IABM Market Intelligence Blog - Broadcasting in the Ruian Federation

IABM Market Intelligence Blog - Broadcasting in the Russian Federation 31 March 2016

IABM Market Intelligence Blog - Broadcasting in the Russian Federation Written by IABM Research Analyst Lorenzo Zanni (lorenzo.zanni@theiabm.org)

The European Audiovisual Observatory has recently published a report on the Russian media industry. In this blog, we have included some of the most interesting results from this study.

Source: iKS-Consulting

In 2014, HDTV penetration in Russia was equal to 32% of the population (40% of households), a very low figure compared to Western countries where HD penetration was more than 60% in most cases. In Russia, HDTV sets are still priced at a premium, making it too expensive for the majority of the population. Pricing for HDTV sets has arguably increased in 2015 as a result of international economic sanctions, which squeezed the supply of HD sets, and the deep depreciation of the Ruble. Moreover, according to the MAVISE database, 80% of HD channels were available only through a Pay-TV subscription at the end of 2015. The penetration of Smart TV was still at a low level in 2014. It is interesting to note that although 10% of households own Smart TVs, only 6% had connected them to the Internet.

Between 2015 and 2016, new legislation by the Russian Government has taken effect. Since January 2015, Pay-TV operators have been prevented from airing advertising on their channels. As a result of this, advertising revenues in the satellite and cable TV industry declined by 46%. At the beginning of 2016, a new law limiting foreign ownership of media organizations to 20% was adopted restricting the possibility of foreign direct investment (FDI) in the Russian broadcasting industry. This law is provoking a reshuffle of the current industry landscape with large media holdings having to adjust to the new regulations.

Source: iKS-Consulting

Russia is one of the many countries that have not met the original 2015 ITU deadline for completing the digital transition; this deadline has now been postponed to 2018. The chart above shows that a large part of the population still relies on analog television. The gap between supply and demand for digital television services is still a problem as many households still do not see enough benefits to justify the cost of buying digital equipment. For instance, although 85% of the total population is able to receive digital signals, only 6% of households have a digital terrestrial signal on their televisions. This will rapidly change when analog signals are shut down.

Source: iKS-Consulting

Pay-TV penetration in Russia is quite high; 68% of households had a Pay-TV subscription in 2014. The chart above shows total revenues in 2013 and 2014 for cable TV, satellite TV and IPTV. Cable is the dominant platform although satellite has experienced more growth between 2013 and 2014. This is partly the result of analog cable subscribers switching to digital. IPTV is the fastest-growing platform in relative terms.

Source: iKS-Consulting

The two major Pay-TV broadcasters in Russia are Tricolor TV, a satellite operator with 29% market share, and Rostelecom, a cable and IPTV operator with 21% market share. MTS, ER-Telecom and Orion Express follow with 7% market share each. The majority of media organizations in the Russian broadcasting industry are controlled by a few media holdings such as Gazprom Media, National Media Group and Russia Television & Radio. Some holdings receive state subsidies.

Source: European Audiovisual Observatory

Despite the recent launch of Netflix in the region, online streaming and catch-up in Russia are far from being widespread as demand for these services is still low. The chart above shows that just 37% of TV channels in Russia are complemented by online streaming and/or catch-up services. Among the major Pay-TV operators, only Rostelecom has its own free OTT offering - zabava.ru portal.

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