The media industry in Abu Dhabi has witnessed a surge in investment recently as sector infrastructure is developed to support the expansion of local production and content creation. This includes both physical infrastructure and human resources capacity. Sector expenditure is on the rise as well. Local English-language daily The National reported in May 2015 that direct spending on television and film production was expected to contribute an estimated Dh400m ($108.9m) to the UAE economy over the next five years, as well as creating more jobs. According to Noura Al Kaabi, CEO of twofour54, the emirate’s media free zone, around one-quarter of companies operating in the media zone are UAE-owned, and their impact on the local economy is already clear.
Down The Line
In a study commissioned by the Abu Dhabi Film Commission (ADFC) in 2013, PwC found that every Dh1 ($0.27) invested by the Media Zone Authority (MZA) in the zone’s rebate programme, which is designed to encourage film production crews to shoot locally, translates into a Dh4.50 ($1.22) boost to GDP. The study further found that the total economic impact of the zone’s rebate programme would be Dh82m ($22.3m) in 2014. In May 2015 MZA announced that it was restructuring its film operations, and that it had earmarked over $100m to invest directly in film and television productions in Abu Dhabi over the coming five years.
Awareness of Abu Dhabi as a location for filming has grown significantly in recent years, largely due to the high viewership figures for films and television series shot in the emirate, and it is becoming clear that the sector’s momentum is building. PwC estimated that Abu Dhabi will receive an additional 300,000 visitors each year by 2020 simply due to interest generated by films set or produced in the emirate.
Setting The Scene
The twofour54 free zone was launched in 2008 as a platform to support the development of the local media industry and encourage private-sector-led Arabic-language content creation. The initiative also falls within the government’s broader strategy for economic diversification, Abu Dhabi Economic Vision 2030, which among other things aims to establish the emirate as a regional centre for culture. The zone’s remit thus includes laying the foundations for a sustainable industry that not only attracts top-name, high-quality projects and crew both nationally and internationally, but also translates into a stronger local production capacity with a regional and global reach.
Major draws in 2014 and 2015 included working with the production crews of “Star Wars: The Force Awakens”, “Furious 7” and BBC’s “Top Gear” series, among others. This has resulted in direct infrastructure development and technical acquisitions, along with an evolving regulatory landscape. Together this means greater economies of scale, more local capacity, and government support for increasing efficiency and strengthening Abu Dhabi’s position as a media centre. Paul Baker, executive director of film and TV services at twofour54, told OBG that the “joined-up” functionality of local authorities and other entities included in the media zone means a more supportive atmosphere for production companies.
A major driving force behind twofour54’s growth and its impact on the local economy is its focus on content creation. This includes an integrated approach towards talent development and media production. A two-fold approach is at work here, as Baker explained. First, infrastructure development related to the film industry is already attracting companies, as seen with the recent big-budget productions that have been filmed in the emirate. Second, twofour54 is looking to ensure that other media work continues even when productions are not in progress. This approach to a “chicken and egg” situation, Baker added, is now seeing positive gains, though there is more to be done. As a result, vendors and freelancers are reaching out to twofour54 and enquiring about working in Abu Dhabi, which is adding to a growing base of industry professionals. “With a structured crew base that can take things to the next level, twofour54 is completely focused on becoming a global production centre,” Baker told OBG.
Recent projects have put the spotlight on Abu Dhabi’s production environment. This has meant new physical infrastructure is already in place for future use. In tandem with this, twofour54 has a freelancer licensing programme that makes it easier for foreign professionals to obtain visas to take part in film projects on a freelance basis.
MZA, for its part, has been promoting the creation of local talent and production capacity through the SANAD film fund, which offers funding for projects during development and post-production. In supporting the creation of Arab and Emirati content, the fund applies to the development of both full-feature and documentary films. Additionally, twofour54’s internship programme provides opportunities to be involved in film production.
Attractive Incentives
The ADFC offers a 30% cash-back rebate for qualifying expenditures on projects filmed in Abu Dhabi. This applies to flight costs and accommodation for crew and other production spends. Abu Dhabi also benefits from a secure work environment, which makes it increasingly attractive compared to other traditional filming destinations, Michael Flannigan, head of the ADFC, told OBG. According to Baker, the media zone’s 30% rebate can also offset differences in price when compared, for instance, to locations such as Lebanon.
Post-Production Facilities
While Abu Dhabi has made significant gains in terms of media offerings in the past several years, the focus moving forward will be on further expansion of the network of resources needed to support the continued growth of the industry, according to Flannigan, which will include everything from costume design companies and hair stylists to makeup artists and camera operators. In May 2015 twofour54 announced it had renovated its post-production facilities and introduced a one-stop shop that offers modern technical capacity for editing, audio and colour correction, along with a more collaborative-style workspace that is meant to encourage innovation and teamwork.
In addition to post-production support, the free zone provides workshops and support during the pre-production phase, including access to its facilities and databases through its Creative Lab initiative. The ease with which companies are able to bring in their talent and set up shop is directly supported by twofour54, according to Cairo Arafat, managing director of Abu Dhabi-based Bidaya Media, which creates educational entertainment for children and is the company behind the new locally produced Arabic-language version of “Sesame Street” (“Iftah ya Simsim”). The programme’s producers were drawn to Abu Dhabi for the services provided by twofour54, along with the “good rates, Creative Lab and the production teams, [and] post-production” services, as well as the logistics solutions, according to Arafat.
