Covid-19 accelerates growth in digital entertainment

Dubai - Consumers in the region are taking more control of their own media consumption, faced with an ever-expanding range of channels and content

The Covid-19 pandemic has accelerated the shift towards digital entertainment, requiring companies across the UAE and Middle East and North Africa (Mena) region to change their business models to capture the growth in on-demand content.

According to a recent PwC report on the outlook for the entertainment industry in the Mena region, the damage to physical media spending, from cinema box office takings to concerts, corporate events and media advertising, means that revenues in the region are expected to fall by 8.3 per cent to $19.7 billion. However, spending is estimated to gradually recover to 2019 levels based on a successful Covid-19 vaccine being widely available in the region, and to continue to grow from 2022 onwards. Overall, entertainment and media revenues are expected to increase by three per cent in the region between 2019 and 2024, exceeding the two per cent rise forecast globally.

Fadi Komati, Technology Consulting partner at PwC Middle East, said that the Covid-19 pandemic and its after-effects have “pulled the future forward”, as consumers in the region take more control of their own media consumption, faced with an ever-expanding range of channels and content.

“This would not have been possible without the accelerated adoption of 5G technology in some markets, which has enabled governments to expand digital infrastructure such as high-speed broadband access, and content delivery networks to enable content streaming and new content consumption experiences at home and on the go,” he said. “Additionally, the advent of newer 5G technologies has provided opportunities to enhance government transparency and enabled new and more inclusive ways of engaging with the public.”

PwC’s report found that the pandemic has accelerated the adoption of streamed video content (OTT video) and music in the region and boosted the popularity of online gaming even further. In fact, when national lockdowns began, 50 per cent of OTT video subscribers increased the amount of time they spent watching. Digital audio – both streamed or downloaded music and podcasts – has also grown in popularity. In 2020, music-streaming platform Anghami reported a 25 per cent increase in music listeners, compared with 2019.

Another winning sector during the pandemic has been the online gaming sector. Gamers in the Mena region have spent 24 per cent more time playing in 2020 than in 2019, compared with an 11 per cent increase globally.

“The pandemic was a game changer for the gaming industry, with many more users being exposed to gaming as sports events and general leisure activity closed,” said Peter Garnry, head of Equity Strategy at Saxo Bank. “According to data on gaming consumption, the average American adult spends around an hour a day gaming socially online, and the streaming of e-sports is gaining popularity. A good indication of this came in 2019 when the CEO of Netflix said that the company’s biggest threat was not Disney or HBO, but that of Fortnite, one of the most popular games in the world.”

In 2019, before the Covid-19 pandemic emerged, the industry generated $120 billion in revenue and by 2021, it is projected that 2.7 billion people will be playing games on one platform or another. The industry, Garnry said, has benefitted a lot from smartphones allowing it to steal time from people commuting, or even when they have a spare moment.

“The gaming industry is a high-growth industry, growing revenue by 37 per cent in 2020, as the pandemic lifted demand for gaming as way to socialize and be entertained while many traditional leisure activities were closed due to Covid-19 restrictions,” Garnry said. “The future of gaming will see fierce competition as the highly profitable growth is luring big technology firms such as Apple, Google, Amazon, and Microsoft into the industry. The expectation is that VR/AI will become more dominant features of gaming in the future, but, so far, facebook’s bet with Oculus has not turned into the success everyone was predicting.”

rohma@khaleejtimes.com