The Arab viewer is in a state of bliss. Last year ended with some well-wrapped gifts in the form of free-to-air channels, and there are serious prospects for introducing new ones this year. This paper will focus on the arrival of two new free-to-air entertainment channels, Dubai's One TV and MBC 4.(1) It will also describe the revamp of MBC 2 and discuss the positioning of these three channels as main competitors for paid packages Orbit and Showtime.

These newly available choices offer an opportunity to take an interesting look at their positioning, marketing/promotion, price, and most importantly, content. This paper will deal with the shaping of Western entertainment channels available for the Arab viewer, whether through a subscription fee or free-to-air.

Both sides of that industry are looking to increase viewership. The free-to air channels need proof of viewership, in the form of ratings, in order to attract a significant portion of the Arab world's $200 million television advertising expenditure.(2) Meanwhile, the pay-based channels need to maintain and expand their own viewership bases, which in turn translate into subscription revenue.(3)

Given the above, this study is concerned with One TV, MBC 2, and MBC 4 as free-to-air Western-model entertainment channels, while Orbit and Showtime Arabia represent the subscription-based channel packages.

The Players

It is important to determine the mission statement as well as the course of development of each of the channels before evaluating their respective programming challenges.

Showtime

Showtime is a joint media venture between the Kuwait Projects Company (Holding) and Viacom Inc. The network offers "over 51 premium channels of predominantly Western television entertainment including four sports and four movie channels."(4)

Established since 1989 in London with its signal beamed up from Egypt, Showtime finalized a transfer to a special facility in the heart of the Arabian Gulf in Dubai Media City in March 2005. This move was accompanied by a significantly bold media maneuver: Showtime's Arab parent company announced an initial public offering which, if successful, will see the company listed on the stock exchange.(5) Operationally, Showtime boasts 300,000 subscribers. Those are served with a combination of house and alternative channels. Showtime enjoys a previous working relationship with another pay package, ART, which is undergoing major re-structuring itself. Both have collaborated on pay per view channels and program cost sharing.(6)

Orbit

Using its own words, "Orbit Satellite Television and Radio Network is the world's first fully digital, multi-channel, multi-lingual, pay television service."(7) Established in 1995 by the same team that was in charge of Star TV in Hong Kong and financed by the Saudi Mawared Group, Orbit had a clear vision of the model and the programming it wanted to offer well before going on air: "Orbit was created with a sole purpose in mind: to provide a vast selection of world-class entertainment and information in English and Arabic, to an audience hungry for greater programmed diversity."(8) Over the years however, this vision has been altered, given cultural, technological, or operational hurdles.(9)

MBC 2

Before reaching the position of "the world's first non-stop, free-to-air movie channel"(10) MBC 2 went through several stages in its search for identity. At its start in 2002, it was simply referred to as "Two"(11) in an effort to dissociate itself from MBC. In order to launch the channel, two presenters were moved from MBC to join Two.(12) They were also commissioned to develop Western-oriented shows about music and movies to accompany the channel's offerings. Two years later, Two was re-branded "MBC 2," with a focus on delivering "the latest and greatest movies to mass audiences in the Middle East with over 300 different movies per month."(13)

MBC 4

To many, MBC 4 is the offspring of MBC 2. It is the MBC group's fourth free-to-air entertainment channel and has been created by picking up some of MBC 2's most successful programs, such as the Oprah Winfrey Show, while MBC 2 took on a new all-movies identity. MBC 4 offers a mix of "live news coverage from the United States in the mornings and top-rated action, comedy, drama and reality television series in the evenings."(14)

One TV

Dubai television was a pioneer free-to-air channel in the Middle East, established in the mid-1990s.(15) After revamping their flagship channel Dubai TV, attention was turned to Channel 33, which originally targeted the expatriate community in Dubai (see Dubai: Watch This Space in TBS 13). Channel 33 was shut down and replaced by a "new channel bearing a new name, a new look and a new line-up of the best in American and British programming."(16) The end of 2004 saw the launch of the new One TV, promising "twenty blockbuster movies a week, (and the) most popular series, sitcoms, reality shows and kid's programs".(17)

Given this overview, the channels' offerings are clear: movies and comedy, drama and reality series. The origin of these programs is exclusively Western-modeled, with the United States and Britain being the largest suppliers.

The Target

For any channel, defining the target audience and tailoring programming content to that audience is a must in order to generate advertising and sales.

One TV offers ongoing entertainment for "the whole family," while targeting "modern Arabs who enjoy Western-style programming, as well as English-speaking expatriates."(18) Both MBC 2 and MBC 4 have even wider-ranging target audiences: "We want families throughout the Middle East to become MBC television viewing households."(19) If they can have their way, MBC is sure that with their "premium content, families don't need to channel hop to other stations."(20) For MBC2 and MBC4, English language could have been a problem -- after all, they deliberately target an Arabic-speaking audience, in keeping with the group's motto of seeing of "the world with Arab eyes." However, the Western series and movies have Arabic subtitles while the topics are carefully chosen in line with Arab values.

