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Euromonitor International

Arab Online Content on the up Despite Low Penetration Levels

9/19/2012
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As the number of Internet users expanded by 167% over 2006-2011 in the Middle East and North Africa region, the demand for Arabic-language online content has risen in parallel. Although the capability of writing right-to-left and setting up technologies that adhere to Arabic is a challenge for the region, online businesses can stand to benefit by targeting a large non-English speaking market, while consumers can gain access to services they were excluded from previously by language barriers.

Internet Users and Internet User Penetration in Selected Arab Countries: 2011
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Source: Euromonitor International from International Telecommunications Union/OECD/national statistics/UN

  • With a population of around 421 million people in 2011 and the vast majority speaking Arabic, the Middle East and North Africa region remains a market of untapped potential for online businesses. Online marketing companies, “sellsumers”, social networks and retailers are increasingly looking to provide Arabic content;
  • However, although major companies such as Google and Twitter have committed to Arabic, the Arabic-content segment remains underdeveloped, held back by low regional Internet penetration levels, few Arabic online creative start-ups and a lack of IT talent. The largest Arabic Internet user nation, Egypt, had 23.2 million Internet users in 2011, yet an Internet user penetration rate of only 22.4% of the population.

Implications

Arabic content has not been able to keep up with technological progress, although emerging markets and interest among a tech-savvy Arabic youth are driving businesses to invest in the segment:

  • A large Arabic youth populace, especially in North Africa, presents strong opportunities for the online sector, which is typically driven by younger users. The increasing proliferation of smartphones means low-income persons, such as students or the unemployed youth, need no longer have a PC to access the web. The development of Arabic content apps is an underserved market with strong growth potential;
  • However, the development of Arabic content remains expensive and time-consuming, as the language is much harder to programme and input than English. Consequently, only major companies are able to finance the switchover, led by the likes of Google, Facebook, Yahoo and Twitter, which have all launched Arabic versions over 2010-2012;
  • Despite major technological leaps and huge capital investment in telecoms, especially in the Middle East, there is not enough Arabic content available to take advantage of new broadband networks, with consumers not feeling the need for a high-speed broadband connection. This restricts consumer take-up and the return on infrastructure investment. The Middle East and North Africa region saw capital investment of US$36.7 billion in telecoms in 2011;

Internet Users and Capital Investment in Telecoms in the Middle East and North Africa Region: 2006-2011

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Source: Euromonitor International from International Telecommunications Union/OECD/national statistics

  • The Arab Spring movement, which took place over 2010-2012, has been pivotal in driving more Arabic users to social media, news networks and digital platforms. However, the dominance of English on the web has meant that it is mainly the educated, urban, middle and upper classes that have come online, limiting users from the large rural and lower-income markets. Increasing Arabic content online can thus help penetrate the Middle East and North Africa`s 116 million rural population, as of 2011;
  • A lack of entrepreneurial talent, low levels of IT literacy and technological expertise in Arab countries, and the vicious cycle of not enough users online developing Arabic content and not enough content in Arabic to push Internet penetration rates are major factors impeding expansion in the Arabic online segment. Nonetheless, economic growth, increasing incomes and educational levels in the Middle East and North Africa region will likely see Arabic a growing competitor to English in the online domain.

Prospects

  • The Middle East and North Africa region is forecast to see a 54.7% increase in Internet users over 2012-2020, in part as a consequence of the increasing availability in Arabic content. Growing demand for mobile Arabic-language platforms, especially for banking and retail services, will drive the regional m-commerce sector, providing opportunities for businesses in the online domain;
  • Arabic-based content will be driven by Middle Eastern telcos going forward, as companies such as UAE-based Etisalat and du, and Kuwait-based Zain increasingly rollout more Arabic mobile apps and value-added services aimed at retaining subscribers in competitive markets. The UAE saw the largest total telecom revenues in the Arab world in 2011, at US$16.4 billion;
  • While Arabic content will continue to face barriers such as the popularisation of English-language sites, low IT literacy and increasing but low Internet user levels, local governments will likely be key in making Arabic available on the web. eGovernment portals have been launched by most Arab countries as of mid-2012, attracting citizens through Arabic content and convenience.
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