Bollywood
While regional productions remain the chief source of revenue, filmmakers from India are increasingly looking to Abu Dhabi as an attractive destination. This is largely due to the support of local authorities with issues such as the road clearances required to film big-budget action scenes and other logistical and permit needs. Flannigan sees the ADFC’s close collaboration with the government as a plus for overseas producers, as it smooths out the permission process and ensures both transparency and efficiency. With Mumbai only a relatively short flight away, two other attractive features for Bollywood film productions are the economies of scale offered by Abu Dhabi and the ease of transport between India and the emirate. Cost-effective and convenient, this relationship is expected to become even more profitable in the coming years, according to Baker.
New Partnerships
MZA and twofour54’s diverse connections are underscored by important partnerships that include firms operating outside of the immediate field of media. For example, Flat6Labs, a start-up accelerator, benefits from its free zone location to help jump-start new businesses for local and foreign entrepreneurs, which could have positive knock-on effects for filmmakers looking to work with Emirati firms. The company’s fast-track process includes mentorships with volunteers from leading UAE businesses and turns what would typically take two years into a four-month cycle. Its target is the $30,000-50,000 investment range, with Flat6Labs then taking an equity stake of between 7% and 15%, on par with global best practice, as Ramzy Ismail, the firm’s project manager in Abu Dhabi, told OBG. The company launched its first branch in Cairo in 2011 and has successfully completed its first cycle in Abu Dhabi, which began in March 2015. Over the coming four years the accelerator plans to see some 80 startups pass through the programme, and eventually to receive funding from larger-scale backers.
In 2014 Image Nation Abu Dhabi, the emirate’s largest creator of content, invested Dh30m ($8.2m) in local production as part of its drive to “build a sustainable film and television industry in Abu Dhabi and the UAE”. The company largely focuses on producing local and international films, documentaries and television content – and, with the 2015 launch of Quest Arabiya, a new Abu Dhabi-based channel, is set to become a pan-Arab broadcaster. In May 2015 Mohamed Al Mubarak, chairman of Image Nation, told The National, “Now that Image Nation Abu Dhabi has become part of MZA, our efforts towards building the media sector can be more coordinated and effective.” One result of Image Nation and twofour54’s cooperation was the production of successful feature film “From A to B”, as well as the production of documentaries such as “He Named Me Malala”.
Creative Lab
The Creative Lab is an online membership initiative developed by twofour54 as a mechanism for individuals looking to enter the media industry. As reported by The National in July 2013, the initiative supplies project funding, helps source personnel and can serve as a production company. Transitioning into a physical space, today the lab provides guidance, training and various other forms of support for thousands of members. The lab membership covers film, television, music, community projects and apps, among other types of media and projects. Opportunities available through Creative Lab also include volunteering and job shadowing, along with internships, workshops and short courses. Project funding is available as well. By offering more than just resources, Creative Lab provides a community full of people and many opportunities for collaboration on projects. As a result, volunteers can develop their skills in a number of ways, whether by working with others in the community or shadowing industry experts on big-budget films. Creative Lab also stages workshops and guest speakers for members.
Abu Dhabi Media
The emirate’s media giant, Abu Dhabi Media, relaunched several of its outlets in early 2015, including its Abu Dhabi and Al Emarat channels, as well as its Al Ittihad newspaper. As part of the relaunch, the company will place a greater emphasis on local and regionally produced drama series, along with animated children’s programmes. The network diversified its offerings with 13 channels, and new, dedicated sports and drama channels. Abu Dhabi media will also focus on cultural heritage by airing traditional regional sports and locally produced Arabic-language series. Additionally, the network will also continue to provide opportunities for professional development. According to Abdul Hadi Al Sheikh, executive director of television at Abu Dhabi Media, this includes training and mentorship programmes, internships, and other forms of outreach and professional development meant to develop skills and build employees’ capacity within the emirate. Al Sheikh told OBG that the initiatives represent “a great step towards building local talent”.
Content Remains King
Local content is increasingly at the forefront of development efforts in the sector. Al Sheikh emphasised that local content consistently outperforms that acquired from abroad. In keeping with the goals of Economic Vision 2030, local content development also serves to engage the emirate’s production industry, with a very high return on investment, according to Al Sheikh. Furthermore, this focus on local content does not end when a programme has finished airing. Repurposing for resale to other broadcasters, or for in-flight entertainment, adds to the value of local content. “Local production content increases to 85% when including these additional revenue streams,” said Al Sheikh. Meanwhile, initiatives by the likes of Abu Dhabi Media and twofour54, as well as academic programmes and the growing use of new technologies, are all contributing towards expanding the local talent pool. In addition, Abu Dhabi Media benefits from back-end processes and skills development promoted by twofour54.
