SHOWTIME PLANS TO LEAD GULF PAY-TV

Meeting up with Sumner Redstone, chairman of Viacom is an experience. Viacom is a phenomenon. Redstone, at 78 years old, is equally phenomenal, and was on a quick tour of the Arabian Gulf to open Showtime’s new offices in Dubai and examine local media-related developments including the new Dubai Media City (see separate story on opposite page).

Sunday September 17 saw Redstone personally driven by His Majesty Mohammed bin Rashid al Maktoum, Crown Prince of Dubai, on a guided tour around the Emirate. Redstone later said, “Imagine having the Crown Prince as your personal driver for the day!” Sheikh Mohammed was keen to fully explain the merits of the already existing Dubai Internet City, but he is known to favour media and technology-related developments as being of key importance to Dubai’s future developments.

Showtime CEO Peter Einstein revealed exclusively to Interspace that it had now firmed up 4.5 transponders for NileSat. He also confirmed that anti-piracy measures were high on his agenda, necessary with widespread piracy amongst Showtime’s viewers. “Fortunately we have a good road map in place which takes us well into the next decade in terms of Irdeto technology. The idea and understanding is obvious, you mustn’t leave an encryption technology out there too long. This was good technology five years ago, and now it’s time to move on. We learn from our mistakes.”

Einstein said Showtime, which currently broadcasts a bouquet of ‘Western’ programming into the Middle East, will also be adding Open TV to a simulcrypted transmission. “This creates extra flexibility for ourselves in the event that the Irdeto technology doesn’t work, or we want to add another level [of encryption]. We are creating higher levels of insurance for ourselves.”

Showtime is going head-to-head with rival Orbit, which broadcasts from Rome. But

Showtime also has a companion set of channels broadcast by Arab Radio & Television (ART) on NileSat. ART also beams from ArabSat. To date none of the rival platforms are profitable, but that could be about to change.

“We will break-even during the first quarter 2001,” said Einstein. He added that NileSat 102’s capacity would mean new channels and services. “Next year is going to be explosive for Showtime. We are gearing up for more channels, and we are going to multiplex our Movie Channel, adjusting the time and the schedule itself so that if viewers miss a movie in prime time they can see it later the next evening.

“We are also adding new entertainment channels, and will re-package the complete service, moving from the current mini and full bouquet pricing strategy. It was easy when we were just seven channels, but when we are looking at something well North of 20, such a system is no longer practical. So we will introduce different packages, which allow viewers who want everything to see all they want at a good discount. But we will repackage, launching PPV in a NVOD model, which might also include some PPV events.”

Showtime, which launched in April 1996 from PAS-4, has just signed the locally important Abu Dhabi Sports Channel to a six-year exclusive contract, and is known to be in discussion with other entertainment channel providers, in particular Discovery. Einstein says other entertainment channels will be added. Hallmark, with Arabic subtitles, was added to the Viacom bouquet in April 1998, while NileSat viewers also now receive BBC World, MBC and TV5 in free-to-air mode. Turner Broadcasting’s CNN, TCM and Cartoon Network were added in October last year.

“Besides these new channels and services we will have a new decoder next year with hard drives. This will give viewers a state-of-the-art decoder with a built-in web-browser, plus a hard disc. Our level of technology is going to be so sophisticated, in fact no less sophisticated than anywhere else in the world. We intend to take a leadership position in this regard. The decoder will have common interface slots, so that people can watch all the local free-to-air channels, it will additionally have Open TV, which gives us games, e-commerce and banking.”

Showtime claims 180,000 paying subscribers for its bouquet, although its executives privately admit that card piracy has caused them some problems in the region, hence the Irdeto upgrades. Showtime is the brand name of a service owned by Gulf-DTH, and itself owned by Viacom and the Kuwait Investment Projects Company (KIPCO), which has financed the venture.

KIPCO’s CEO is Faisal Al-Ayyar, who said his immediate priority is to see Showtime developed into its adjacent Middle East markets. “Our footprint reaches 260 million people, and we have only touched the surface. The potential is huge, even without leaving our area. Our infrastructure is good, but we are far away from its full potential. Our priority today is enhancing the value of Showtime and expanding out from the four major markets that we now have: Kuwait, Saudi Arabia, Egypt and the Emirates.”

Al-Ayyar continued, “We are expecting operational break-even in the first quarter of 2001, and this is incredible in this line of business. The biggest hurdle for us was the absolute lack of infrastructure. We had to build everything from scratch, training people as we went along. When we launched we were up against another revolution, that of free- to-air Arabic satellite.

“Some said that already they had enough Arab channels, but we have overcome those hurdles and people recognise that if they want the best in programming they have to pay for it. I absolutely hold true to this vision that people must be prepared to pay for the best. Look at the USA where despite the strong networks people are paying for their cable and satellite TV, it is exploding. It says there is a market whenever you give consumers choice.”