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Industry Report: Market trends

Russia has over 2,300 operating TV channels

- These findings come from a brand new report, FOCUS on the Audiovisual Industry in the Russian Federation, just published by the European Audiovisual Observatory (part of the Council of Europe in Strasbourg) together with Nevafilm Research. It can be downloaded on our website for free in English and in Russian.

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The report provides a snapshot of the Russian audiovisual industry in 2014-2015 detailing key trends in the television and on demand sector supplemented by detailed information about the sources of industry financing and an overview of the legal framework.

Russian TV market tops over 2300 operating TV channels at end of 2015: Gazprom Media, VGTRK and National Media Group largest media holdings

A total of 2,370 TV channels were identified as operating and accessible in Russia and/or having licences to broadcast in the country, according to the report. Of these, at least 520 are regional representatives of national networks, the largest of which (with over 50 regional partners each) are REN TV, TNT, Rossiya 1, CTC, and Rossiya 24.

Over 80% of Russian channels are in the hands of private companies, 13% are state-owned, and 5% have combined ownership (some of their shares are held by national or regional authorities). At the start of 2016, the major media holdings, owning the largest number of channels, were Gazprom Media (owning a total of more than 50 channels including the Red Media and ProfMedia holdings), VGTRK (30 channels owned partially or outright, plus regional television and radio companies), and National Media Group (25 channels, including Discovery Communications and Turner Broadcasting Systems).

A third of TV channels operating in Russia at the end of 2015 were general regional channels (broadcasting local news and their own entertainment programmes, as well as independently purchased content). Channels devoted to music and entertainment and lifestyle programming make up 21% of the currently operating Russian TV channels. The third most popular group of channels is those broadcasting films and series. It is worth noting that national channels broadcasting generalist content, such as Channel One, Rossiya 1, NTV, Peterburg - 5 kanal, REN TV, and TV Centre account for only 3% of the range available to audiences.

A small proportion of the channels studied (60 - 8% of the total) are HD versions of both free terrestrial and pay-cable channels available to digital TV users. Meanwhile, there is a total of 121 HD channels in the Observatory’s MAVISE database, meaning half of them do not have standard versions accessible to viewers of analogue TV. The vast majority of HD (97 out of 121) and 3D channels (5 out of 6) are pay channels.

Overall, more than half of all the channels available in Russia are pay channels, and a large proportion of free-to-air channels are provided by regional terrestrial television and radio companies. Hence, in every single region of the country viewers must pay to access the majority of TV channels.

Pay-TV as the cornerstone of Russian TV market: over 2/3 of Russian TV households subscribed to pay-TV in 2014 with digital segment and IPTV as main future drivers

The report states that 68% of households subscribed to pay-TV in 2014, 8% more than the year before. The highest saturation of pay-TV was seen in the Central and Northwestern districts (80% and 77%, respectively). Meanwhile, the fastest growth rates were observed in Siberia (+15%), Central Russia and the Southern Federal District (+14%), and in Russia’s Far East (+13%). The first and latter in this list are also the ones with the most potential for further development (due to their relatively low saturation level).

The total number of pay-TV subscribers in Russia reached 37.7 million in 2014, according to report figures. However, this data does not account for the fact that one family may have several subscriptions. The size of the pay-TV market in 2014 is estimated at RUB 61.2 billion.

Market growth by subscriber numbers is gradually slowing down (due to market saturation): in 2014, the market grew by 7–8%, whereas this indicator had previously been in double figures. Satellite television is the growth leader in absolute terms but there has been a notable stagnation in the cable pay-TV segment in Russia.

The main trend in pay-TV over the next few years will be a growing subscriber base in the digital segment and in IPTV. Growth will be moderate, though rates of growth could vary significantly between individual operators. The significant network modernisation observed over the past two to three years is not expected to continue, due to financial and economic difficulties in the market.

Rapid growth in Russian VoD market: more than 40 VoD services available at the end of 2015 and dominance of transaction and subscription business models

Since 2011, the Russian VoD market has experienced rapid growth which is characterised by an increase in the number of services and the size of their catalogues, as well as the platforms via which VoD can be accessed. At the same time, from a business-model point of view a ‘backwards movement’ began: from the dominant ad-based model towards transaction and subscription models.

According to an analysis of the European Audiovisual Observatory’s updated MAVISE database, by the end of 2015 there were more than 40 VoD services available in Russia, specialising in professional feature-film and television content (this does not include catch-up versions of TV channels, news portals, and specialist children’s services such as deti.ivi.ru, Internet music channels, and network versions of popular television programmes such as Dom-2 and KVN, or sites exclusively featuring user-generated content (UGC) and unlicensed content).

The leader in terms of user numbers is ivi.ru (around 38 million viewers); this service receives up to 200,000 views per month on average (using the ad-based, subscription, and transactional models), which is ten times more than its closest competitors. Meanwhile, Okko, which bases its business on paid services, takes the lead in terms of revenue, with earnings of RUB 630 million in the first half of 2015.

The arrival of global VoD players on the Russian market has not led to significant changes: at the end of 2012, iTunes and Google Play launched in Russia, followed in 2013 by Amediateka, the official distributor of content from HBO, and the launch of a range of other leading international producers; the international giant Netflix entered the Russian market in January 2016 (Russian audiences are initially being offered a limited content library and an English-language interface). However, it is not expected that the domestic leaders (ivi.ru, Megogo.net, Okko, and Tvigle.ru) will be forced out of their positions by these foreign competitors.

VOD is still growing, and it is doing so faster than other segments of the audiovisual industry. In the future, one can expect to see subscriber services strengthen their position and further growth through mergers and acquisitions.

 

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