Why the EMEA Market is OTT’s Biggest Growth Opportunity

BlogMay 10, 2022

Don Howarth

Online video platforms (and other brands) operating internationally often choose to segment the global market into regional markets, where the most important markets in terms of size and purchasing power are the typically the Americas (USA, Canada, Mexico, South and Central America, and the Caribbean) and Asia Pacific (China, South Asia, Japan, South Korea, Australia, etc.).

As part of this practice, Europe, the Middle East, and Africa (EMEA) may be grouped into a single geographical market region that encompasses the United Kingdom, the entire European Continent (sometimes including Russia, though not always), all 18 countries in the Middle East, and the whole African continent from Tunis to Cape Town. 

Online video platforms recognize the importance of capturing market share in the wealthy markets of the Americas, and Asia Pacific. But for platforms that have already entered and succeeded in these markets, the EMEA presents itself as an untapped market with huge potential: the final frontier where massive revenue and subscriber growth remains achievable.

In this blog, we’re taking a closer look at the EMEA video market and the key OTT trends emerging as video platforms battle to win audiences and grow their market share in Europe, the Middle East, and in Africa.

EMEA Video Market Report

The EMEA market is characterized by significant diversity in language, culture, political beliefs, and both social and economic development.

For this reason, each of the major regions within the EMEA market may be analyzed separately to understand its unique regional and market characteristics, and to identify the best opportunities for growth. 

Europe

The European Economic Area represents a single market for OTT video platforms with 30 member states and a combined population of 453 million people.

Over the past decade, online video streaming in Europe has exploded in popularity, following a similar growth trajectory as in the United States. Over-the-top (OTT) video revenue in Europe grew from just €1.3 billion in 2013 to €14.5 billion in 2022, with the majority of growth coming from Subscription Video on Demand (SVOD) services

Netflix and Amazon Prime Video are the European SVOD leaders, with 55 million and 29 million European subscribers respectively, followed by Disney Plus (10 million European subscribers), sports streaming service DAZN (4 million subscribers) and the European service Now TV (1.9 million subscribers).

The European video streaming market is expected to grow by 18% annually over the next decade, thanks to growing internet connectivity, increased demand for online video content, improvements to smartphone and cloud technologies, and ongoing investments by OTT streaming services in original and licensed content for European audiences.

Middle East + North Africa (MENA)

The Middle East + North Africa (MENA) market region includes 23 countries (Algeria, Bahrain, Djibouti, Egypt, Iraq, Iran, Israel, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, Turkey, the United Arab Emirates, and Yemen) with a combined population of nearly 600 million people. 

Despite its significant population size, OTT video streaming has remained a fledgling market in the MENA region with just over 17 million total SVOD and OTT subscribers at the end of 2021. 

The slow rate of market penetration in MENA may be attributed in part to lower rates of smartphone adoption in the region, slow Internet speeds outside the GCC countries, and poor availability of native-language content for diverse viewers. Credit card penetration is also low in the MENA region, creating an additional barrier between potential viewers and an SVOD subscription.

Netflix is the most popular SVOD service in MENA with an estimated 6,827,000 subscribers at the end of 2021. Other popular platforms include Starz Play (1.9 million subscribers), Amazon Prime Video (1.4 million subscribers) Shahid VIP (1 million MENA subscribers), and OSN (500K subscribers). Disney Plus has not entered the MENA market, but plans to launch its service in the Arabic countries, Turkey, and Israel beginning in 2022.

Annual SVOD revenue in the MENA region is expected to reach $4 billion by 2027, but realizing that growth will depend on two factors:

  1. Making OTT video services more accessible for end users (e.g. improving Internet infrastructure, expanding access to smartphones, and simplifying payments), and
  2. Creating or licensing original, high-quality, local content that appeals to the diverse values and cultures in the MENA region.

Sub-Saharan Africa

Sub-Saharan Africa (SSA) is a market region that includes all African countries South of the Sahara Desert. The region is home to a total of ~1.14 billion people, or 13% of the world’s total population.

Market penetration and growth for online video platforms has been markedly slow in SSA, with just 4.89 million total SVOD subscriptions at the end of 2021. Just like in North Africa and the Middle East, this can be attributed to low levels of economic development, poor broadband penetration, and high Internet access costs. More than 50% of OTT revenue in SSA is generated by its two most economically developed countries: Nigeria and South Africa.

But while access to broadband is poor, many areas without wired Internet have access to 3G mobile networks that may be used to access video content. As Africa continues to develop its 4G and 5G networks, OTT providers are partnering with Telecoms and mobile operators to offer data bundles and grow their subscribers with a mobile-first strategy.

Netflix is the frontrunner in the SSA SVOD market, with just over 2.7 million subscribers as of 2021, while platforms Showmax (804K subscribers) and Amazon Prime Video (599K subscribers), have also grabbed a substantial share of the market. Disney Plus, which does not currently operate in Africa, is expected to offer its streaming service in South Africa beginning in May 2022.

Analyst reports indicate that SVOD subscriptions in SSA will grow to more than 13 million by 2027, with Netflix capturing most of that market growth while other brands compete for their fair share.

The Massive Potential of the EMEA Market

The EMEA market region holds the majority of future growth potential for the OTT video streaming market. While the total number of OTT subscriptions in the United States is greater than its population (354 million subs at the end of 2021), subscriber numbers in the EMEA remain vanishingly small relative to the region’s population size.

And while the SVOD market segment will continue to grow in Europe, Africa, and the Middle East, we also expect Direct-to-consumer (DTC) streaming, Pay TV platforms, and AVOD services to see substantial growth in the EMEA market region.