10
New Monetization Models? Ad-supported model… a long-term opportunity for growth in MENA markets
As highlighted above there is a limit on the number of subscription services that customers are willing to pay, and we see the new alternatives where customers are consuming their content on Ad-supported Video on Demand services (AVOD) slowly gaining in popularity globally across the US and other markets as of 2020. This reality is simply fueled by cost as customers want to save money. The streaming war 2021 study suggested that consumers are very open to advertising in the streaming space—perhaps even more so than they were in the traditional, linear space as there was more tolerance when watching content that is available for free or at low cost especially the more customised, personalised advertising experience they are getting through streaming. To accommodate, we have seen also big players like HBO Max and Paramount+ moving into new tiering subscription models with an ad-supported tier by providing $5 discount on the subscription fee. All regional SVOD providers need to monetize their content, it is a matter of survival for all media companies in this new ecosystem. In this context AVOD has been increasingly seen as a shelter for a low-budget content consumption and it can become a strategic asset relevant in a lot of MENA markets with low per capita income to increase penetration by reaching the broader mass market. Adopting a new service tiering strategy by introducing ad-supported packages could be seen as short-term trade off that will lead to a winning strategy for acquiring more customers and generating higher ARPU over time. That said, existing and new OTT video entrants should understand well the nature of the market, and its viewing trends by considering a hybrid business model that should be in line with consumer needs and desires for ultimate market penetration.
Customers are shifting to AVOD for cost related reasons
Customers are open to advertisng which offers more personalized experience than traditional linear
Hybrid Strategy AVOD + SVOD relevant for content monetization
Final Words • Regional SVOD OTTs in MENA have started their path with a strong subscriber growth momentum and are successfully leading the race over international players in terms of volume market share. Although this acquisition strategy was key for generating higher revenue and increase in customer base in the last 2 years, however this growth proved to be costly, and is yet to be profitable. The market in the MENA region could be facing an inevitable streaming war, with the expected entrance of more OTT video players in the future, exerting more threats on existing players with further market fragmentation and increasing churn. • That said, SVOD regional players should work on being continuously relevant through creating a long- term binding customer relation by deploying a strategic monetization path: It is crucial to differentiate their content offering with a clear positioning, adapt to viewing experience and behavior, understand better customer screen time and create more value to their customers by extending in adjacent entertainment verticals, and lastly challenge their existing SVOD model by adopting new business models (AVOD for instance) that could resonate much better with viewers across the MENA markets and lead the way to bigger opportunity in term of value and volume growth.
11
OTT Video Success Path in MENA: How can SVOD be more relevant and create long-term value
Made with FlippingBook Learn more on our blog