On the evidence of its performance in 2017, the future looks bright for Russia’s OTT sector.
Data produced by TMT Consulting, made public at CSTB 2018 and subsequently published by Comnews, shows that the value of the online movie market in Russia grew by 50% last year to R7.2 billion (€102 million). Ivi was the leading player, with a share of 35%, followed by Okko (17%), Amediateka (15%), Megogo (12%), Tvigle (7%) and Tvzavr (6%), with the remaining operators claiming a combined 8%.
Of particular significance was that for the first time revenues from paid-for services exceeded ad-funded ones. The former amounted to R4.4 billion, or 88% more than in 2016, while the latter were worth R2.8 billion, a much more modest 15% increase on the previous year.
Clearly a major change is taking place in Russia’s OTT market, with a growing number of viewers now willing to pay to receive services. This has been put down to such factors as improved content offers, the widespread ownership of smart TVs and availability of higher broadband speeds.
Furthermore, one could also argue that while the war against piracy in Russia is far from over, this trend indicates that it maybe being won.
This week we saw two of the top six players, Okko and Megogo, release their latest results. What was particularly striking was how much their revenues increased by in 2017, with Okko’s nearly doubling to R1.4 billion and Megogo’s increasing by 1.6 times to just over R1 billion.
Okko operates a pay-only business model, while Megogo derives around 70% of its revenues from advertising and the remainder from payments. In keeping with market trends, Megogo saw the latter increase by 2.6 times in 2017.
Looking at the bigger picture, on demand services in general are becoming increasing popular in Russia. The content they offer is seen as an attractive alternative to that shown on FTA TV and a growing number of viewers are willing to pay for it.