In 2015, Digital Islamic Services should reach an inflection point in its maturity cycle and start to take off across the Middle East region, a major development highlighted in Deloitte’s latest technology, media and telecommunications (TMT) predictions report for the Middle East.
If global and regional online benchmarks are used, Deloitte estimates that within the next three to four years the region’s Digital Islamic Economy will nearly double in size in terms of Muslim consumer spend potential on lifestyle products and services, from around US$15 billion currently to touching and probably crossing US$30 billion by 2018. Muslim consumer spend on Digital Islamic Services in the region, driven by already high digital media consumption, will likely expand by as much as 25 to 30 percent across most areas of the Islamic economy in 2015 and beyond. The anticipated surge in growth is a combination of a number of factors which have converged to synergize demand (e.g. Dubai’s stated ambition to be the capital of the global Islamic economy, the Dubai Islamic Economy Development Center’s initiatives in Islamic economy reports, events and awards and growth in Digital Services such as e-commerce).
In the years ahead, we expect the impending growth in Digital Islamic Services to widely proliferate across all areas of the region’s Islamic economy. In terms of size, the four largest growth areas of the Digital Islamic Economy (aside from Islamic Finance) are in Islamic Media, Halal Travel, Modest Fashion and Halal Food.
Islamic Media: Although media, including recreation and culture as well, is not the largest in offline market size, it is certainly the most well developed online, echoed by many developments specifically in the Islamic Media space, such as through the rise in Islamic Media entrepreneurship. Notable examples include Kuwait’s The 99, a Muslim comic book series which rapidly expanded into gaming and television across the region and to over 70 countries worldwide. Munshid Al Sharjah, a popular reality talent show similar in format to Arab Idol, but dedicated towards finding the next Nasheed (Islamic inspired music) star from across the Muslim world, is another example of popular Islamic media content.
Halal Travel: Online travel over the past 20 years has evolved to become one of the most core components of any travel, hotel, airline or tourism business. Naturally, the most pervasive of Digital Islamic Services seen in this vertical are online bookings services, ratings and accreditation platforms. In particular, Islamic friendly travel apps such as in-flight prayers and mobile travel guides have also proved to be very popular, helping users to practice on-the-go. Regional examples include Hajj Salam, Omani Calendar, Islamiyat Bahrain, The Two Holy Mosques Gateway and many others.
Modest Fashion: Unlike travel, the online fashion business is still very small in comparison to the offline market, contributing only 4 percent in clothing and footwear sales globally, and only 1-2 percent in the region. However, growth in Modest Fashion over the past decade has also coincided with the growth of Digital Services. This has helped many local Modest Fashion designers to start-up low-cost shops online (e.g. the region’s world leading designers Rabiz Z and Balqees), engage with consumers directly through social media (e.g. Jordan’s Hijabik, established online following astounding feedback of sample designer items posted on Facebook), market themselves through online blogs and magazines (e.g. Kuwait based Ascia AKF’s million-plus Instagram followers after only a year of Modest Fashion blogging) as well as to build their own business network and knowledge base online.
Halal Food: Fundamentally, Halal Food is by far the largest sector, with its offline market representing over 70 percent of the overall Islamic economy (excluding Islamic Finance and non-Modest Fashion spend), but with online sales at most only 0.1 percent of the region’s offline market, and few dedicated homegrown Halal Food online and e-commerce services, it is also one of the most digitally immature. That said, offline market and e-commerce growth is strong, together providing plenty of opportunity to grow off a low base in this sector.
The growth and rising adoption of Digital Islamic Services is supported by a number of underlying and complimentary trends across the region’s TMT space, fuelling its technology-readiness. On the consumer side, smartphone penetration is predicted in 2015 to reach 30-40 percent, with around 70-100 million upgrades across the region. Similarly, Internet and fixed broadband penetration is predicted to reach around 38 percent in total and 21-22 percent of households respectively. The region’s majority millennials are also anticipated to spend significantly on media content this year, and short-form video, estimated at around 545 million hours per month, will be increasingly consumed alongside traditional television, at around 23 billion hours per month. On the enterprise side, the Internet of Things (IoT) has enabled smart cities as well as smart mosques. With 25 million IoT devices predicted to be shipped to the region and significant open data advancements expected to be made in 2015, the number of new smart city greenfield developments in the GCC is anticipated to double in two to three years, with its open data rankings expected to break into the top half of the world’s most ‘open’ countries in three to five years.
The past decade has seen great advancements in the region’s social and technology development. 2015 will see many of these trends carry forward and bring to light many new developments. Coupled with its growth in the Islamic economy, the stars have naturally aligned.
by: Santino Saguto, consulting partner and TMT Leader for the Middle East; Gareth Pereira, consulting director, TMT, and Adil Parvez, senior consultant, TMT at Deloitte Middle East
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