The Rise of Paid Streaming Services in the Iraqi Market: A Brief on Market Potential, Customer Behavior, and Challenges

The Rise of Paid Streaming Services in the Iraqi Market: A Brief on Market Potential, Customer Behavior, and Challenges

The streaming industry is on the rise, and this upward trend shows no signs of slowing down. The revenue in the video streaming segment is globally projected to reach US$108.50 billion. Revenue in the music streaming segment, on the other hand, is expected to reach US$29.6 billion globally in 2024.

Historically, radio and television were the main means of streaming, but they are being taken away by the rapid uptake of broadband internet and streaming applications. The growing popularity and number of paid streaming services in those years can be attributed to an increased number of households having access to faster Internet connections, with 33.7 million internet users in Iraq at the start of 2023.

Another factor is the rising percentage of mobile penetration, which reached 45.7 million mobile connections in the same year. Furthermore, the increase in the adoption of digital payment has enabled many platforms to enter the market. The volume of online transactions has increased from 1.4 trillion Iraqi dinars in 2020 to 9.6 trillion Iraqi dinars in 2023. Whereas the number of e-payment cards from 11.7 million cards in 2020 to 19.7 million cards in 2023. Taking the high internet penetration rate into consideration and the increased adoption of digital payments, we can notice the emergence of paid-subscriptions local players in Iraqi entertainment despite the challenges of freely available pirated content.

1001: Launched in March 2023, 1001 platform offers a mix of locally-produced shows, exclusive content, and international content. It secured partnerships with OSN, Rotana, and StarzPlay to deliver regional and international content. By early 2024, 1001 had reached over 2 million users and introduced sports content through collaborations with providers like TOD, giving users access to live football leagues and global sporting events.

Almanasa: Developed by Iraq's major ISP Earthlink, bundles streaming content with home internet packages. Through a partnership with StarzPlay, Almanasa provides access to premium entertainment and sports content at no additional cost to Earthlink subscribers. 

Njoom Al-Rabiaa: ِA leading Iraqi media platform that belongs to Al-Rabiaa TV network. In 2023, Njoom Al-Rabiaa strengthened its presence in the premium content market by signing a $32 million deal with beIN Media Group to stream 57 exclusive channels in Iraq, offering live coverage of major sporting events, with a mobile app for live streaming and updates.

The demographic profile of Iraq is driving the growth of the country's streaming market. The country’s young and growing population of 43 million individuals, with a median age of 21, presents a young demographic with high potential for digital adoption. These younger generations have grown up in a digital world and are more tech-savvy. This demographic is also more likely to prioritize entertainment and leisure activities, making them a prime audience for streaming services.

The purchasing power of consumers in Iraq is a critical factor in the growth of the streaming industry. There has been significant growth in the middle class in Iraq as its economy has been prospering in recent years, with an increased purchasing power of 4,775 USD GDP per capita in 2021.

The increased internet penetration, with 33.7 million internet users in early 2023, has made streaming services more accessible and convenient for users, which has led to increased demand on both local and international platforms.

Mobile streaming has become increasingly popular due to the growing number of mobile devices, which reached 45.7 million mobile connections in 2023. This growth could be attributed to the availability of affordable smartphones, improved mobile network infrastructure, and the optimization of streaming services for mobile devices.

The internet and smartphones have made international content more accessible to Iraqi users, leading to cultural changes that are impacting the streaming market in the country. This exposure to international content is changing the preferences and expectations of younger generations, resulting in a growing demand for high-quality, well-produced content.

Globalization has also affected the behavior of younger generations toward online video content consumption, with an increase in viewing habits of content from different cultures and languages. Social media platforms like YouTube, Facebook, and Instagram are popular among this demographic, with a rise in the popularity of short-form video content. The emergence of new online video content providers has created diverse opportunities for content creators, and globalization has led to a convergence of global and local cultures, increasing acceptance of cultural differences.

According to our survey sample, audiobooks and podcasts have the highest percentage of non-consumers, with 71.7% and 47.7% of respondents, respectively, not engaging with these formats compared to other types of entertainment formats. In contrast, music emerges as the most widely consumed medium, with only 10% of respondents reporting no consumption and a significant portion (34.5%) listening for 2-6 hours weekly. Movies and TV shows have moderate engagement, with a large number of respondents spending between 2-5 hours per week on these activities.

