Sam Barnett CEO, MBC Group
MBC Group, one of the Middle East’s strongest FTA broadcasters, signed a significant HD agreement with YahLive in December to broadcast its portfolio of high-definition channels. As a result of the deal, viewers of YahLive now have access to seven HD MBC Group channels across the Middle East and North Africa. Sam Barnett, CEO of MBC Group, hopes the deal will kickstart other HD activity in the region. He spoke with Via Satellite about the broadcaster’s HD strategy and how he sees the broadcast landscape developing in the Middle East.
VIA SATELLITE: What are the major challenges for MBC during the next 12 months? Has the global economic recession had an impact on advertising revenues?
Barnett: The key challenge for any FTA broadcaster is to keep the ratings high. We have a significant market share in Saudi Arabia and we currently have 46 percent of the Target Rating Points (TRPs) in KSA and the Gulf. We have different ratings across the region. That is a very high number when you compare us to colleagues around the world. Our key challenge is to maintain that number, which is a day-by-day battle. We are investing a huge amount of effort in programming and we are confident that we will keep those ratings high. We are in an environment where we have 650 competitors snapping at our heels, and that remains a key challenge for the year.
The other challenge is to get the advertising and monetize those ratings. The Arab world had a difficult year in 2011 with the Arab Spring. Advertising paid a price for that with the political uncertainty around the region. We felt that advertisers had come to grips with the uncertainty in the latter half of the year, but they have been coming back more recently. Then, there was the European financial crisis and we are waiting to see what the impact of it will be, particularly on our multi-national clients.
VIA SATELLITE: What would you say are the major technical challenges facing MBC right now?
Barnett: We are implementing the last phases of our tapeless transition this year. We had a tapeless transmission system for many years, however, only now are we making sure the various production elements are tapeless. We are catching up with other broadcasters in doing this. When one moves to a tapeless environment, the workflows, and virtually everybody’s job, changes. This is a challenge we are dealing with this year.
VIA SATELLITE: What are your plans in terms of producing more content in HD?
Barnett: We look at our HD as a three- to five-year strategy. We decided to go HD halfway through 2011. We felt there were enough HDTVs in the market to make it viable and interesting for our audience. At the same time, the cost of equipment had declined to a point that it became more interesting for us. We see a transition from SD to HD happening in the next five years. As a FTA broadcaster, we want to follow that transition.
Currently, we have seven HD channels on our bouquet. We have another three SD channels; so a total of 10 SD channels of which seven are now HD. I imagine the other channels will move to HD at some point, as more of the market converts and takes more HD boxes and TVs. We produce content in seven different places. So, ensuring that all of the content is being produced in HD is a key technical challenge for us. We expect to complete a full transition to HD in the coming months.
One of the interesting dimensions about satellite in the Middle East is that it is outside the control of the various government regulators. The whole evolution of the satellite TV industry in the Middle East was based on that fact.
VIA SATELLITE: What is your market view of HD in the Middle East? Has there been an interest to have content in HD?
Barnett: I think there has been more interest in HD. It’s a natural evolution once people start to upgrade their TV or their set-top box to go to HD. The price of HD set-top boxes is dropping significantly. The thing you have to consider about the Middle East is that it is not really a pay-TV market — it is more of a FTA market. In the past, the infrastructure was cheap. The challenge for HD is that they will have to pay a bit more for the set-top box and a bit more for the TV, which has caused some resistance. However, now the prices are coming down for HDTVs and set-top boxes, and people are showing a willingness to upgrade.
VIA SATELLITE: Are you a believer or a skeptic in 3-D TV?
Barnett: If I have my profit and loss hat on, I would be skeptical about 3-D TV. If I have my creative hat on, then I think it is absolutely wonderful. I think there is scope for doing some programs in 3-D. In terms of the 100 million viewers that watch one of our channels each day, I think it has limited appeal in the short- to medium-term. I think it is unlikely we would have a 3-D TV broadcast this year. We are a mass-market FTA broadcaster. We have to make sure that what we are doing is relevant to the majority. We took our time with HD. Engineers have been trying to push us to HD for the last seven to eight years. I suspect we will have the same sort of creative tensions with 3-D TV.
VIA SATELLITE: How do you view the OTT opportunity for MBC?
Barnett: One of the interesting dimensions about satellite in the Middle East is that it is outside the control of the various government regulators. The whole evolution of the satellite TV industry in the Middle East was based on that fact. There was a degree of independence, as you could broadcast signals into any given country without going through the various domestic regulators. That independence continues, but one of the issues about OTT is that it allows domestic networks that are subject to domestic regulation. Al-Arabiya news channel was one of the most popular channels during the Egyptian revolution. Had we been relying upon the IP networks to deliver the signal on an OTT basis, it could have switched off like most of the Internet. Because we were being delivered by satellite, we could not be switched off. That is a structural reason why satellite will continue to be important in the Middle East.
At the same time, we have an Internet proposition. We re-launched our Video-on-Demand service Shahid.net, which means ‘watch’ in Arabic. That has been very popular, particularly around Ramadan when we broadcast all of our drama series. We anticipate that the Shahid.net service will be available on an OTT basis in the next few months. If people have smart TVs, they will be able to plug them in and get this service on their TV as well as their PC.
VIA SATELLITE: Do you believe that MBC has been ahead of the game in adapting to stay relevant in this environment?
Barnett: I think we have tried to make sure that our content is available on any platform that becomes popular. That is the first step. The second step is much more fundamental — we must adapt the content made to the platforms. When people use different platforms, they want to view slightly different things. Our Al Arabiya news channel has been extremely popular across a number of platforms and the drama programming has been popular across platforms and our main family channels. Our challenge is to see what people are doing on these platforms and how their behavior changes and then potentially alter some of our commissioning based on these changes. Today, we are comfortable with our progress. Are we ahead of the game? I think we have pioneered a number of things in the Middle East, but the infrastructure is less advanced than elsewhere. We are catching up very quickly, but we are looking at what our colleagues are doing internationally, as well as where there is much higher broadband penetration.
VIA SATELLITE: What was the significance of the deal MBC signed with SES and Yahsat in December?
Barnett: Yahsat has launched a new satellite at a different position in the Middle East. Their strategy is to become the HD hub in the region. Clearly, we are well watched in the region, and are required viewing for many people. Yahsat wanted us to be on the satellite and we wanted to be with Yahsat as the HD hub. We have a strategy and have worked to make sure our content is available on a variety of different platforms, so the HD content is available on Nilesat. It will continue to be available on different platforms.
VIA SATELLITE: Will the Arab Spring that took place in 2011 have any long-term impacts in terms of broadcasting?
Barnett: In the short- and medium-term, the Arab Spring has clearly heightened the appetite for news. I think the longer-term impact, particularly in the countries that have been affected, will continue that need. There will be a heightened appreciation for coverage of local issues and I believe that will continue for many years.