Islamic video-on-demand gaining ground in a $49 bln world market

The market for video-on-demand content was estimated at $49 billion in 2015 and is expected to grow by over 8 percent per annum till 2026. The success of Alchemiya, the first online video-on-demand service catering to the Muslim market, and the launch of on-demand services by British Muslim TV show that there is demand for Islamic-themed content. What opportunities are there for a new player providing Islamic-themed content on demand?

HIGH GROWTH GLOBAL MARKET

The global video-on-demand market was expected to reach $49 billion in 2015 and is projected to grow at an 8.3 percent compound annual growth rate (CAGR) till 2026, according to an FMI market report. Growth is driven by increasing Internet and mobile penetration and a shift in viewing habits from pre-determined channel schedules to flexible viewing.

The market for video-on-demand is dominated by a few key U.S.-based players with revenues earned primarily from subscription fees. The largest provider is Netflix, whose revenue reached $6.8 billion in 2015, accounting for 13 percent of the global market last year. Netflix’s revenues come primarily from subscription fees.

Other players include HBO Go, launched by U.S.-based HBO, with revenues of $4.7 billion in 2014, and Hulu, a U.S.-based video stream service founded by NBC Universal, Fox, and ABC, earning revenues of $1.6 billion in 2015.

YouTube, the leading free video-sharing site, however, dominates the U.S. digital video ad market with an 18.9 percent share, U.S. video ad revenues totaling $1.13 billion in 2014, and over 1 billion unique visitors monthly, according to E-marketer.

ISLAMIC CONTENT

With Muslims contributing $107 billion and accounting for 6 percent of the global digital economy, there is an increasing demand for cultural and values-based content that is accessible on-demand. As for the landscape for online Muslim media, three distinct segments providing online video content have emerged:

Exclusive online subscription services

Alchemiya, launched and founded in 2015, is the first exclusively online platform to provide a video-on-demand TV service via web-enabled devices. Subscription costs $160 a year.

The company seeks to become a “go-to channel for showcasing the best of Islam” and has ambitious growth targets, including $120 million in revenues by 2020.

Alchemiya was able to raise $75,000 (60,000 pounds) on CrowdCube, a leading equity crowdfunding platform. 

Muslim television channels providing online subscription

From a global perspective, the landscape for Islamic themed television channels is highly fragmented. For instance, in the Middle East region, there are over 120 religious channels with a collective viewership in the “tens of millions,” according to a program description posted on America Abroad Media’s website.

A subset of these channels provides video-on-demand via their websites. Notable examples include British Muslim TV, which provides a subscription service at 9.99 pounds ($15) per month to access the largest collection of British Muslim and Islamic-themed content and entertainment.

Al Hijrah is a Malaysian channel that provides an online subscription service with free and premium content for 60 ringgit ($14) per year.

Established channels have a natural advantage in making select programs available online for a subscription fee in much the same manner as leading players such as HBO and Hulu. 

Freely-available video content

There are also over 40,000 free channels displaying Islamic content on YouTube, although many of these tend to rehash or replay videos from other channels. The top three channels are Talk Islam, The Daily Reminder, and Islamic Guidance.

Talk Islam has just over 330,000 members and 48 videos listed. Its videos are typically less than 10 minutes in length, and its most popular video, “Why I Hate Religion But Love Jesus,” has earned over 3 million views.

The Daily Reminder has just over 314,000 members and 760 videos. It also produces shorter videos, and its most popular video, “Awakening That Allah Love,” has just over 480,000 views.

Islamic Guidance has longer videos, typically over 20 minutes in length. It has just over 249,000 subscribers and 69 videos. Its most popular video, “The Minor Signs,” has just over 428,000 views.

CHALLENGES AND CONSIDERATIONS

There is a substantial opportunity to develop tailored content for millennial Muslims, and existing content may have a natural advantage in addressing it, but the landscape remains highly fragmented. As such, there are several key considerations.

Genuinely unique and attractive content for the core demographic

British Muslim TV and Alchemiya have both succeeded by creating content that appeals to the Muslim youth and goes beyond Islamic lectures to exploring the religion’s rich history and cultural diversity.

The ability to research the core market and produce content that addresses millennial needs will determine the ability to secure financing and gain market share.  

Finding and developing talent quickly enough

The main challenge Alchemiya faced as it scaled rapidly was developing talent. In their two key areas of operation, content and marketing, they need individuals who have insight into the Muslim community.

Commenting on this fact last year, Alchemiya founder and CEO Navid Akhtar said, “In both of these areas, there are a limited number of people who can demonstrate relevant experience and often they are in big demand. We are lucky that being based in London, we have access to skilled talent who learn fast and care about our mission to present a positive image about Islam.”

Developing linguistically- and culturally-appropriate content

Gaining scale by addressing the Muslim markets requires offering content in different languages.

However, for video content to be successful, it also needs to account for differences in culture.

Shahed Amanullah, Co-founder of Affinis Labs, commented, “We require a significant investment in resources to create content that is not simply translated content, but original material presented in the language and cultural context of the target audience.”

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