The Middle East potentially is one of the must lucrative markets in the world for satellite TV. With television being one of the main forms of entertainment, the opportunities for pay-TV operators to carve out lucrative businesses is strong.

In particular, the role of satellite in this landscape is vital. In the Middle East, three satellite pay-TV operators, ART, Orbit Satellite Television and Radio Network, and Showtime vie for supremacy to wins the hearts and minds of people throughout the Middle East. While pay-TV penetration is still relatively low, all three operators seem to be targeting different market segments.

"The three providers, Showtime, ART and Orbit try to have different focuses," Nadine Usta, a media analyst at Arab Advisors, said. "Orbit is very much in-between ART and Showtime. ART focuses on Arab channels and Showtime has a ‘best-of-the-West’ approach. They are very much focused on Arab channels. Orbit has a mix. It has channels in both languages."

While the three operators have vastly different strategies, their main competition comes from free-to-air (FTA) channels. "The FTA market is so huge," Usta said. "I think pay- TV is still just targeting just a small segment of the society. Even though, the three operators are targeting different markets, there is still only one segment of society that has an interest in pay-TV. There are so many FTA channels that I think FTA will continue to give pay-TV a run for its money."

Peter Einstein, Showtime’s CEO, discused in March the imminent launch of personal video tecorder (PVR) services in the Middle East and how he felt this would give them a competitive edge of over other operators. So, how is the competition responding?

In an exclusive interview with Satellite News, Samir Abdulhadi, CEO of Orbit, discusses his operator’s plans in terms of PVR and high-definition (HD) services and how it will look to grow subscriber numbers across the Middle East.

Satellite News: How many subscribers does Orbit have, and what levels of subscriber growth are you looking for in 2006?

Abdulhadi: Orbit is a private company. We do not publish subscriber numbers.

Our own research tells us that in the Middle East and Africa, we enjoy a healthy share of the pay-TV sector. Furthermore, our strong ARPU (average revenue per user) figures are a result of the advantages that we enjoy through our offers and our targeting customers in the mid- to high- income bracket. We are anticipating a growth of 20 percent in terms of customers in 2006. We performed above expectations in terms of our performance in 2005. We did well in Egypt.

We are also focusing on countries like the Lebanon on the issue of piracy, which is rampant in the country. It is hurting all the players.

Satellite News: What do you see as potential new growth markets for the operator?

Abdulhadi: 2005 has been pretty good for us. There are markets like Egypt where we achieved excellent performance and met our growth targets. We have been investing in our distribution networks, outlets, and back office facilities. We believe we always rank number one in this area. When it comes to customer services our culture is "one dissatisfied customer is one too many." We continue to do surveys. There have been significant improvements in the last three years. We have invested in training people so our customers can see the difference when they call Orbit and access services from Orbit.

Satellite News: Could you tell us about your interactive strategy going forward and what new services you hope to bring to users?

Abdulhadi: Orbit has invested heavily in the technology aspects of pay television. There is a commitment to continue that investment in technology. This will facilitate business development across the many channels in which we operate.

Our digital technology supports television and radio channels. Our broadband services deliver complete end-to-end communications and solutions for Internet, data, and voice. Our offering in the telephony domain including VoIP (Voice over Internet Protocol) enables us to offer an expanded range of services to meet the needs of our customers. Customers can take advantage of technology driven products and services from a provider that has created cost-efficiencies and intra-business synergies.

Our entertainment and communications position is also future-ready. We can introduce new products and services that are based on these technologies. Our boxes are unique in the Middle East. They are the only boxes in the market that already equipped with modems, and therefore, they are interactive ready. We have launched virtual interactive applications such as the seven day electronic program guide. There are other EPGs (electronic program guides) in the region, but with different non-standardised STBs (set-top boxes), it can be very cumbersome for viewers.

We want to launch additional interactive services such as polling, voting, impulse PPV (pay per view) and chat. We are also planning to launch the first SVOD (satellite video- on-demand) product in the market in the near future. We aim to launch this before the end of this year.

SatelliteNews: What are Orbit’s plans in the PVR arena? Do you think Showtime will benefit by being first to market here?

