Dubai: OTT (over the top) video offers strong growth opportunities in the Middle East, and the collaboration between telco operators and content distribution networks can boost revenue for both, industry experts said.

OTT is the delivery of content like Netflix, icflix, etc, over the internet direct to home over telecom operators’ network infrastructure without paying fees.

“Telco operators are facing challenges because of the growth in OTT services due to the big drain in their network,” said Christophe Firth, senior manager at the management consulting firm A.T. Kearney.

He said the OTT video market in the Middle East will be worth $1 billion by 2020.

“OTT is here to stay. Video compression rates are improving, broadband rates are dropping, devices are becoming more affordable, so OTT will continue to grow,” said Ali Ajouz, managing partner at Sawa Media.

HBO, Verizon and Dish are expected to announce OTT video services in the US next year.

In the region, Firth said that telco players do not have much in terms of OTT.

OSN has OTT service like OSN Go targeted at non subscribers and beIN Sports has OTT services in parallel with DTH (direct to home) services.

“Telcos can strike deals with OTT players and that is the only way to go as they [operators] have invested huge money on their network infrastructure,” he said.

“IPTV [internet Protocol television] has dedicated line but OTT does not, so quality of the transmission is not great. In the US, Comcast has signed a deal with Netflix to guarantee quality of service across the network. We can see more of these happen here [region] as more telco players are expected to strike deals with big OTT players to guarantee quality of service,” Firth said.

Ajouz said that expensive internet charges and limited broadband speeds are challenges to consumers, so collaboration with telco operators are a must.

Free-to-Ai r channels are still the king in the region despite the growth of Pay-TV market.

There are 800 free-to-air and 237 pay-TV channels in the region.

“People in the region do not like to pay for the online content. Getting the revenue from these people are quite difficult as they don’t have credit cards and bank accounts,” Firth said.

According to Ovum, the number of pay-TV subscribers in the Mena region will increase from 10.6 million in 2013 to 15.2 million in 2019 and revenues will increase to $3.8 billion in 2018 from $2.6 billion in 2013.

He said that 27 million watch pay-TV services in this region but only seven million actually pay for them.

“The game is still open and there is potential for all types of companies to be winners,” he said.

According to Informa Telecoms and media, UAE has 1.06 million IPTV subscribers as of second quarter of this year and 494,000 DTH subscribers.