'Low-pay' TV firm targeting tens of millions of Arab viewers

A Dubai-based TV company is targeting “tens of millions” of customers in the Arab world, aiming to sell monthly subscriptions costing the same as a cup of coffee from Starbucks.

But My-HD, which currently offers about 30 channels from various broadcasters, faces a challenge selling TV packages in a market dominated by free channels.

The company launched last July. Although it does not disclose how many subscriptions it has sold so far, it has high hopes for the future.

“I think ultimately it could be tens of millions of viewers,” said Cliff Nelson, chief executive of My-HD Media, in an interview with Al Arabiya.

My-HD has formed agreements with set-top box manufacturers to pre-install its basic package of about 30 high definition (HD) channels, which are available free for the first year.

“Today roughly 10 to 12 million set-top boxes are sold per year in the Middle East. Even if we get 10 or 20 percent of those sales, that’s a very sizeable number,” said Nelson.

After the first year, viewers pay around Dh199 to renew the basic package, which includes several channels operated by MBC Group. Al Arabiya is also part of MBC Group.

Viewers can also subscribe to add-on channels, currently limited to a Filipino package costing Dh89 a month, through a deal with the GMA network. The channels were previously carried by OSN, which replaced them with rival Filipino channels owned by ABS-CBN.

Despite claiming to be a ‘low-pay’ TV service, My-HD faces the challenge of persuading viewers to part with cash in a region dominated by free-to-air channels.

According to the Arab Media Outlook, there are more than 530 free channels beamed across the Middle East and North Africa. Just 8 percent of households pay for TV packages from the likes of OSN, Al Jazeera or Abu Dhabi Media.

However, regional revenues from pay-TV subscriptions are forecast to grow from $591 million this year to $703m in 2015, the Arab Media Outlook found.

Nelson said the ‘low-pay’ model – as distinct from what he called “premium” paid-television operators in the region – could prove a draw to existing satellite-TV viewers looking to upgrade to HD.

“Satellite is the dominant form of television delivery in the Middle East. But with over 40 million satellite households, there is no basic cable package so to speak. So that’s where we intend to be, versus the premium pay-TV providers that are charging anywhere from $55 to $110 a month.”

Cliff Nelson explained the ‘low-pay’ business model further in an interview with Al Arabiya

Cliff Nelson, chief executive of My-HD Media

Q. The Middle East television market is dominated by free channels. How are you going to combat consumers’ reluctance to pay for TV?

We’re using a very similar strategy that [television broadcaster] HD+ has successfully used in Europe. Our plan is to be able to offer about 30 to 40 channels for free with the set-top box. In the second year, if you want to renew [the basic package] it will be extremely cheap, about Dh199 per year. It will literally be the price of a medium-sized Starbucks coffee per month, which anyone can afford. Even the taxi driver in Egypt can afford Dh15 a month. And then packages like [the Filipino TV channels] will be an add-on.

Q. How many subscribers do you have?

That’s confidential information. We essentially began with our soft launch on July 11, 2012. And our hard launch will begin [this month], essentially with the launch of our Filipino channels. Plus we’ll be announcing a lot more channels later on during May.

Q. Why did you choose to target the Filipino community with your first add-on channel package?

It’s the second-largest ethnic group in the Middle East after the [South Asian community]. Frankly, creating an Asian package at this time is not that attractive because of the fact that the presence of Dish TV boxes, which almost every Asian has. The cost is around $10-$11 a month for over 250 channels, including every sports rights known to man: all cricket rights, American football… you name it. That’s one reason why we’re not interested at this time in an Asian package.

Q. How do consumers get My-HD?

We’ve licensed over six set-top manufacturers, with Humax being one of the largest ones… And we’re very close to concluding with a European manufacturer as well. We started in July 2012, but that was only with Conax boxes. The whole idea is that you buy the box, and included with the box you get these 30-40 channels. Many people think ‘why do I want to pay for an HD channel, it’s the same content?’. That was even my reaction until a few years ago. But when you experience HD, then it’s very difficult to go back. It’s like when you got a DVD, and there’s no way you could watch a VHS tape any more.

Q. Do you still get the standard definition (SD) channels via the satellite boxes?

Of course. You still get thousands of channels from as many satellite receivers as you can hook up to.

Q. Why should TV companies broadcast through My-HD?

If you look at most other markets in the world, the channels are getting a duel revenue stream. They get the traditional ad-sales revenues, and they get a low-pay revenue stream. Even if they get 1 cent of revenue per subscriber in the United States, you times that by 90 million households, and that’s a lot of money still coming in.

Q. Is My-HD going to change the market in the Middle East, or will it remain a niche player?

I think it will change the market. It will offer the consumer a better quality product for a far cheaper price than it’s been paying to date. And at the same time, it will offer the major broadcasters the opportunity to finally move into a low-pay proposition. Even though it’s a small revenue stream per subscriber, it still adds up if it’s the masses. That will enable them to provide even better programing, invest more money in programing, so the consumer will win.

Q. Aside from the Filipino TV package, what other bundles are you looking to offer?

We’re looking to cooperate with any of the existing pay-TV operators in the region… when we’re ready, we will announce it. We just signed four HD channels from Al-Nahar network in Egypt, exclusively.

Q. Are there any negotiations with international channel networks?

There are, but I can’t disclose them right now.

Q. Who is your target market?

Our target group is the mass market [that] likes the largest Arab-speaking networks in the Middle East like MBC, Al Nahar and hopefully some others to come shortly. Anything that is semi-controversial we’re not interested in. It’s family-safe viewing – nobody will ever have to worry about the children watching any channel on My-HD.

Q. How do you plan to compete with the likes of OSN?

I don’t view OSN as a competitor in any way. We’re not worried about people who are willing to pay $55 or $110 a month, that’s not our target group. We’re targeting the [majority of] households that don’t have any pay-TV but they would like to.

Q. Can you change the TV-viewing habits in the region?

I don’t think we’re necessarily changing the habits per se. I think it’s more that we’re offering something that doesn’t exist today. We’re really filling a vacuum. What we’re doing exists in almost every developed television market in the world.