Abdulhadi: As far as launching PVR is concerned, Showtime has done that, but, one must remember that, standard PVRs have been in the Middle East market for the last five years having been introduced by equipment manufacturers from China, Korea and Europe. At Orbit, we already have a PVR solution but we have decided to withhold its launch as we believe value-added PVRs that are SVOD capable would be better accommodated by the market. We have the solution, but we are adopting a wait-and-see strategy.

Satellite News: Are you planning on bringing higher capacity PVRs to the market this year? What about HD PVRs?

Abdulhadi: On the STBs, we have invested considerably. We provide a proprietary STB to the viewer. We don’t use the card system. Our boxes have the chips embedded in them. This is a unique proposition. The PVR when launched will represent the high-end of our box strategy.

As I said, we are in the wait-and-see mode. The solution is ready. It is a matter of pressing the button. We expect to press the button this year. All the indications are positive and the plan is to launch the STBs later this year. The box will have an 80 GB capacity, but the options are still open.

Satellite News: Do you feel the market in terms of premium customers is maturing? Will you look to focus more on the low end of the market?

Abdulhadi: The market is at a very early stage and still has a long way to go before it matures. Pay-TV penetration in the Middle East is still very low by any standards. Orbit’s packaging and strategy continues to target the middle- to upper-income bracket audience. We develop and acquire our content with this in mind. We don’t believe the market has matured for us. Plus, you also have the factor of a large and growing expatriate population. Local population rates are also growing. Economies are growing. These very positive indicators clearly demonstrate great potential for us.

Satellite News: What are the major content challenges this year? What are your plans in terms of HD?

Abdulhadi: HDTV requires a lot of bandwidth and we are well placed to handle this because we have a sister company that has bandwidth on various slots over the Middle East, especially at 26� East and 7� West. This is really unique to Orbit.

In terms of our plans, we are in advanced discussions to launch HD over the Orbit platform. The service we plan to offer will be a sustainable service and we are making long- term content investments in this area.

Satellite News: What are the opportunities for Orbit to have its services delivered on platforms other than traditional DTH? Do you expect telcos in the Middle East to become more of a competitor going forward?

Abdulhadi: Of course, that is the nature of the business. In terms of IPTV, there are some very exciting opportunities for us. We currently have deals with all the IPTV operators in the region and will continue to support IPTV networks. In terms of having the licence to operate, we are currently in the process of launching our own IPTV service in KSA (Kingdom of Saudi Arabia). This is our largest market. We are currently building a fiber-to-home infrastructure through a group company, which will cover the Kingdom. We welcome the entry of the telcos into this arena. This provides more synergies for us and our content, especially knowing that Orbit produces 100 hours per week of exclusive quality Arabic content which is very advantageous to us, as it allows us to satisfy demand for programs targeting Arabic speakers, who represent one of our major customer segments in the region.

Our content is unique. Orbit offers Arabic entertainment, which is considered the best in the region. We offer very high quality Western entertainment. Orbit also provides news and sports services. We provide subscribers with the Saudi football league. We have also just launched NBA TV in the region. We have a very specialised kids package, which contains strong entertainment and information channels. We provide a large range of content which is unique in the region.

Satellite News: In Europe, we have seen deals between satellite operators and mobile operators. How would you describe the mobile television opportunity for Orbit?

Abdulhadi: This is a great opportunity as this is an additional revenue stream for us. As mobile operators become more sophisticated in the region and markets open up, there will be more opportunities. We are now beginning to see more deregulation and more players entering this market. In many markets there is more than one mobile operator. The telcos do not produce content. They acquire it and we are here to provide it to them.

Satellite News: How do you see the digital television landscape changing in the Middle East over the next 12 months?

Abdulhadi: In general, there continues to be growth of digital television. New FTA channels continue to be launched. On the pay-TV side, we continue to bring in new channels. We have several in the pipeline. We see the same approach by other pay-TV operators. There is a lot of content that is being offered both in FTA and pay-TV over the Middle East.

–Mark Holmes Contact, Nadine Usta, Arab Advisors, e-mail, [email protected] Lorna Damiani, Hill and Knowlton (for Orbit), e-mail, [email protected]