Based on our survey, 37.5% of the respondents reported subscribing to paid streaming services, while the remaining 62.5% of the sample stated that they do not subscribe to any paid streaming services. 

The difference in spending habits and purchasing power among consumers may account for the vast variation in monthly subscription expenditure. Nonetheless, the majority of our sample spends 10-15$ per month on subscription fees. Additionally, less than 5% of respondents reported spending more than 30$ per month on paid streaming service subscriptions.

The majority of participants chose content library and convenience as the leading motives for subscribing to paid streaming services. Half of the respondents selected speed as the most significant factor when subscribing to paid streaming services. While other factors such as price, recommendations from friends or family, and other criteria were also important, they played a relatively minor role in the decision-making process.

Free content is widely available online in Iraq, as there are ineffective copyright laws to protect against piracy. Thus, the availability of free content is the leading deterrent in subscribing to paid streaming services, according to almost 70% of our sample. There is also a lack of interest in such paid services by almost 43% of the sample, while 33% lack a stable internet connection to access those services.

Other factors such as pricing, lack of content library, sharing someone else’s subscription, and other reasons also contribute to the deterrence of paid streaming service subscriptions. It should be noted that respondents had the option to choose more than one deterrent to subscribe to paid streaming services.

Over the past decade, the widespread adoption of mobile phones has resulted in them becoming the primary vehicle for streaming content for 92.6% of those surveyed. It should be emphasized that the survey respondents were permitted to select multiple devices.

Spotify is the leading audio streaming service in Iraq, according to 60% of respondents, despite having recently entered the Iraqi streaming market in 2021. The second most popular service was Anghami, with 32.5% of respondents reporting that they subscribed to it. It is important to note that respondents here were allowed to choose multiple platforms.

Nearly 70% of the participants in our survey stated that they subscribe to Netflix, while 29.2% reported their use of other platforms. A much smaller percentage of respondents reported using other streaming services, including Shahid, beIN Sports, Amazon Prime, Disney Plus, OSN, Starzplay, and Apple TV.

The majority of our survey participants expressed satisfaction with the services provided by audio and video streaming platforms, with 38.2% and 43.8%, respectively, rating them as good. Conversely, only a small proportion of respondents, comprising 2.2% and 3.3%, rated the services as very bad.

The streaming market in Iraq faces several challenges related to copyright issues. One of the main challenges is the limited availability of licensed content, including popular movies, TV shows, and music. This is because many copyright holders have not made their content available for streaming services in Iraq. As a result, users may have limited options when it comes to streaming the latest content, which has subsequently led to many cases of copyright infringement, where content creators have had their work used without permission.

Piracy is defined as the illegal distribution of copyrighted content. It includes movies, TV shows, music, and other types of content. Piracy is a rampant issue in the streaming market in Iraq due to several reasons, including the unavailability and high cost of licensed or legal content, which drives consumers to seek pirated content. Another reason is the ease of access to pirated content in Iraq. Since there are no effective copyright laws to protect foreign content, widespread piracy is hard to tackle.

The country has not signed any copyright-related deals such as the TRIPS Agreement, Berne Convention, Brussels Convention, or the WIPO treaty. 

As is the case in many conflict and post-conflict economies, Iraq’s economy remains primarily cash-based. This state of affairs places significant limitations on the entertainment industry in Iraq, as most streaming platforms in Iraq do not accept payments in cash. This means that paid streaming services must find alternative payment methods that are compatible with the cash-based economy, such as mobile payments or prepaid cards.

Over the past decade, streaming platforms have recognized the value of the Arab market and, thus, have exponentially increased their localized content. The Middle East is a complex region with many cultures, languages, and dialects, and a flat and uniform approach across the Middle East is unlikely to pay off. In Iraq, this localization process is concentrated on the linguistic transfer of textual assets. Although localization goes beyond simple translations, it must take into consideration the social, cultural, and religious characteristics of the Iraqi market and accordingly adapt its content.

One of the main issues that the streaming industry is facing today is the weak internet infrastructure. Iraq still lags behind many countries in terms of network infrastructure and broadband connectivity. This has led to slow internet speeds and constant network outages. Therefore, users cannot reliably access those streaming platforms. Another issue is that many areas of the country still lack access to the internet, which can limit the reach of streaming platforms.