Tailoring entertainment options would increase spending in the GCC

08 October 2019 Consultancy-me.com

A tailored approach to leisure & entertainment sector development in the GCC could reap $3.4 billion in annual rewards, says leading advisory Strategy&.

With the Saudi government keen to make NEOM one the world’s premier entertainment destinations, Strategy& think-tank the Ideation Centre has tested the pulse of 1,200 consumers across the gulf to assess the current state of the region’s leisure & entertainment (L&E) sector – concluding a $3.4 billion annual opportunity in the GCC should investments align with local spending patterns and preferences, along with the enhancement of well-being for its citizens.

For its analysis, Strategy& grouped six forms of activities – home recreation, visual arts, live entertainment, neighborhood recreation, mega-parks, and sports – under the L&E banner, and surveyed local nationals as well as Arab, South Asian, and Western expatriates on their current entertainment consumption habits and preferences. The first take-home message; local consumers spend more than their counterparts elsewhere, and are willing to spend more again.

According to the survey responses, GCC consumers spend an average of 6.2 percent of their income on L&E, compared to 4.2 percent for the residents of the UK. Yet, nearly four out of five also stated a willingness to up their spending – at an average increase of 8.5 percent per household – if the local L&E offerings were more attuned to their needs. For most of the GCC, this translates to a preference for fun activities as compared to more-cultural offerings.

Entertainment engagement and spending in the GCC

 “We compared available and planned offerings with GCC consumers’ consumption levels and preferences,” explained Ideation Center director Alice Klat. “Our survey findings show that there is a lower level of engagement with the cultural activities, as GCC consumers favor ‘lighter’ L&E activities such as neighborhood recreation and sports. Based on survey results, this is due to the limited awareness, variety and cultural relevance of current activities.”

As a response to its findings, Strategy& offers up three particular priority areas for L&E investment for the governments of the GCC; a focus on neighborhood-based entertainment offerings such as highly profitable family centres and outdoor urban parks; efforts to increase sensibility to arts and culture by making them more available and accessible; and a careful investment approach to theme parks – the category attracting the highest levels of future interest.

In prioritising these areas, the analysts contend that an additional $3.4 billion in spending on L&E could be stimulated in the GCC annually, with the bulk of this figure – $1.6 billion – generated in Saudi Arabia, which presently has a limited (but steadily growing) supply of L&E offerings relative to population size but together with the UAE the highest levels of engagement. It’s also likely the only market large enough to sustain the sizeable investment into theme-parks.

Entertainment sector opportunities and focus points in the GCC

“The current L&E investments under way in GCC countries are ambitious,” states Melissa Rizk, Ideation Center senior fellow and a co-author of the report. “By working in partnership with the private sector, GCC governments can develop the L&E sector so that it also opens the region to an influx of domestic and international tourists. In turn, this could unlock significant economic potential for the region, helping countries to fulfil their national development objectives.”

In addition to economic advancement, the tailored development of the local L&E market could also reap significant societal benefits, with two-thirds of the survey respondents considering leisure and entertainment as a “must” for their quality of life. Here, some 69 percent of those questioned believed appropriate L&E could deliver a better lifestyle and increased happiness, with one half citing stronger family ties and 39 percent the enhanced social connections.

“L&E activities impact society’s well-being positively in a number of ways, through engaging nationally relevant culture and art activities, increasing citizen’s participation in recreational events and affirming belonging among diverse groups of people – which all leads to a higher quality of life,” concludes Strategy& partner Bahjat El-Darwiche. “However, to get the most from their L&E initiatives, GCC governments have to prioritise investments to match the specific needs of the sector’s consumers.”