for the next few years has been allocated to production to achieve their global studio strategy. That doesn’t mean they won’t look at live streaming in the future, just that there’s no budget left.
So, does that open things up here then?
In Saudi Arabia, they believe in sport for all, that it should be free and that content investment will lead to a streaming platform in the kingdom. I don't know their plans, but I think OSN left sport. MBC could and should look at F1, others as part of Shadid VIP and potentially bid for other sports rights. You've got SR&M, Tihama, what are their plans? Rotana seems to have put their video bet into MBC, just like they put their music bet into Deezer.
What role with 5G play?
A significant one, I would imagine, given that it will improve any latency issues on an upload and download basis, thus improving the speed and quality even more
Will we see any changes to the streaming business model?
From the product itself, there are many challenges. From technology to content to audience building, all pose their own difficulties.
Tech-wise, you have to build from scratch every element, do a hybrid solution or choose a full off-the-shelf white-label offering. All have their pros and cons. There are more and more solution providers, at every level of the streaming process, from transcoding and distribution to hosting. Some streaming native brands will choose existing platforms like Twitch or YouTube.
With Smashi, we used open source technologies and SaaS, as the foundation to build consumer apps to stream the content. With Lovin, we purely stream across social media platforms like YouTube, Facebook, Twitter, Instagram, LinkedIn, and Twitch. The content you choose, by default, can change your business model. Take a look at the entertainment industry, where the cost of production can be based on a $50k hourly rate of content, to lives - unscripted shows to live sports.
For Smashi, we produce original content, but only an hour or two a day. Currently, we’re looking at innovative ways to syndicate content but also eventually working with content creators. Audience growth also poses its own challenge. How do you get the distribution? How to cut through the noise, compete with social feeds and other things that consume people's attention? Do you partner with companies that have that customer relationship? Do you leverage social media to build an audience with the intention of converting them to your platform? Do you acquire customers through advertising?
I think there can be different options in production costs - music pay variables per artist plays, so there isn’t as much upfront costs needed (this is the reason Spotify did a direct listing and didn’t raise funds with a public offering). Additionally to the product, the business model itself is challenging. Do you choose AVOD, SVOD, or a combination of both? If so, what is the price point? After all that, what is your subscription management strategy and how do you deal with the churn?
One prediction in the Financial Times of late said of streaming that this current phase to 2024 is a land grab dominated by unbundling and that 2025-2030 will become a consolidation phase, dominated by bundling and aggregation of services. I would go along with that, if you can’t compete with the content production budget of Netflix or even MBC in this region, or the customer acquisition growth of Disney, you could sell out like Rupert Murdon did with Fox or shut down as Quibi did, or you could play the medium-term game, ready for that consolidation phase.
What are your predictions for the content business in the region in 2021?
We didn’t see much consolidation of media/content companies or consolidation. There have been interesting partnerships, but not many mergers. Perhaps we will see some of that. There is a continued shift of legacy media distribution models to digital. And those in themselves are fragmenting.
Snapchat has already proven how effective the ‘Discover’ section can be at delivering short-form produced shows. The shows, like our own Meen mKassir Social Media, is as impactful in society as shows on YouTube used to be. We have seen over three billion top snap views on the show this year. A huge number. Now TikTok is looking to attract media companies and creators with something similar, which started by allowing a three-minute video upload. And as with everything TikTok does, it gets rolled out and adopted fast. In addition to the land grab, we will see more media companies launching OTT offerings as Bloomberg did with Quicktake.
Spotify has experimented with video more and regionally. Anghami has launched a ‘Live’ feature for radio-like streaming. The influencers industry is well established. We have started seeing some convergence with content/media companies and talent. So, we can expect more of such big deals, like how it's done in the US on Spotify with Obama’s, Harry & Megan’s, Joe Rogan's, etc.
There is a lot of debate recently about the death of cinema theatres but I think much of that is overblown and will bounce back post-Covid like all other sectors that have been impacted. The destruction models will have shifted though, and there is probably no going back from that.
Were there any content trends that stood out this year that will be carried forward into 2021?
The content business has many facets. So, without trying to oversimplify trends, there is a lot more development and innovation to go in this region across video, text, and audio. Globally, video developed further with innovative apps like Cameo and OnlyFans, of which we are seeing this trend in the region as well with the likes of Bigo in Pakistan and Halahi in the UAE.
In text, we saw more and more adoption of subscription websites like The New York Times and many other publications going behind a paywall if they hadn’t already, such as Arabian Business in the region. There was a trend for going on your own, like Substack - we saw a prominent Saudi journalist do this. But it’s not widespread. I would have expected more as journalists transitioned during Covid.
In audio, the podcast market definitely matured. Players, companies, people expecting a hit series. The investment and consolidation of apps seen in the US may happen here, apart from Storytel acquiring Kitab Sowti, the Arabic audiobook platform in which it was already an investor. Platforms like Podeo are to watch (full disclosure, I am an investor in that company), and audio content companies like Kerning Cultures and Finyal Media.
We could expect to see more automated content as AI and robotics pick up, but probably nothing majorly significant. There is also more drone usage and 360 camera, but again, probably not going to be the breakout trend. I expect streaming to be even bigger next year and increased adoption of mixed reality.