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The current environment of course is an outcome of the two years we have all just lived through.  And of course are still living through as countries across the world grapple with the omicron variant. The impact of the Covid-19 pandemic on the Middle East region cannot be avoided. For sure, it has had a pretty major impact, some good, some obviously bad, depending on the relevant sector within the media and entertainment environment. On the bad side, obviously massive negative impact on in-person revenue, so cinema attendance, concerts, live music, theatre, even physical media and the advertising implications relating to the same. Obviously corporate events, conferences, exhibitions, production activities, so anything that has required that face-to-face element have been massively impacted. 


The latest PwC Global Entertainment Media Outlook for this period, 2020 to 2024 suggests an 8.3% fall down to a figure of $19.7 billion in revenue for this year. We may see some continuing reduced revenue ranges for a little while but again it really depends upon which sector is being discussed. 


This remarkable period that we are all still living through has prompted a number of very key changes. Significant impacts that are changing operating parameters, results, and future strategic direction. One of the primaries is the drive towards digital activities, the refocusing of brands and the advertising industry generally with a move towards a greater concentration on the digital and the use of social media. Television models are changing as well and we have seen more of, and we are going to continue seeing, more of a move towards transactional and VOD models within television generally and we all obviously are becoming very used to the digital consumption of content. We also must talk about cinema, events and sports and the developing world of sponsorship within the Middle Eastern region.


The major changes we have seen during the pandemic and during the lockdown period may have changed certain things for good. There is not going to be a bounce back. There is a new future based on some of these changes we have seen.


The Digital Context

The shift to digital is without doubt one of the primary significant shifts that we have seen over the pandemic period. It is a continuation of an existing trend but there has been an acceleration during this recent period of social distancing and lockdown. Digital revenue constitute 42% of total media and entertainment revenue in the MENA region, which is a remarkable statistic. In 2019, it was at a level of about 37% so it was already quite high but obviously we are looking at a continuing increase, and industry projections are putting this rate at approximately 46% by 2024. However you look at it, it is a considerable level of growth.


We can look at a few specifics, first in television and gaming and then we can come back to talk about social media and some of the implications there including from a legal and regulatory point of view. 


With television, we have seen a move towards transaction and subscription VOD models. Primary players like Netflix, Shahid, and Starzplay, are all driving more local content and they are all responding to the fact that the statistics for the number of hours spent watching content has massively increased during the lockdown period across 2019 through 2021. That is quite a big shift that we are going to continue to see in TV generally. 


Online gaming continues to be a hot space. There have been a lot of recent announcements - tournaments, associations and government interest in several territories including the UAE and Saudi Arabia particularly which are going to generate considerable growth across the online gaming and e-sports contexts. We have just seen the Boston Consulting Group’s report on Gaming and e-Sports suggesting that gaming revenue will increase to $6.8 billion by 2030 – up from $959 million in 2020. Just one interesting statistic which links in on a number of different levels - think about the Instagram user base - it’s 60% within the 18 to 24 age bracket currently, whilst other  platforms that are more youth orientated like TikTok and Snapchat have even more aggressive numbers. So that’s quite a user base to work with in the digital context.


One issue I suppose is the mish-mash of laws and regulations we are faced with in this space. Whether we are talking social media, online gaming or e-sports, there is a lack of consistent regulation and governance within the region currently. We see this in other regions as well – other regions like South East Asia are looking at this also. So that is definitely an area where operators but also particularly government should have an eye to assisting that continuing growth. 


Within the gaming context, the use of advertising spend is going to continue developing and it is going to orientate more and more towards in app advertising, the use of branded content and more in-app purchasing. That’ is a trend obviously that started long before pandemic but it for sure is going to continue and, if anything, has been accelerating. 


More on the shift to digital. The statistics for the MENA region show that it has one of the highest user bases in the context of mobile social media penetration. Figures from the GSMA show 44% mobile social media penetration within the region and that is expected to double in five years. Platforms like Facebook boast 187 million active monthly users. On the social media network, Saudi Arabia is reported to have 10 million users, which is 38% of the population. 