Similarly, Orbit targets an Arab audience hungry for greater program diversity. "They are delivering a product attractive to a small, well-traveled, bilingual and well-off elite who understood that one must expect to pay for quality."(21) Then there is Showtime, with the same quality and ease of access. The channel has for a long time been positioned as a bouquet of Western programming. As CEO Peter Einstein states, "We wanted to position it as Western programming made for the Middle East."(22)

Admittedly, this target audience is a bit ambiguous. In actuality, all marketers seem to agree that the audience that really counts is situated in Saudi Arabia. In a study released in September 2004, the Arab Advisors Group revealed that close to 89 percent of Arab households in Saudi Arabia have satellite television. Furthermore, close to 16 percent of Arab households in Saudi Arabia have a pay TV subscription. The same study also reveals that 90 percent of surveyed households prefer to watch satellite television programming in Arabic or with Arabic subtitles. Only 10 percent of those surveyed preferred the English language.(23)

One may conclude that there is a near consensus, with slight variations, on the target audience. In fact, a vast market exists for these channels, but realistically, in the game of winning viewers, the competition is fierce.

Game Play

Technological development has enabled many of the advances taking place in the Middle Eastern television media landscape. Yet, it takes the vision of television programmers to combine their knowledge of the audience with technological insight in such a way as to offer the formula that will generate the audience's adoption of a particular media platform. This paper's study of the "game play" will focus on two battles these channels have to fight in order to maintain their audience and achieve a larger piece of the ratings pie.

For both free-to-air and pay channels, generating viewership numbers is of prime importance. In the cases of One TV, MBC 2, and MBC 4 their goal is to achieve ratings, whereas Showtime and Orbit aim to subscribe the largest number of households. In order to gain market share, the channels engage in a battle to provide the right content for the right target.

There is also an in-house battle being fought within each organization to adequately reform their financing structure. The battle for financing is mainly about restructuring and redistributing the channel's resources to both maximize the return on investment and allow adequate funding for sustained growth.

The Battle for Financing

On a macro level, subscription television is at a competitive disadvantage when compared to free-to-air channels. On one hand, there is the historical bias of Arabs who believe broadcasting should be a free service. This may have been one of the driving forces behind widespread channel piracy in the Levant and North African countries.(24) On the other hand, subscription rates have reached rock bottom for all providers, making the battle over incentives and costs seem irrelevant.

At the same time, it is possible to argue that in pursuit of advertising dollars, free-to-air entertainment channels are pitted against various other channels that also provide music, sports, and news. Moreover, thematic channels have not been advertisers' favorites. Most media-buying units within advertising agencies believe that audiences are only attracted to specific programs usually available on more general channels. Against this backdrop, what are the current practices and future tends of Western entertainment channels?

Orbit is faithful to its motto of focusing on quality for the subscriber's money. First, Orbit is diversifying its programming source in the hope of attracting new demographics. For instance, Orbit is serving a number of previously overlooked expatriates residing in the Gulf region, who are not satisfied with traditional free-to-air media. A case in point is the introduction of two Filipino channels. More importantly perhaps is Orbit's search for alternative sources of entertainment material, most notably its deal with Chum TV, a Canadian media company and content provider; the contract provides Orbit's Hollywood channel with a three-hour block of entertainment segments. Besides these two approaches, which are closely related to programming, it does not seem that Orbit is willing to pursue other sources of financing besides the traditional subscription fee.

Unlike Orbit, which is aggressive on various fronts, Showtime is seeking primarily to put its efforts into developing its motto of "one box, one card, and one platform." In other words, it is planning to put to use its technological capability to serve its customers using Internet and Electronic Program Guide (EPG). Interestingly, Showtime is moving towards an initial public offering (IPO), with a valuation estimated at $2 billion. This offering will secure additional capital which will be re-invested in acquiring a larger market share. The outcome of the IPO and its benefits are yet to be seen.

In theory, free-to air entertainment channels rely on advertising as a main if not the only source of financing. In practice, two main forms of advertising have been adopted so far on all three channels: spot advertising and sponsorship. While MBC 2 has opened up the doors for its sister channel MBC 4 to profit from the creation of theme nights and show branding; One TV did not lag far behind in adopting the same strategies. Sponsorship has become very limited given the time and place of insertion. Competition, instead, is focused at the creative design and flow between promotions, sponsorships, commercials and program content. Ironically, all three channels are represented by companies belonging to the Choueiry Group.(25) To some this may constitute a hindrance to competitiveness as all three channels adopt the same programming approach and the same sales strategies. Others argue that this could eradicate the "discounted ads syndrome" whereby the Choueiry Group will maintain a tight control on the discounts, if any, given on either channel.(26)

In the battle of financing, each channel has uncharted territories worth exploring. MBC 2 and MBC 4 have started combined marketing and promotional activities - cross-promotional in particular. This will prove substantial in minimizing promotional costs. Similarly, the channels are marketed as a combination using exclusivity as incentive. In other words, in the game for ratings the MBC group's combined market share will most likely be a strong proposition for advertisers.

