Recently, Viacom ( VIA ) announced a partnership with IMG Worlds to develop its first Nickelodeon Park in the Middle East. The new park, which will be a significant addition to Nickelodeon branded attractions globally, is a key step in the company's international growth strategy. While theme park revenues do not form a very significant portion of Viacom's total revenues, they work well for company's image and content branding. According to our estimates, the international television channels segment is the most valuable division for Viacom accounting for nearly 70% of its valuation. In Dubai, the company's channels Nickelodeon and Nick Jr. are available in English and Arabic on Dubai-based OSN, which is the region's leading Pay-TV player. Earlier this year, the company opened a flagship Nickelodeon store in the Dubai mall. As Viacom looks at international markets for growth, it can develop Nickelodeon as a key kids brand in the Middle East and Asia. A theme park in Dubai can help in this brand building exercise and attract the younger audience into its channel viewership.
Capturing The Growth In International Markets
According to a new report by Global Industry Analysts, the global market for amusement and theme parks is likely to reach $44.3 billion by 2020 and the Middle East is likely to emerge as the major destination for theme parks by this year. The Asia Pacific region, led by China, is expected to emerge as the fastest growing market in the theme parks segment, with a CAGR (compounded annual growth rate) of 12.2% over the next few years. As Viacom works on an international growth strategy including Asia Pacific, a theme park strategically located in Dubai can attract consumers from regions such as India in addition to the Middle East. Apart from generating revenues from this growing business, Viacom can use the theme park as a marketing and branding tool for Nickelodeon. This can also boost merchandise sales related to the brand. We expect Viacom's international and other advertising revenues to grow modestly from $ 3.58 billion in 2016 to around $ 3.83 billion by the end of our forecast period.
A rapid pace of increase in these revenues can lead to an upside in our price estimate. Middle East is a strong market for Viacom and the company management stated that its Arab channels are working well. Its Nickelodeon Play apps are strong in the region, since 44% of kids consume their content digitally. A theme park can add to this growth and attract more users to its apps. We believe a Dubai theme park works well for Viacom's international growth strategy, especially for Asia Pacific and the Middle East. This park can drive independent revenues for the company and boost the viewership of Nickelodeon in the region.
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