But we also have to talk about regulation. The regulators for sure have an eye on this area.  It is complex because it is so quickly changing. The role of bodies such as the UAE’s Telecommunications Regulatory Authority (and the equivalents in other regions) as monitoring and enforcement body has to be key and they have to work really very hard at a high strategic level to make sure that they are keeping up with the changing game. Some of the problems being faced include for example:



How do we deal with issues like this? First, the regulators must have a close eye on what is going on and should have a very clear and transparent approach to regulation and monitoring.  Second, on the platform side, their policies including their take down policies and what happens where potentially infringing material arises are key. We often use a two-fold strategy – first, a direct communication with whomever is the infringer or relevant third party is (assuming you can track them) and second,  look at the take down policies and how they work.  Remember, in this context, there is a mix of criminal and civil law within the Middle East region (including an increase in specific laws dealing with this kind of activity across the criminal and penal codes and cyber laws arriving across the region). 


So there is a lot going on in the digital context in the Middle East – big opportunities for growth but anyone operating in the space should also be very clear about how to address the ever changing challenges which will arise.


The Advertising Segment

There has of course been a heavy change in the way we use print media and including of course a pretty heavy print readership decline. For the advertising segment, this takes us straight to the increased move to digital. For example, growth in terms of new online channels and increased digital activity. Social media influencers have taken on increased importance but then the regulation that might attach to them is also going to become increasingly important.  Just giving one example, the UAE has introduced a variety of regulations that do attach to social media activity. Influencers have to register and be licensed now and there are of course issues relating to how you deal with free speech versus harm – what if somebody is actually using most social media for false or fraudulent purposes? There have been cases reported of social media sites taken down and action taken against the owners or operators of such sites. Within the Middle East we do have some specific areas that may not be the same for international social media and participants, for example the restrictions in the UAE cyber law on the nature of the content. 


TV, Film and Cinema

In television, we have seen a move towards transaction and subscription VOD models. We just need to look at primary players like Netflix, like Shahid, like Starzplay- they’re all driving more local content and they’re all responding to the fact that obviously hours spent watching content has been massively increasing during the lockdown period across 2019 through 2021. That is quite a big shift that we are going to continue to see within the television sphere. 


On the film and production side, production activity has been massively impacted during the Covid-19 period. This area of business is recovering and in the UAE there has been quite an upsurge in the level of production activity. Most jurisdictions around the region and internationally but also some industry bodies are seeking to provide recommendations and/or regulations for recommencement and ongoing production. The kind of issues addressed on set include, number of crew, some greater limitations, social distancing restrictions, sanitisation processes which brings in affordable technologies and products. Obviously the production budget is always key on any production so it just means that there’s an extra element to consider now, including also relating to PCR testing and timing and vaccination requirement for crew and participants on set. 


There are actually some real opportunities - production parties outside of region getting slots for productions that are either coming online or are seeking to recommence to complete production. Everybody is rushing to the usual environments and locations and production houses and therefore it is getting difficult to find slots both at a talent, locations and production house level. So the UAE maybe has an opportunity there. We have varied locations, despite the heat we have a workable weather, it doesn’t rain very often here so you don’t tend to get those vagaries of production that occur elsewhere, world class sound stages which have a lot of space on them, excellent crews and that key point really which is where the opportunity comes up, is availability. So if you have a sub-studio level production that you can’t find a slot for, the UAE is a place to consider. You can get in, it is a safe working environment and we do have the capability and the talent here.  We do have some difficulties - for example, some of the benefits within the region, including at a rebating level, need to be given a little greater focus but the opportunity is real. 


