(21 February 2009 3:00 pm)

MUMBAI: Due to rising incomes and greater competition, the pay-TV market in Africa and the Middle East (AME) will enjoy the world's highest growth rate over the next five years, says a new report by international market research firm Pyramid Research Inc.

The report, “Pay-TV in Africa and the Middle East: Early-Stage Market Prepares for Expansion,” suggests that subscriptions in the region is increasing at a CAGR of 13 per cent and total regional pay-TV revenue will almost double 2008 levels by year-end 2013.

It also analyses the growth potential for pay-TV services in AME, as well as the influence of current market conditions, new licensing regulations, and new technologies.

The 14-page report identifies the main obstacles to pay-TV adoption in the region and points out the key market developments that would enable more aggressive growth, outlining some of the initiatives taken by regulators and operators in three African and Middle Eastern markets: Nigeria, Saudi Arabia, and South Africa.

"Due to limited competition, the difficulty of obtaining content and the lack of an affordable mobile pay-TV platform, pay-TV markets in Africa and the Middle East are currently dominated by a small number of direct-to-home (DTH) operators," notes EMEA senior analyst at Pyramid Research and author of the report Dearbhla McHenry.

Growth will accelerate significantly as regulatory changes and rising incomes enable new pay-TV entrants to begin tapping the region's very underpenetrated pay-TV market.

"Over the next five years, we expect these positive changes in the market environment to improve pay-TV subscription adoption rates in the region, leading to an overall CAGR of 13 per cent through 2013 and a total of 27.5 million subscriptions by year-end 2013," says McHenry." Although infrastructure shortcomings and limited content availability will continue to affect growth in the short term, we expect total regional pay-TV revenue to reach $8 billion by 2013, almost double 2008 levels."

Increasingly, regulators in the region are choosing to award "universal" licenses rather than sector-specific licenses, a trend that makes it possible for mobile or new fixed operators to consider adding pay-TV services to their offerings.

Not all converged networks will translate directly into IPTV potential; however, nationwide IPTV-ready fiber networks are being planned in wealthy markets, while operators in less wealthy markets are considering deploying fiber in at least the wealthier areas of major cities to enable triple-play bundles.