How well is Netflix doing in Russia and what are its prospects for the future?
Available in the country since early 2016, it was until late last year hampered by the fact that it offered English language content with limited localisation. This placed it at a clear disadvantage when competing with Russian on demand services.
The big change came when, in compliance with legislation limiting foreign ownership of such services with over 100,000 Russian users to 20%, it entered into a partnership last September with National Media Group (NMG). This was soon followed by a change in pricing structure, with customers no longer being required to pay for Netflix in euros but instead given the choice of three plans – basic, standard and premium – charged in roubles. Even more importantly, it became a fully localised service, with an offer that initially included TV series and films in Ultra HD and HDR and some 40 Russian films. Russian content, including the TV series Epidemiya, also became available internationally.
Given that NMG is a key player in Russia’s media industry and accounts for some 25% of its pay-TV market, Netflix’s position looks increasingly promising. Indeed, figures published by Kommersant earlier this month, quoting information about Netflix’s operating company Entertaining Online Service, points to it ending 2020 with between 180,000 – 500,000 paying customers. Given its current rate of growth, doubling the total to up to one million by this December looks realistic.
However, as has been pointed out by J’son and Partners Consulting, a major shift took place in the Russian on demand market last year. It relates to the two different approaches now being adopted to the monetisation of video content, with Netflix being categorised as a ‘mono service’ with a business based solely on the sale of such content. The second approach places video as part of an ecosystem that offers customers a variety of services and is believed to have a better long-term future.
For more information about Chris Dziadul, please visit https://www.chrisdziadul.com