Netflix Middle East launch will be good for pay TV, says OSN

Streaming service says fewer users will view content from abroad through VPN.

Netfilx headquarters in Los Gatos, California. Netflix confirmed this week that it would start operating in the Middle East by the end of next year. Paul Sakuma / AP Photo

The upcoming Middle East launch of web-streaming service Netflix will positively affect the region’s pay television providers, with subscribers likely to be lured away from accessing content illegally, according to OSN.

Netflix confirmed this week that it would start operating in the Middle East by the end of next year.

But while Netflix has had a seismic impact on the revenue of pay TV providers in the United States and other mature markets, Medea Nocentini, OSN’s vice president of corporate development, said yesterday that the service’s Middle Eastern launch would bring positive benefits in the short term for the region’s incumbents.

“We’re actually quite excited about them officially launching in the region, because we feel it will help stop the phenomenon of the consumption of content via VPN connections, or at the very least help to contain it,” she said on the sidelines of the PwC entertainment and media outlook, held as part of the Dubai International Film Festival.

“Netflix will have a vested interest in not allowing customers to just subscribe to the service in the United States, and watching it through a VPN connection.”

Consumer research by OSN suggested that Netflix is already the largest provider of subscription web-based video in the Middle East, even though its services are only accessible through VPN connections.

OSN has been at the forefront of the Do the Right Thing campaign, launched earlier this year, aimed at persuading viewers to use legitimate means to watch their favourite shows.

Joris Evers, Netflix’s regional vice president of communications, stated this week that the greater availability of legal streaming services had resulted in a drop in illegal downloads.

Traffic to illegal peer-to-peer services fell by more than a quarter in Australia following Netflix’s launch in the country earlier this year, he said.

Ms Nocentini hoped that the service’s official launch in the Middle East would have a similar impact.

“When Netflix come to this region and do their marketing it will increase awareness of the value of paying for content, so it will help existing players like us to get into those segments that are not yet paying for content online,” she said.

Ms Nocentini insisted that Netflix would not have a significant impact on OSN’s subscriber and revenue numbers, at least in the short to medium term.

“The bulk of OSN revenue comes from customers paying a premium for a family service that is very high quality, technologically speaking. [Netflix] is not the same proposition,” she said.

Pay TV household penetration in the Middle East and Africa, currently the lowest in the world, is forecast to increase to 40 per cent by 2019 from 29 per cent last year, according to PwC.

“In other regions of the world Netflix has come in and challenged companies that had solid and stable revenue,” said Ms Nocentini.

“In this region we’re under-penetrated in the pay TV space, and so the pie is going to get a lot bigger than what it is now.”

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