In April 2018, Saudi Arabia opened its first public cinema in 40 years—the initial step in a planned initiative that will ultimately bring 350 theaters with more than 2,500 screens to the kingdom. This autumn, Cirque du Soleil will perform in the country. Both events are part of a growing wave of concerts, exhibitions and cultural events that aim to improve the quality of life for citizens, diversify the Saudi economy and create local jobs. Only the U.A.E. has previously launched a similar effort. These moves have generated significant attention, but a truly successful entertainment sector will only come from a comprehensive, private-sector approach that supports the creation of local content, not just the consumption.

The Saudi government is now throwing significant support behind the local media industry, emphasizing entertainment in particular as a quality of life issue and a means to build a private sector that is less reliant on oil revenue. The ambitious Saudi Vision 2030 strategy includes quality of life as one of 12 key priorities. In addition, entertainment and media are two of the nine development sectors in the planned city and economic zone known as NEOM. Large entertainment projects such as Al Qiddiya, a futuristic mega-city that will include a Six Flags park and safari, will further boost activity in the sector.

This amount of activity in the entertainment sector in such a short time is noteworthy. Yet the Saudi government is aware the real work lies in building the underlying ecosystem for local content creation. For example, the increase in local cinemas will encourage the production of Saudi films, which in turn will require investment to build production infrastructure. Similarly, the rise in entertainment and cultural events calls for investment in new venues, logistics capabilities and fields such as event management.

Across the entire sector, local pools of talent will be required, in areas such as production, art direction, set design, sound design, script writing, acting, directing and so on. While at first, entertainment and cultural events can be imported and will generate some economic gains, only home-grown talent can generate long-term economic dividends.

Initial demand is coming from within the country, with supply met through international players. The government is investing to build local capabilities. However, current investment levels are unsustainable. At some point, the private sector will need to step in and make the investments necessary to build the region’s entertainment ecosystem—and claim the rewards.

In addition, Saudi Arabia’s building of a local entertainment and media sector will have a knock-on effect on neighboring countries. For example, much of the GCC’s film production and content generation currently occurs in the U.A.E. As the kingdom develops its local talent base, regulation and infrastructure, it will increase competition and may lead individuals and companies to shift their presence from the U.A.E.

Even as the entertainment sector is poised for rapid expansion in the region, traditional media continues to face significant challenges, as advertising revenue continues to decline.

Print magazines and newspapers still rely heavily on advertisement-supported business models, due to low subscription revenue. Regional television, which suffers from low pay-TV penetration, has long struggled to develop a sustainable business model and is undergoing its worst economic downturn in recent memory.

Digitization has exacerbated these issues, fragmenting audiences and siphoning off advertising spending. There are simply too many channels, newspapers and magazines competing for a shrinking pool of traditional advertising, even as global internet giants attract significant portions of rising digital revenues.

In the past, government-owned media companies were largely unaffected by cyclical economic downturns, yet that is no longer the case. Governments today are under growing pressure to reduce costs, due to volatile oil prices and regional instability. In a purely private market, this pressure would lead to consolidation. Yet with many of the major media companies owned directly or indirectly by regional governments, consolidation is not always an option. Instead, traditional media players must scale back their reliance on advertising, reduce their operating expenses, adapt to digital economics and use partnerships or acquisitions to expand their capabilities.

One potential a venue for such partnerships is telecom. Mobile operators increasingly consider media as a strategic sector to diversify their revenue and reduce churn among customers. For example, Saudi Telecom recently paid nearly $1.8 billion for the rights to Saudi Professional League football games for the next 10 years. Other telecom operators are partnering with over-the-top (OTT, companies that provide content through the internet) video providers, all with the goal of offering a richer range of content to subscribers. This trend will likely continue, driven by rising broadband penetration and growing demand for premium OTT services.

Those deals illustrate how the fundamental solution for media companies lies in content. Leading companies will be able to build and reinforce their brands through compelling content that they can use across multiple platforms and channels. They will also need to move away from outdated business models and focus on monetizing new interactions with customers. More importantly, they will need the financial resources to complete this transition.

Overall, the prospects for the entertainment and media sector in the region are positive, despite the challenges faced by traditional media. Strong government support over the next several years will dramatically increase the number of entertainment options, even as growing consumer demand for content—including new channels for accessing it—will encourage growth and attract private-sector investors. Over the long term, the winners may not be the household names of today. Still, it is an undeniably exciting time, for both providers and consumers.

Karim Sarkis is a Senior Executive Advisor at Strategy& Middle East (formerly Booz & Company), part of the PwC network.