What are the prospects for Netflix in Central and Eastern Europe, and in particular Russia?
With the service now firmly established in several West European markets, questions are almost inevitably being asked about when it may launch elsewhere on the continent. Russia is certainly a territory many feel would be a good prospect.
However, in a media event organised by last week in London by Tvigle, the country’s leading online video company, its CEO and founder Egor Iakovlev told Broadband TV News that Russia will not be ready for Netflix for the next 3-5 years.
The reasons he gave were compelling: no established culture for pay-TV, too many high quality FTA channels and high piracy are all obstacles to success for the likes of Netflix.
On the other hand, all this slowly but surely is changing. Firstly, people in Russia are realising that if they want more they have to pay for it.
For instance, ER Telecom, one of the country’s leading cable operators, has just announced that it now has the most comprehensive HD offer on the market – 50 channels, including the news MTV HD – and of course it is not being offered free of charge.
Secondly, the issue of piracy is being addressed by new legislation. Although it is still early days, Iakovlev said it is already having an effect, seen most visibly by the closure of a number of illegal sites.
The appeal of Russia lies in its sheer size. According to a new report entitled Online Video in Russia published by East-West Digital News, internet usage began significantly later than in advanced European markets but is now growing rapidly. Indeed, the internet penetration rate could reach 75% by 2020 and 90% by around 2030.
Internet usage is highest in Moscow and St Petersburg (over 70% of the adult population in late 2012/early 2013), though only 11% of Russian internet users live in Moscow and 4% in St Petersburg.
It’s important to note that as of this year over 50% of households and around half of internet users in Russia have broadband access.
Furthermore, online video is growing rapidly, with nearly 60 million monthly viewers now being recorded this year.
Clearly Russia is a market to keep a close eye. With or without Netflix, it certainly has a promising future.
