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Tuesday, June 3, 2008

The future of TV = video games, SMS and T-shirts

The future of TV = video games, SMS and T-shirts

This opinion was published in Campaign Magazine in December 2006. I thought to add it to the blog as it is still relevant!

With all the ongoing buzz around the internet, its impact on the Arab world, and how many free-to-air channels we currently have, many media experts are not foreseeing how Arab television will change in the next 10 years, and to what extent their business will be modified.

While attending a recent get-together for media executives, I was astonished by the number of people that genuinely believe the number of Arab television channels is bound to decrease. I am afraid this is probably more wishful thinking than factual analysis.

In a recent published study, we showed how the ratio of population to channels (Channels Reach) is three times larger in the Arab world than it is in Europe. All things equal (and with the free availability of cash in our region), the number of Arab channels will probably be multiplied by two or three within 10 years.

In the same study, I made the point that this growth in the number of channels will probably be driven by four elements:

Unsaturated market (channels reach);

Increase in the advertising pie;

Investment in alternative revenue model channels (SMS);

Political, social and economic changes in North Africa.

The latter impact on the market is starting to show, with MBC, LBC and Dubai TV launching "Maghrebiya" versions of their successful models.

As for the increase in the advertising pie, Antoine Choueiri was recently pointing out that he is strengthening his business with the firm belief that the advertising market will increase 10 fold within 10 years.

I would add to these elements the probable increase in the number of pay TV channels; Arabs want quality content, and pay TV has the economic model to offer such a service. The growth will come from an increase in premium Arabic channels (ie Showtime launching its own Arabic bouquet) and through the continuous delivery of the best channels from the US and the UK.

If technology issues such as adopting HDTV will definitely increase short-term operating costs, the real loss generating factor will be the necessary adoption of new processes, workflow tools and the continuous training of the different TV populations. But these will mostly impact short-term operating costs. In the longer term, these are investments that will actually smother the inevitable continuous increase in costs.

"It's all about content!" a thousand times heard, a thousand times forgotten.

Television executives that keep this in mind will always lead the pack. This is easier said than done. Content is difficult to acquire/produce, there are cost limitations, revenues that can be generated are not guaranteed, and this content must appeal to both viewers (ratings) and advertisers (programme engagement).

By investing in content research, and fine-tuning the selection process, television channels will be able to better target the different populations advertisers crave for.

M6, the number two channel in France, currently generates 30% of its revenue through its games, licensing and phone division.

Every programme is initially thought and developed with the clear prospect of generating extra revenue (sometimes more than advertising). Programmes that cannot lead to video games, board games, SMS chatting, T-shirts etc, are more often than not rejected.

We are still far from this level of pre-planning in the Arab world. But this is where Arab television channels (and free-to-air in particular) will find their next leap into the mega-revenues bracket.

This is the future of television, this is television 2.0.

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