The Battle for Content

These channels rely solely on acquisition as a source of material. There is no development of programs or series. The other aspect of the channels' content is on-air promotion. These have proven to be an arena for a different type of competition, one that is beyond the scope of this analysis. International acquisition is associated with various factors including but not restricted to: territory for which the material is acquired, number of households/viewers, and type of encryption, if any.

OneTV has inherited a niche audience that is predominantly comprised of expatriates. Its lineup of reality television and American-based series has disturbed an audience familiar with soaps and British series. This reaction has caused the channel to respond and to adjust its scheduling accordingly.(27) The channel is establishing its identity. One TV has gone to extremes to disassociate itself from Dubai Television in an attempt to avoid repeating the mistakes made by Channel 33. However, One TV will revise its scheduling and try to cater to an expatriate community that may require locally produced entertainment. If achieved, One TV would have a unique product not available to any of its competitors.

By launching MBC 4, MBC 2 managed to share the burden of competing head-on with One TV. Consequently, MBC 2 has reinvented itself as a free-to-air movie channel that caters to over 120 million viewers.(28) In doing so, it has raised the bar for movie rights in the region. These have been steadily increasing over the last fifteen years. Distributors will not only be going for the highest bidder but also for the channel that will be ready to buy a back catalogue of older movies. With solid financing, MBC 2 will be ready to outbid its competitors. MBC 4 stands to benefit from MBC 2's negotiating advantage. Indeed, many of the movie distributors also are handling syndicated programs. MBC 4, through consolidation with MBC 2, stands to compete against One TV.

Orbit has turned to two strategies to reestablish its entertainment channels. On the one hand, it has looked for alternative sources of entertainment material, such as deals with Chum Television International. On the other hand, it has positioned itself as the forerunner in providing the latest series and films. Its introduction of the "first-see TV" campaign is an attempt to focus viewers' attention on the exclusivity and quality associated with Orbit. This elite content, aired just six months after its release, comes at a high financial cost, but one that Orbit is willing to bear in order to maintain its share of the market.

When it comes to Western-origin entertainment, Showtime has a competitive advantage. It repackages the productions of Viacom, the parent company of MTV, Nickelodeon, Paramount Pictures, UPN, CMT, and others. Showtime Arabia's task therefore is to focus on selecting, scheduling, and promoting their series and movies. This programming heaven is allowing Showtime to explore additional content such as pay-per-view, Internet, and interactive options. These could well be the next revenue-generating tools for pay packages that are facing growing competition from free-to-air channels.

Insights

The satellite landscape in the Middle East is a rapidly expanding pan-Arab business. The study of this emerging competition between pay packages and free-to-air channels requires thorough research and increased transparency. As a platform for such study, this paper has attempted to provide a sense of the competition and dynamics at play. In closing, we look into the future, based on personal observation and discussions with industry insiders.

Exclusive Deals

It is true that millions of programming hours are available for these channels, but only very few seem to attract programmers in the region. Consequently, bidding for programs has resulted in soaring prices and an attempt to secure program sources for as long a period as possible. Long-term exclusive agreements will ensure that a continuous stream of series or movies is secured.

Free-to-Air Bouquet

MBC's four channels and Al Arabiya are realigned in a way that locks the viewer's remote control to that particular family of channels. Any channel that loses one member of the family will, programmers hope, gain another member. Consequently, advertising will be sold by the bundle across channels on a combined rating.

A Single Platform

Pay television could be forced through mergers, acquisitions, or alliances to provide a single platform. Showtime stands as a main leader with a bold move towards an IPO, various ventures with ART, and a "combo" offer with Orbit.

Series Movies Plus Plus

Added value for the subscriber's money will be a trend. Pay-package customers will be tempted with more options, particularly interactive elements such as long-form Electronic Program Guides (EPG), games, interactive on-line options. In addition, high-speed Internet, and more pay-per-view programming will help reduce the gap between one package and another. Ultimately, this will set the pay-package offers apart from those that are free-to-air.

The viewers are declared winners in the competition between pay packages and free-to-air Western entertainment channels. The viewers are offered more choice, competitive prices, and added value for money. Now, more than ever, their remote controls can surf freely over an expanding spectrum of channels.