Cinema is an interesting one. There has been a massive negative impact on cinema because of the close down on face to face engagement, and subsequently a huge decline in cinema admissions. Within the region the numbers are down from 120 to 48 million between 2019 to 2020 as a result of lockdown and social distancing and reduced numbers. But this has got to be one of the biggest growth sectors within the region moving forward. The biggest growth impact came in 2018 when Saudi Arabia announced the opening of its cinema market.  Projections are looking at enormous screen numbers and massive potential revenue even as early as 2024 – due in large part to that growing demand within the kingdom of Saudi Arabia for leisure and entertainment. We have seen many changes, many developments, and many projects that are all orientated towards that. So even when the international cinema box office figures are showing decline, we’re still projecting growth for the MENA region within that area. This also links into, the private sector participation law within Saudi Arabia which is going to provide even greater opportunities. We’ve seen some of the mega leisure and entertainment destination projects from Saudi Arabia. This new law will allow further engagement between public and private sector relating to those projects. It can only be a good thing and it can only be an opportunity for further growth and further development. Coming out of a time where numbers have been on huge decline yet this potentially is one of the greater areas of possible expansion.


The Events and Sports Space

The events space has been massively impacted.  With the lack of face to face opportunities, events just have not been happening. One of the difficulties I guess is that we have seen a lot of healthy well-known events and event services companies in real trouble over the last pandemic period. 


Why? Well simple really, no work and no revenue and remember that the events world has two primary things about it. Number one it isn’t very easy to pivot working in events and event services; and secondly operators in this region tend to work on a pretty tight cash flow so if something highly impactful like we have just been through happens…the results can be catastrophic. I sit on the board and have done for the last 12/13 years of the International Live Events Association. So some of the work that the Association has been heavily involved in is efforts to illustrate to government the industry contribution to GDP across the region and why so that we are continuing to lobby for support of regulation but also support for the industry. Who knows, we have seen some consolidation, so mergers and acquisitions is an opportunity area I would say. There are good companies that are struggling through no fault of their own. 


Big changes in the return to activity. We have had regulations from various government bodies, but including within Dubai and they do give an indication of the kind of things that are going to be a part to the return to live events, physical distancing, masks, attendance caps depending on the category of event (weddings are at a different cap, larger weddings are at a different cap, entertainment venues within Dubai for example at are at 70% capacity, hotels are at 100% capacity now). One key point of course is that participation in events and sporting events has a requirement in Dubai at least relating to vaccination. It is an inevitable part of our return and recommencement I would say.

 

With regards to sporting events, on one level the same kind of conditions for recommencement and return apply. The sport sector is another area within the media and entertainment sphere that has been badly impacted. People are starting to look at how they can re-work back catalogues. Content obviously is a key driver. But then the big thing we have talked about many times is that focus on data collation and analytics is going to be a key driver. We are seeing it in every commercial deal we are working on within this space. With sporting events, and particularly some of the larger sporting events, there are quite a number of key issues that should be on the strategic agenda. There is a lot of things to think about so that you can actually have people participating in the live context both at a player level and also at a fan level. 


So testing, what rules? If you look at the international sporting organisations around the world, they differ quite broadly in terms of what their testing parameters are. The same goes for staging protocols. When you are bringing mass numbers of fans into a stadium for an event, how are you going to orientate that, particularly at a health sanitisation and distancing level? There may be a whole range of things that you need to think about and things may go wrong and therefore contingency planning is key. And you cannot do that in isolation. It does really require an integrated approach across all stakeholders and all parties involved:  the suppliers, the brand participants, the participants themselves, the fans, governments in terms of how you engage with people including with testing, quarantine, etc. regulations that may exist and are going to be relevant for any sporting event. 


And then, technology solutions. Sporting events need to think about what the appropriate technology solutions are and then they have to be acquired in the right way. Again, in the core of all of this is strategy and then contracts and then underlying rights. Those things are as important as they ever were and possibly more so in certain regards.


