Media firms in the United Arab Emirates (UAE) apply a range of business models, including subscription model, advertising model, and venture capital-fast growth-exit model.
The subscription model is whereby users register for online services at a particular fee. It deals with premium content such as market surveys and business intelligence, which is inaccessible through all other means. Users pay a fixed amount of money, periodically, to access content (Deek, 2013).
An example of an online site that practices the subscription model is Hulu. Hulu has announced a move to integrate pay content with free material even though it has previously worked as an advertising-supported model. Hulu works on the premise that clients, naturally, like to watch items free of charge, although they can pay for premium content. It operates under a subscription model called freemium. The freemium model attracts many users by offering free content and then asking them to pay a fee for premium.
This method has emerged as the most affluent option, and firms have learned how they can utilize this model efficiently from the booming online game business. The online social gaming business is by now making major income from paid content.
Farmville and other social games sites lure users by offering free games but require users to pay for other goods, which develop the user’s performance. It is not just in the Western nations where players have managed to monetize content; even growing economies with low-income levels and less developed payment structures have found effective methods of making money from online content.
For instance, internet gaming in China has developed into a powerful and booming business, worth about $1.4bn which is way above the console/handheld gaming business, whose worth totals to approximately $92m (Price House Water Coopers, 2010). While there are some obstacles to the expansion of the online VOD market, in the Arab area, 69% of trade specialist respondents think there is a potential for offering free content while also charging for some online content following the freemium model.
The benefits of the freemium model for users include ease of conversion to sale, increased knowledge about the service through shared experiences by users, and it allows room for advertisements. Google is another example of a freemium site, and it uses Adwords as its revenue model. Other sites affiliated to this model in UAE include Pandora and sales force.
Another common media business model in the UAE is advertising. Apart from traditional television advertisements, social networks, and Mobiles have turned into significant channels for promotions (Price House Water Coopers, 2010). With thousands of different visitors every day, many start-up companies prefer to advertise their products on social networks.
A new trend on social network use in UAE has been the increase in access to media sites using mobile phones and mobile broadband. This development has resulted from many constructive market settings, particularly the dropping of the prices of data bundles on mobile, the promotion of 3G systems to HSPDA and, certainly, the increasing access to smartphones such as the iPhone.
A closely related mode of media advertisement in UAE is mobile TV. Mobile television guarantees to offer many channels in the form of DVD videos to the handset. This is a noteworthy development from the content-filled structure as found in third-generation (3G) systems. Mobile televisions employ a distinct frequency from 3G, making it easier for network operators to conserve limited network resources. Different markets have installed different technologies varying from satellite to terrestrial broadcast.
The UAE is presently using both MediaFlo and DVB-H mobile television technologies (Price House Water Coopers, 2009). As the mobile TV penetrates increasingly, the handset has become an important arena for content utilization, and there have been a growing number of collaborative enterprises between media content suppliers and telecom operators.
The booming use of content-filled applications such as Mobile TV on a cell phone has been an additional major booster to new media development. Diverse technologies obtain synchronization for the transmission of audiovisual material, particularly 3G and mobile dissemination technologies such as DVB-H, which is the principal technology in the area (Price House Water Coopers, 2009).
Indeed, the Middle East has been a director in Mobile TV expansion with the latest establishment of services in Iraq and the grant of the Mobile TV accreditation in the UAE, with more expansion also happening in Qatar and Libya. In the Arab zone, consumption of news via mobile is growing swift, and market players such as Al Jazeera have integrated mobile technology with other key delivery platforms (Price House Water Coopers, 2010).
Consequently, the mobile phone is as well as developing fast as an arena for promotion. Although mobile phone advertising only comprises a small share of the market, both internationally and in the Arab area, this share is likely to grow over the years motivated by advertising through Short Messaging Services (SMS).
Apart from the mobile phone, there is a growing number of other moveable entertainment apparatus that are obtaining an interest in Arab and the world at large, such as the iSlate and e-book. All these developments have made advertisements to remain the main revenue generator in UAE digital media.
Another model common in UAE is venture capital-fast growth-exit model (Deek, 2013). In this model, businesses earn profits before they can create revenue. Those who assume this model can protect their survival by focusing on developing the community while driving traffic. A recent, global example of a company that pursued this model is Instagram. Instagram, a photo-sharing industry functioned for almost two years without creating any capital.
Through concentrating on creating traffic and developing a powerful and loyal group of users, Instagram turned into a strong Facebook, rival. A case emanating from the Arab region is Maktoob. In 2009, Yahoo purchased Maktoob for more than 150 million dollars after ten years of business (Deek, 2013). Maktoob restructured itself several times in the economy, through numerous circles of financing and transformations to its company model. Yahoo then realized a strategic podium for entering the Arab world through Maktoob.
In conclusion, the main media business models present in UAE include the subscription model, advertising model, and venture capital-fast growth-exit model. The subscription model deals with premium content, and users pay a fixed amount of money to access the content. The advertisement model, on the other side, uses television, social networks, and mobile phones as its platforms. With current technological developments, social networks and Mobiles have turned into significant channels for promotions.
Lastly, the venture capital-fast growth-exit model focuses on developing the community while driving traffic. A case evidencing this model in the Arab region is Maktoob Company, which Yahoo purchased after ten years of operation. Most news driven applications in the UAE often combine advertising and subscription models. It is, therefore, prudent for businesses to employ combinations of different models in the online platform.
References
Deek, G. (2013). Business models for digital Arabic content: Promotion of the digital Arabic content industry – phase II. Web.
Price House Water Coopers (2010). Arab media outlook 2009-2013: Inspiring local content.
Price House Water Coopers (2009). Arab media outlook 2008-2012: Collaborating for growth.