How will Deezer fare in a market dominated by Anghami?
On Sunday October 21st, music streaming service Deezer officially launched in the MENA region. Yet, it is launching in a market dominated by an unrivaled king: Anghami.
So, can the Western Deezer hope to stake a claim in the Middle East and North Africa?
In the Middle East, local beats international business
The MENA business environment is a very peculiar one, and quite different from those in other regions, with a certain set of expectations and traditions. Take the ride-hailing sector, for example. Careem, a locally nurtured business born out of Dubai, has found significant success in its sector. US-based Uber, therefore, has had to contend with fierce competition from the former, and is currently considering a merger to facilitate a less competitive environment.
In Lebanon, Western casual dining chains are at merciless pressure from local rivals, with homebred chains like Roadster Diner and Deek Duke eclipsing Western franchises such as T.G.I. Fridays and Applebee’s in terms of branch numbers and customers. It is no surprise that Applebee’s shut down operations in the Mediterranean country in 2014.
Home Team vs. Away Team
Anghami and Deezer face a similar conundrum. Anghami was launched in 2011 by two Lebanese entrepreneurs, and was the first company of its kind in the region to offer such a service. By the end of 2012, the partners had expected to reach a total of 300,000 users, Eddy Maroun, one of the co-founders of the company, told The National last year.
However, “[Anghami] ended March 2012 with 1 million users, way more than expected.”
According to MIDIA Research, Anghami’s paid music subscribers in the Middle East were 1.3 million by the end of 2017, while total users, both premium and free, stood at 50 million.
Elie Habib, the second half of the partnership behind Anghami, said that their revenue was growing at a rate of 250% to 300% a year at the time in 2017, and was forecast to exceed US$20 million that year.
Anghami, which means “My Tunes” in Arabic, strikes a chord with Arab users. The simplicity of its name tells the consumer exactly what they will receive, and its tailor-made to suit their needs. In a region where the general consensus regarding online payments is still not a very satisfactory one, Anghami has adapted. They offer MENA users the chance to subscribe, not through a credit card, and not through PayPal, but through a means much more ideal for local consumers: a telecom data bundle. Anghami has teamed up with telecom providers to allow users to use their SIM credits to upgrade their streaming account to premium, circumventing online payment and all the hassle that entails.
It is little interactions like these that prove how local businesses often have the edge when it comes to unique markets like the MENA region.
Deezer has an ace up its sleeve, but is it enough?
Deezer, realizing the competition it’s up against, has not come unprepared.
Realizing the popularity of Arabic music in the region, the Western streaming service signed an exclusive digital distribution agreement with Rotana Group, the largest media content producer in the region. This investment was made through Prince Alwaleed Bin Talal’s Kingdom Holding Company (KHC). In August, he announced that he had bought $266.7 million (SAR1 billion) worth of newly-listed shares in France-based Deezer.
Rotana Group’s subsidiary, Rotana Music, has an extensive array of exclusive content that will surely draw in fans. Deezer likely hopes that with this, coupled with KHC’s involvement, their service will resonate with MENA users and potentially secure them a share of the Anghami-dominated Arab market.
According to the company, music fans will also be able to instantly access local content from music production group Mazzika and Saudi-based telecom provider Qanawat, in addition to 53 million tracks from global artists.
But Deezer has got more than Anghami on its mind. Ranked 4th in the world in 2017 by Reuters, the French-based company is trying to catch up with streaming services like Apple music, Spotify and Amazon Music.
“Deezer is hoping to get a head start on Spotify in the Middle East, but even with this exclusive deal it faces serious competition from dominant local player Anghami,” Mark Mulligan from MIDIA Research said.
As of August, Deezer had 14 million active users and a catalog of 53 million music tracks available in 180 countries.
Apple Music already operates in the region, but has struggled to compete with Anghami.
Services like the newly launched YouTube Music offer a hybrid experience where users can stream both audio and music videos. With the region’s massive demand for video content, such as in Saudi, YouTube Music could outwit the preexisting streaming apps with their video offering. Perhaps Deezer could tap into that market, before YouTube Music makes its way here.
Whether Deezer’s attempt to distinguish itself will bear fruit is yet to be seen, but the company is confident in its attempt to grab a piece of the market. They are here to stay, expecting to open an office in Dubai next month.