As it passed the five million household mark for the first time, and despite harsh economic conditions, the Middle East and North African (MENA) pay-TV market saw record growth in 2016, according to IHS Markit.

The analyst found that as the number of pay-TV households passed the landmark figure, this represented 8 percent year-on-year growth, driving revenues to rise 15 percent year-on-year to USD 2.27 billion. IHS Markit expects that growth will continue, with pay-TV homes reaching seven million in 2021. Revenues will almost double to USD 4.03 billion in 2021.

Two satellite operators, beIN Media Group and OSN, dominate the market, controlling over three-fifths of subscribers and over 55 percent of revenues for the last seven years. 2016 marks the first full year that beIN Media Group and OSN competed directly against each other.

“The Middle East and North Africa region is one of the fastest growing regions for pay-TV, in both subscriber numbers and revenues,” commented IHS Markit senior analyst Constantinos Papavassilopoulos. “The launch of services such as Netflix and Amazon Prime is fuelling the market and is a good sign for further growth.”

The data also found that total online video market revenues in the region stood at USD 500 million in 2016, a year-on-year growth of 51 percent from 2015. IHS Markit expects total online video revenues to grow by more than USD 1.5 billion by 2020.

Advertising was the most successful online video business model representing nearly two-thirds of total revenue in 2016. “The prevalence of advertising is corroborated by YouTube’s huge appeal in the region,” Papavassilopoulos said. “Countries such as Saudi Arabia are second only to the US in terms of time spent per person watching videos on YouTube.”

However, IHS Markit forecasts that going forward, subscription video will drive revenue growth, gaining ground in the Middle East and North Africa region at the expense of advertising, with almost half of total online video revenues coming from online subscription services by 2020. “Subscription services in the region saw 137 percent growth in 2016, spurred by the launch of Netflix and strong performance from local players,” Papavassilopoulos added. Subscription accounted for over 30 percent of the total online video market in 2016, and is expected to contribute 45 percent of total market revenues by 2020. – Rapid TV News