Sponsorship

The sponsorship market is increasingly important but also the level of sophistication that we have within the Middle East is very specific. It is a region filled with opportunities but you are going to find an increased compliance with international standards and levels of sophistication and there are differences so depending on who the organisation is, the involvement of government bodies sometimes can slow things down. You have to bear in mind that the Middle East is a very large and varied region so there are differences depending on which jurisdiction you are in, who your contracted parties are, how guarantees work, should you be taking a holdback on funds relating to either payment or performance depending on which side you sit on, how indemnities work.


The difference from country to country can be quite considerable so that has to be a careful part of any contracting strategy you have when working in the region. But the opportunities are huge. We have seen already a pre-pandemic figure of 2.5 billion out of the 70 billion global brand partnership market, and that is going to increase. Aviation and tourism have had to maintain brand visibility so we have continued to see sponsorship activities. But the key thing is the level of sophistication that we are seeing. This is more about content access, and direct engagement with customer fans - and again back to that data and analytics point. So it is a more sophisticated model that has less to do with just ROI these days. 


Some Thoughts for the Future

Covid-19 and its continuing effects are likely to show a split between sectors recovering quickly and others experiencing an extended downturn:


1. Digital content including OTT and VOD/ streamed services together with gaming and digital music are going to grow at a massively accelerated pace.


2. In-person activities will continue to be limited until restrictions relating to control of the virus normalize in terms of operations and requirements.


3. For regional media companies, developing the digital business model continues to be crucial in the drive to build direct to consumer relationships.


4. For telcos, we will see a continuing focus on how to grow their presence in the media sector but they must get the content approach and culture right.


5. For governments and regulators in the region, it is crucial that they support the media and entertainment sector locally and including through appropriate but simple content regulation and key protection in the areas of intellectual property and data protection regulation. Governments should be driving initiatives to support the digital economy in particular.

UNITED ARAB EMIRATES

Media and Entertainment - The Changing Landscape in the

Middle East   


Written by Mark Hill

Charles Russell Speechlys

We live in remarkable times still.  There would not seem to be a better time than now therefore to talk a little about the changing landscape in the Middle East in the media and entertainment industries.  The world is looking as though it is thinking about heading back to normal but clearly there are huge differences across the world and from region to region. What “normal” is going to be is also an interesting question.  In this article, we will set out a few thoughts relating to the changing landscape in the media and entertainment markets in the Middle East. And what that “normal” may actually look like.

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Biography

Mark Hill heads up international law firm Charles Russell Speechlys’ Commercial, IP & TMT practice in the Middle East and is responsible internationally for the firm’s activities in the film and production space. Mark is a Partner with 30 years of experience as a high level strategic commercial lawyer and has been based in Dubai since 1999. Mark specialises in intellectual property and has particular industry focused knowledge in the media, entertainment and events industries.

 

Prior to joining Charles Russell Speechlys, Mark was the Managing Partner of The Rights Lawyers, a boutique industry-focused intellectual property firm that he founded in Dubai in 2003. The Rights Lawyers was the Middle East’s first and only boutique media, intellectual property and technology law firm.

 

Mark has been advising production houses for decades. He is known by and acts for many of the production companies operating in the Middle East region and is advisor to the UAE’s Production Forum (the key business association for primary production houses operating within the UAE). Mark and his long-term team have been described by The Hollywood Reporter as “the ‘go-to’ guys for all things media in Dubai”. Mark acts for a variety of production houses, film producers, entertainment and media companies, celebrities and artists, high-end retail franchising groups, leading local telecommunications firms, financial service sector clients, sports bodies as well as technology and app providers. 

 

Some of Mark’s high-profile clients include Image Nation Abu Dhabi, Racing Green Pictures, Voltage Films, Boomtown Productions, regional film directors Ali F. Mostafa and Reshel Shah Kapoor, the International Cricket Council, Al Tayer Group, Majid Al Futtaim, Haier Electronics Middle East, and the Mediapro Group. He also stands on the Board of various companies from the sectors in which he operates including key industry organisations such as the Middle East International Live Events Association. He is also regularly featured as a speaker at industry events, seminars and conferences throughout the Middle East and internationally.

 


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