What’s behind the growth of mobile digital content in the Middle East?

Juan Jose De La Torre, VP of Strategy & Corporate Development and Meghali Sharma, Competitive Intelligence Analyst at Intigral take a deep dive into the Middle Eastern mobile digital content market, and uncover the driving forces of its rapid growth.

The Middle Eastern telecommunications market is going through a transitional shift demonstrated by changing business models on the back of high smartphone penetration rates and a slow down in revenue growth. The business reality is that telco customer engagement models are evolving from subscriber acquisition to customer retention and now to customer experience management (CEM). This is because there is an evolving customer preference for data oriented services over traditional voice calling or mobile value added services (MVAS).

Juan Jose De La Torre, VP of Strategy & Corporate Development

The modern mobile customer is influenced by a “connected culture” brought upon by growth of smart devices and availability of high-speed mobile broadband. Consumers’ need to remain connected, informed and entertained continually, changing consumer consumption patterns and increasing demand of digital content has proven to be insatiable, thus creating a whole new set of VAS consumption behaviours – leading to the rise of digital mobile services both regionally and globally. Let’s explore some of the main factors contributing to the growth of digital mobile content in the region.

Rising Adoption of Smart devices

Uptake of “Smart” devices with high processing capabilities, large interactive touch screens, and desktop-like applications experiences are gaining traction in the region, especially among young and affluent customers. The region is now getting a lot of attention from vendors such as Nokia and Samsung who are working to “smart” up even the entry level devices and introduce feature rich smartphones at affordable price points. These smartphones when coupled with affordable data access plans are whetting consumers’ appetite for digital content and applications. Smartphone penetration in Middle East stood at 14.3% in 2012, which is expected to increase to 41% by the end of 2017.

Meghali Sharma, Competitive Intelligence Analyst

Affordable smartphone, data packages and launch of LTE

In seeking to maximize the digital mobile services opportunity, operators in the region are working hard to lure smartphone owners to subscribe to data access packages by bringing down the entry barriers. To this end, a plethora of 3G data packages are available, with various bundles, sachet pricing, off-peak allowances, and several other innovative tariff options. Moreover, most operators in the region have introduced attractive handset bundles and offer smartphones like Apple’s iPhone 4S and Samsung’s Galaxy SIII at subsidized rates when purchased with a contract.

Furthermore, a number of operators in the region have already launched LTE/4G services commercially such as STC (KSA), Mobily (KSA), Zain (KSA & Kuwait), Viva (Bahrain & Kuwait), OmanTel (Oman), du (UAE), Etisalat (UAE), while other operators like Qtel (Qatar), Vodafone (Qatar), Mobinil (Eygpt) are either testing LTE services or awaiting spectrum allocation to start network deployment.

Operator efforts to boost local content ecosystem

Regionally, telcos are contributing to digital content landscape through a number of initiatives. Firstly launch of operator-owned application store such as STC App Shop (powered by Intigral) and Mobily’s Universal App Store which aim to facilitate localized Arabic applications.

Secondly, operators, device and platform providers in the region are actively encouraging local application development through developer communities. These communities are aimed at providing skills training and support for development of applications. Applications developed under these programs are published by the network providers either on OS affiliated storefronts or their own independent storefronts and the revenue split is mutually agreed with the developer. Developers can also participate in various forums to gain knowledge and training about latest SDKs.

In January 2013, STC hosted the first “Sports Hackathon”, which provided amateur and professional developers a chance to develop sports applications. STC also organizes Developers Training Initiative (with support from Intigral) which is targeted at Saudi app developers and provides them training on application development and encourages production of local apps. Similarly in 2012, Qualcomm partnered with Mobily to organize events and offer application developers a combination of technology, resources, development tools and training, as well as creation of new mobile applications in Arabic language specifically for Saudi Arabia.

Initiatives for development and promotion of Arabic content

Demand of digital content has proven to be insatiable, creating a whole new set of VAS consumption behaviours.

A number of initiatives by several Arab countries for development of digital content will further eliminate the limited non-availability of Arabic content across platforms. For example, in Saudi Arabia, King Abdullah for Arabic Content Initiative has over 60 projects for developing digital content. Qatar on the other hand, established a Digital Content Incubation Centre to promote entrepreneurship related to the production of Arabic content and a Creative Commons affiliate in Qatar to encourage and protect digital creativity. In UAE, Twofour54 has two initiatives – a Creative Lab, which provides funding to promising ideas originated in the Arab world; and Apps Arabia, which will invest in mobile application and will act as an interface between application developers and those with ideas for application content. Similarly, ‘Badir‘, a technology incubator program launched by King Abdulaziz City for Science and Technology (KACST) in 2007 has been funding and supporting many start-ups projects related to mobile apps development.

Furthermore, Intigral is planning to launch a start-up incubator for the MENA region named “Afkar”. Besides supporting the level of innovation in the region, this platform will offer entrepreneurs access to Intigral’s industry expertise and access to a revenue pipeline in the markets that the company operates in. Overall, this aims to benefit the entire ecosystem.

The above factors have enabled the region to witness a visible shift from traditional voice calling, or mobile value added services, to data oriented services, thus laying a perfect foundation to what we call VAS 2.0.

At Intigral we believe that operators’ and mobile ecosystem players are yet to adopt models that understand the digital behaviour of their customers and therefore adapt the digital offering not only to the behaviour of the customer but also to their multi-device usage.

Ability to understand psychographic, geographic, demographics of consumers; improve quality of service, decrease network downtime and increase customer satisfaction, and moreover, effectively communicate with customers anytime, anywhere will be a key element in promoting the adoption of mobile content services over the next couple of years.  Utilizing digital customer analytics and enabling customer experience management (CEM) therefore appears at the center stage of a telco’s new business models for driving revenues for next-generation customers.

Our next blog will explore the potential use and benefits that a telco can achieve with analytics applied to digital services, products and behaviour, which can further contribute to promote digital mobile services such as applications, entertainment, health, and payments/banking among others.

Juan Jose De La Torre is VP of Strategy & Corporate Development and Meghali Sharma is a Competitive Intelligence Analyst at Intigral. You can connect with Intigral on LinkedIn and Twitter.