Social Media & Advertising
Social media platforms are very popular in the UAE and are widely used by citizens and expatriates alike. According to the UN report “The State of Broadband 2015”, released in September 2015, the UAE’s mobile broadband subscriptions stand at 114 per 100 people, with 90.1% of households having internet (fourth place globally) and 90.4% of individuals using the internet (15th globally). Fixed-broadband subscriptions per 100 people stood at 11.5. According data from Global Media Insight, in the first quarter of 2015, some 56.4% of people living in the UAE (5.4m) had active social media accounts and 48.02% (4.6m) had active mobile social media accounts. According to app developer and website design firm Go-Gulf, the two biggest age groups for social media usage in the UAE are those aged 18-24 and those aged 25-34. The youth cohort is particularly large in the UAE, where more than 75% of the population is below the age of 40 and around 34% is below the age of 25.
These high numbers of social media users are in large part driving a rise in internet advertising in the UAE overall. In late 2014 PwC reported that the UAE’s $299m internet advertising sector was set to increase to $735m by 2018, at a compound annual growth rate (CAGR) of 34.6%. According to PwC, this will be the fastest growth rate in the world, well above the anticipated CAGR of 10.7% globally. The UAE has also seen an imbalance develop between advertising spend on social media platforms and the amount of time spent by individuals when using those platforms, according to Yousef Tuqan Tuqan, chief innovation officer at advertising agency Leo Burnett MENA. “The fact that the UAE will have the fastest growing internet advertising is not a surprise,” Tuqan told The National in December 2014.
Spending On Ads
The “MENA Showcase” report released in July 2015 by the Dubai Lynx International Advertising Festival, in collaboration with Choueiri Group, shows that the UAE remains in first place regionally in terms of media advertising expenditure. The $528m in ad spending in 2014 equalled 12.81% of the total spent on regional media for that year, and this was expected to reach $566m for 2015.
Yet while the rise of smart devices is still propelling some media ad spend, newspapers led the way in spending in the first half of 2015, followed by outdoor advertising and television advertising. According to statistics released by the Dubai-based Pan Arab Research Centre, the first half of 2015 saw some Dh2.88bn ($783.9m) spent on advertising. Of this total, Dh1.45bn ($394.7m) went to newspaper advertising, while outdoor advertising brought in Dh495m ($134.7m) and television ads saw Dh286m ($77.8m). Rounding out the top five categories were cinema and radio, which showed spending of Dh113m ($30.8m) and Dh84m ($22.9m), respectively. According to Al Sheikh, spending on television advertising is showing consistent growth for the MENA region. “It is always evolving, in terms of both media content and how people reach that content, thanks to digital offerings,” Al Sheikh told OBG.
Digital reach has more than tripled in the last five years, according to Martin Newland, the former launch editor at The National. Traditional media still provides the bulk of revenue in Abu Dhabi’s newspaper space. However, with more and more people choosing to obtain their news online, Newland’s view is that digital and print ad rates are falling behind the times. What this traditional approach misses, he argued, is the value of “reach” through digital engagement with a modern audience.
Data & Circulation
A common challenge in Abu Dhabi’s media and advertising landscape is the lack of robust data. “The market is evolving and developing in terms of overall spending, but the data is not very mature,” said Al Sheikh. In terms of newspaper circulation numbers, the lack of auditing for some key titles means that accurate comparison of data is difficult. According to the “Statistical Yearbook of Abu Dhabi 2015”, local newspapers distributed in 2014 totalled 69.7m, up 0.5% on 2013 and up 34.7% on 2012. US auditing firm BPA Worldwide’s figures for the second half of 2014 gave Dubai-based English language daily Gulf News a circulation of 108,295, while Dubai-based Gulf Business had a figure of 23,264 and Time Out Abu Dhabi was recorded at 19,099.
E-Commerce & Gaming
According to Sarwant Singh, senior partner and practice director at consulting firm Frost & Sullivan, GCC states are likely to experience e-commerce growth of 40% by 2020. In February 2015 he told Gulf News, “The potential of e-commerce in the Gulf is very high and by 2020 e-commerce sales across GCC countries [are] expected to touch $41.5bn, which will be one of the highest growth [rates] across this industry worldwide.” For the MENA region more broadly, the firm expects e-commerce value to double by 2020, amounting by that time to an anticipated 5% of GDP, as compared to the current 2%. Gaming is another growth segment. A joint study released in late 2014 by Strategy&, MZA and twofour54 found that the gaming sector in the MENA region was growing faster than the world average. “To date, global games from international developers have captured the lion’s share of opportunity, roughly 90% of the Arab market,” the study reported. It also forecast that, within three to five years, some 15% of the market will be taken up by games tailored to local users.
Outlook
When it comes to growing international awareness of Abu Dhabi as a media centre, “people know we are in the game”, said Baker. Infrastructure gains in 2014 and 2015 are laying the foundations that will allow film and television producers to achieve greater efficiencies in terms of time and cost. Incentive schemes and collaboration with multiple government-funded agencies underscore this trend going forward. As the number of productions increases and global awareness of Abu Dhabi as a media production centre grows, this should have a significant impact in the short and medium term, helping to generate multiplier effects, as well as economic diversification.
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