Information and Technology
Information and Technology

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Overview

A modern sector for information and communication technologies is integral to today’s advanced industrial activities.

 

Saudi Vision 2030 aims to transform Saudi Arabia into a globally competitive ICT hub, with modern technologies and an empowered information society.

 

The ambition envisages many investment themes, including the development of the digital content and media, the expansion of the telecommunication system, the digitization of the country, and the creation of new high-tech and smart industries.

 

The government is working alongside the private sector to modernize the ICT infrastructure, enhancing the regulatory framework to enable new innovative investments, and building the most suitable ecosystem to support entrepreneurs and digital talents.

Facts & Figures

IT Infrastructure
38 B$, By end 2017
Saudi IT market
35% Expected Yearly growth rate from 2017 to 2022
Consumer data traffic
54% In 2012, up to 76% in 2017, Expected to reach 86% by 2020
Internet penetration
21.4 Mbps in next 5 years
Internet speed
22% Growth by end of 2017
Cloud market in MENA
Digital Content & Media
32.5 Million
Total population
50% Approx.
Percentage of population under 30
11 M, Active social media accounts in 2016
Social media
3 Billion in 2015 (the largest in MENA)
Media market size
320,000 Years of videos watched in 2015 – i.e., highest globally
Video
62% TV, Publishing 14%, Internet 10%, Games 8%, Other 6%
Media market components

Information and Technology Value Proposition

Largest IT MENA market with strategic location

  • Saudi Arabia is the biggest IT market in the MENA Region (Spending per year expected to reach 38 billion dollar by end of 2017)
  • Saudi Arabia enjoys a strategic location to become a main IT services hub (Access to international connectivity through Red Sea and Gulf, Central location to serve Europe, Asia and Africa)

Healthy environment for development of IT

  • >50 per cent of the Kingdom’s largest organizations planned to launch IT projects (Increasing IT services budgets and expenditures)
  • Introduced policies mandating local storage of large volumes of data
  • Internet penetration has increased rapidly from 54% in 2012 to 76% in 2017Q2 (Exp. 86% by 2020)
  • Datacenter, business continuity, and cloud computing are the most important areas of IT investment cited by Saudi businesses

Growing cloud computing adoption and data traffic

  • Population has high expectations on digital services and government on digital industries and megaprojects (especially NEOM), all requiring sophisticated, high quality, high capacity infrastructure

  • Migration to cloud is the most relevant trend shaping the IT sector


    (Cloud market in MENA region to grow 22 per cent by end 2017, Highest growth from PaaS/SaaS)

  • Consumer data traffic expected to grow 4-fold over next 5 years (At 35% CAGR, Reaching 70% of smart connections, With 21.4 Mpbs avg speed)

Government commitment on upgrading IT infrastructure

  • Developing relevant legislation with the support of global private sector players (e.g. CITC "Communication and Information Technology Commission" issues public consultation to draft regulatory framework on cloud computing)
  • Established the NDU (National Digitization Unit) which signed a partnership with a major foreign player to develop open data framework and architecture
  • Public Investment Fund (Saudi sovereign wealth fund) co-invests with Softbank to form a $93B fund to invest in Saudi tech sector

A digital content media revolution is underway in KSA. Young Saudis who dominate demographics watch more online videos per capita than any other nation. Their appetite for digital media is huge, yet most of the content consumed is produced outside the Kingdom. Several opportunities in this market reveal an industry that has hardly begun to take shape. Demand for Arabic media content is beginning to influence positive developments that include the opening up of production facilities and distribution channels to support the commercialization of this sector. Several government initiatives seek to change the way Saudis approach digital content and media by encouraging localized content creation and creativity. Ongoing efforts are being made to address gaps in the value chain, grow local talent and establish new niche industries that form a basis for Saudi Entertainment culture. This is truly an exciting time to become involved in this industry as it is on the cusp of experiencing unprecedented development and growth.

Young population with heavy media consumption

With half of the Saudi population under the age of 30, the majority of inhabitants consider themselves to be digital natives. Saudis have embraced advancements in media technologies that have transformed the way they consume information. Recent studies analyzing the Kingdom’s usage of digital content media confirm that Saudis have the highest rate of daily video consumption in the world, with over 50% of inhabitants watching online videos through their smartphones. This puts Saudis ahead of Turkey, the UAE and even the USA.

Furthermore, KSA ranks 7th globally in terms of accounts on social media, with an average of 7 accounts (3 active) per individual. Saudi Arabia also ranks 14th globally in terms of active social network penetration, which translates to 59% of the population and is significantly above the global average.

Saudis clearly have an appetite for digital media, and this presents a lucrative opportunity local and international digital media companies.

 

High demand of media content and limited coverage of value chain

Saudis evidently have a passion for digital media content but are generally limited to watching Arabic content that is developed in Egypt or to content based in foreign languages. Arabic is the 5th most spoken language in the world and 4.8% of internet users globally are Arabic speakers, yet only 0.8% of media content is in Arabic.

Despite high demand for Arabic media content, narrow coverage of the media value chain results in limited content being developed both online and offline. Local content development and production is growing, but KSA has few professional production facilities and underdeveloped channels to distribute and commercialize this content. This market suffers from significant gaps that prevent it from fulfilling its untapped potential. There is enormous scope for growth in this sector amid positive signs that the gaps in the value chain are beginning to be addressed.

Ongoing efforts to develop the media ecosystem

In 2017, Media City was established to act as a catalyst for the digital media sector and to start filling the gaps in the value chain. Several initiatives are beginning to take effect, including vocational courses aligned with market needs, grants being made available to local talent, the development of high speed and capacity internet facilities, the opening of high quality studios and equipment facilities as well as event spaces being reserved to create community and cohesion. The MiSK Foundation has established a series of initiatives to stimulate the media ecosystem, which include Tweeps, Shoof, Kammel, Awalmna, & TEDx kids. These initiatives are primarily aimed at Saudi youth to increase knowledge, share ideas, raise awareness and unite aspiring entrepreneurs. Awalmna is an independent media project that aims to highlight creativity and hone the talents of the youth. TEDx kids is introducing young talents to larger audiences and providing a stage for their thoughts and experiences to be shared.

Several initiatives have been commissioned to enhance the media experience of KSA residents. Hajj & Umrah productions have embarked on an exciting new project to use Virtual and Augmented reality technologies to showcase the Hajj & Umrah experience for over 1.8b Muslims globally. Saudi Arabia’s first cinemas are also scheduled to open their doors in March 2018, with live performance shows also in the pipeline. The Game Hub initiative has been set-up to incubate talent and showcase mobile, consul and interactive gaming content. The Female Gamer and Game Developer Conference is a community driven and organized event that’s in its 5th year, drawing thousands of attendees and industry leading sponsors. Furthermore, the first Saudi Comic Con has attracted over 20,000 fans and is sponsored by the General Entertainment Authority.

Changes are slowly but surely taking place to fulfil the needs of this rapidly growing sector.

 

Growing local talent pool to develop content

KSA intends to utilize its growing talent pool with the aim of expanding the digital content marketplace. Platforms like YouTube have already been exploited by budding Saudi entrepreneurs, with the top 10 KSA channels exceeding 2 million subscribers each. Saudi government initiatives are being established to support local content development for the local and regional market. Gaming leads the way with recent agreements to support game development, publishing and distribution. A video game hardware and software company has been established as well as an animation studio to train young Saudis on animation and to develop Saudi animation content.

Further initiatives are inevitable as Saudi Arabia’s Ministry of Culture continues to implement the cultural and entertainment goals set out by Vision 2030.

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