Digital Arabic Content Market: Size, Challenges and Solutions
In November of 2012, the United Nations Economic and Social Commission for Western Asia, or ESCWA, published a report that focuses on digital content creation and consumption in the Arab region entitled “The Status of the Digital Arabic Content Industry in the Arab Region.”
The document aggregates statistics and findings on digital content, compares global and regional statuses, pinpoints areas of weakness, and concludes with a list of recommendations. And although the report was published in 2012, a large part of it deals with projections and estimates for the coming years. It also presents an alternative, detailed mechanism in assessing the market for years gone by, offering fresh insight into an area that suffers from a lack of proper measurement tools and documentation. Finally, the list of recommendations, we believe, is still relevant to the current state of the market and needs to be seriously considered.
More on the subject, be sure to check out our upcoming summit. The ArabNet Riyadh 2013 is the largest gathering for digital professionals and entrepreneurs in the Kingdom, with a focus on digital Arabic content development in the GCC and Saudi market.
Below are highlights of the data, observations, and conclusions available in the report.
Defining Digital Arabic Content
The report starts with defining digital Arabic content, which takes many forms and serves several functions. It is as follows:
Digital Arabic Content: Any content in Arabic represented in digital form on the Internet (or on CD, DVD and other formats). It includes web-sites, portals, and e-services, as well as audio and video content. It also includes software, databases, open source products supporting Arabic language functionalities and tools, such as, but not limited to, Arabized software interfaces such as word processors, Arabic language processing software such as speech and character recognition programs, search and translation engines, etc.
Secondly, it also identifies what constitutes the digital Arabic content industry as the following:
Digital Arabic Content Industry is the collection of DAC related products and services generated, produced or distributed by organizations and enterprises of all sizes, as well as start-ups and individuals which enable access, use and exchange of Arabic content.
Global Trends & Issues
Based on a report by Price Waterhouse Coopers (PWC), the global content market for 2011 was estimated to be just below $3000 B and is predicted to increase to $3800 B in 2015. The digital share of entertainment and media spending stood at 27.9% in 2011, and is expected to rise to 33.9% in 2015.
The growth in this domain is largely dependent on connectivity and affordability. The rise is also due to the emergence of new business models: subscription, advertising, and contractual.
The report also notes that the industry is economically concentrated, which is the result of several factors: big players’ access to very large venture capital and stock markets and privileged access to large markets.
“The major players set then the pace and the rules of the market, as well as the business models, on the global and countries’ levels. Most of emerging businesses need to adapt and compete in this environment. Often, their best fate, if they are successful, is to be bought off, largely overvalued, by one of the majors.“
Governments so far seem to have failed to address this issue. They do not help create favorable market environment and business conditions for an emerging and rapidly changing digital industries and services landscape, which is mostly made of small medium enterprises.
Estimating the Size of the Local Market
A Price Waterhouse Coopers study – Global Outlook of E&M 2011 – 2015 – is used to estimate the digital content in the Arab world based on global models. Here are the global figures for entertainment and media, internet, advertising, and consumer/end user.
The size of the Arab content market is assumed to be proportional to the percentage of available content, which is generally believed to be around 3%. Local figures would then be:
Estimates for each segmented is then applied to get the figures for digital content. 16% in 2011 and 20% in 2015 for entertainment and media and consumer/end user markets. 60% of Arabic content is assumed to be online. The region’s portion of internet advertising is assumed to be 3%.
So the values for the digital Arabic content is estimated to have been $18 billion in 2011, and is predicted to hit $28 billion in 2015.
A key issue to for digital content is monetization. In a survey by the Arab Media Outlook, respondents pinpointed the main difficulties associated with monetizing content. 45% noted that the wide availability of free content was a cause. 39% cited the lack of audience and circulation measurement, 36% blamed the quality of the content produced, 16% reported piracy.
The industry also suffers from significant difficulties in attracting development funding, venture capital, project financing and enterprise investment. Due to low return on investments, this issue plague both low and high income countries.
Content players that rely on advertising suffer from the concentration of ad market and low levels of ad spending on new media, whereas those that charge for subscription suffer from low revenues average citizens and their low access and use of banking services.
The study concludes with a number of recommendations. These include:
- Improving the affordability and penetration of broadband, particularly in less privileged areas.
- Establishing of national and regional foundations that facilitate financing, provide advice, and monitor and benchmark progress.
- Encouraging the banking sector in introducing venture capital support for start-ups and the creation of SME in DAC industry sector.
- Supporting and funding research and development in computational linguistics in order to produce tools that ease the process of producing grammatically correct text for translated content.
- Encouraging universities to partner with the industry, incubators and professional associations in designing academic and professional courses in digital content development and processing
- Investing in a regional partnership to develop automated tools for optical character recognition
- Encouraging the establishment of content industries for e-Books and e-Learning in the Arabic language
- Launching regional DAC awards for individuals, the business sector and government institutions
- Launching an awareness campaign on the beauty and wealth of the Arabic language, its heritage and culture