The MBC Group is one of the Arab world’s biggest media owners, with six channels ranging from general entertainment station MBC1 to film channel MBC2 and 24-hour Arabic language news channel Al Arabiya. After the successful launch of MBC Action last year, the group is focusing on new media and the launch of new platforms.
But with television advertising still under-valued and people meters yet to be introduced in the region, Sam Barnett, Chief Operating Officer at the MBC Group, says there are still many challenges ahead:
How successful was last year for your MBC Group?
We ended the year with a 40 per cent share of the market in Saudi Arabia [the Middle East’s biggest market], which is one of our highest scores ever. So we are pretty pleased with our performance.
Is that MBC’s own research that’s telling you that?
No, it’s Ipsos-Stat data. There are various drivers for the rise. If you compare that to three or four years ago, in 2004 we were on about 26 per cent and that’s just steadily climbed up so we’re now at 40.
The key thing last year was the launch of MBC Action. It went from zero to five per cent in the first month. The Action channel was a big hit in 2007 and it was pleasantly surprising that we managed to put Action in without taking share from our other channels. So MBC2 was back up at eight-and-a-half or nine per cent at the end of the year and MBC1 was stronger than ever.
So where did this increased audience come from? Are you stealing from rivals or are you simply growing the market?
We are taking from rivals. One of the oddities about this market is that people talk about the 300-and-something channels or 400 channels that are out there, but really they’re irrelevant. If I wanted to follow the market in terms of what people are watching, then there are only about 20 channels.
How credible are the figures from Ipsos-Stat? You can get audience figures from Ipsos-Stat and from the Pan Arab Research Center (PARC) and often they’ll tell you different things…
There are methodological differences, but certainly in the last year PARC and Ipsos were reasonably consistent about scores.
What particular plans does the MBC Group have for 2008?
There’ll be breaking news in 2008, but we don’t always advertise it months in advance.
OK, can you indicate which directions you will be heading?
There are various things. New media will continue to be a big source of investment and the question mark will be the level of broadband penetration in Saudi Arabia. If that grows more quickly then the services we launch will roll out quicker. But expect to see a lot more coming through on MBC.net. We think the advertising market on the internet is going to jump this year.
What kind of stuff will we be seeing on MBC.net?
We launched the video-on-demand service in Ramadan and our hits per month tripled, so we’ll start rolling that service out. Then we’ll be launching a number of social networking tools as well, which we think will “Arabise” some of the cult things that have been going on around the rest of the world.
Does this mean you think the future of TV is on the web?
With internet penetration still being so low, I think it’s too early to say that. People say this about the United States and Europe, but I think TV has a huge way to go here. TV viewing figures are still way up, people are watching a lot of TV here and I don’t think that’s going to change anytime in the near future. So, regarding your earlier point, we will continue to look at the channel portfolio and pick out opportunities for new channels.
You’ve got a free-to-air movie channel, which is pretty unheard of in the rest of the world, and the level of programming that viewers get free is quite high. Can such a product remain free-to-air?
From our perspective, it’s working very well for us. We’re managing to generate a considerable advertising revenue with which we are able to pay the studios and pay them on time. On the pay side, I think the pay-TV market is not particularly well developed in the Middle East.
Do you not view pay-TV as any kind of threat to you?
Not currently, no. We get 75 million viewers a day and it doesn’t really threaten us from an advertising point of view, and we have a very good relationship with our content providers.
Because there are no TV people meters in the region, do you think advertising is still undervalued? And also, is there too much advertising clutter on TV anyway?
They’re two parts of the same problem. People want to maximise revenue and that’s vulnerable to price, and if prices are low they stick their volumes up. We think the prices here are perhaps four to five times lower than they should be in equivalent per capita income countries.
And that’s driven essentially from a lack of people meter data. We anticipate people meters will go into Saudi Arabia in the next year or two years, and that will correct it. But there’s also a big overspill so, let’s say we get 45 million viewers a day on MBC1. Perhaps eight or nine million of those are in Saudi Arabia, but the rest are definitely outside Saudi Arabia.
So the people meters will measure whether the total number of viewers is 10 or 12 million, but the other 30 million across the Middle East are still essentially taken for free by advertisers. And that isn’t going to change until you’ve got some sort of new technology that will allow you split up the feeds and divide up those markets. That’s the key issue.
At the moment you buy one and get 12 free. I suspect there will be various things that may change in the future which will stop that. If people move to digital terrestrial and expand the number of TV stations that are on digital terrestrial, then you’d have different feeds for each country.
But that’s quite a way off isn’t it?
In Morocco they’re talking about that in the reasonably near future. This is all in a few years, but if you’re painting a big broad brush of the market, that’s what will change it in a big way.
What about advertising clutter?
Our policy is 12 minutes in an hour, which is the same as the United States, and we adhere to that, because if you don’t it will hurt you. I think we’ve managed to get the balance right. Occasionally things have gone wrong, but we’re on top of that.
Last year MBC launched its MoBC brand. But how viable do you think TV on mobiles is? Everyone’s talking about it, but hardly anybody’s using it. Do you think this will change in the future?
I think it might change. If it does change, somewhere like Saudi Arabia is going to be the place where it will be spotted because handset renewal is highly frequent and they watch lots of TV. So we’ll see.
We’re putting money into making mobi-sodes and we launched mobi-sodes for our key shows during Ramadan and there were 100,000 downloads.
Do you plough much money into market research and surveys?
We’re always testing new things. That’s part of the new media game. You’re never really sure which new technology is going to win, which format will take off, so we’re putting money into different ventures and some of them will succeed.
What challenges in the market do you think have the potential to hold MBC back?
One of the frustrations, as you’ve mentioned, is the lack of research. Advertisers are still getting a huge free ride. That’s gradually changing and is something that’s been worked on. But I think one of the other frustrations in this region is how many channels are launched on a non-commercial basis.
Out of your 400 channels, nobody watches 380 of them, but they’re out there competing for your content and poaching your people. We’ve got 1,400 people on our team and we invest in training. Our staff turnover is only 11 per cent, but every time someone pitches up and wants to launch a TV channel, guess where they come to?
These new channels then get ratings of 0.0 per cent, but they don’t get closed down and keep on running. It would be nice to play on an equal playing field.
How is that situation going to change?
What would be helpful is if you had research data. So, if you want a talk show that has 0.0 ratings at least everyone’s aware of it. But the frustrating bit is when advertising money goes to a television channel that doesn’t deserve it at all.
Is it the responsibility of anyone in particular to try to sort the market out?
We all have some responsibility. But watch this space because there are various initiatives in the pipeline.
GM and COO, MBC Group
Barnett joined MBC in 2002. In his role he has supported Chairman Sheikh Waleed bin Ibrahim Al Ibrahim in the commercial restructuring and ongoing growth of the group into one of the largest media and entertainment entities in the Arab world.
His primary areas of focus have included the outsourcing of advertising sales, launching new channels and media, building an organisational structure to fit a multi-media network and enforcing a commercial and financial discipline on operations.
Earlier, Barnett held senior roles in consulting firms Arthur Andersen and PricewaterhouseCoopers.
He is a graduate of Cambridge University in the United Kingdom and has a Master’s degree in economics and history.
‘Most regional TV channels irrelevant’