FOCUS: Russia’s MTS veers to satellite TV, seen as business diversification

By Yekaterina Yezhova

MOSCOW, Nov 24 (PRIME) -- Major Russian mobile operator MTS has launched satellite television under its own name, whose popularity can assist in promoting the service. Analysts said the operator is trying to diversify business and has a chance to get a good market share.

“We were the first in Europe to unite all possible channels of television content distribution under one brand. The entrance to the market of satellite television is a logical development of Russia’s largest operator, which allows us to get extra synergy out of existing resources and present a completely new product combining the advantages of satellite TV and mobile connection in Russia,” Vasil Latsanich, vice president for marketing at MTS, said.

The service was kicked off in teamwork with Sistema Mass-media, which manages media assets of MTS’ major shareholder, multi-industry holding AFK Sistema.

Users of the new service will receive access to 160 channels in six languages, an option to form video content themselves with the help of delayed viewing, pause, video on demand, and a channel of communications with the operator thanks to a SIM card installed into the set-top box.

A kit of the user’s equipment of the MTS satellite television will comprise an antenna, an annual subscription for a basic package and a smart set-top box, which is a media center with interactive services, based on the convergence of satellite, mobile and fixed line connection. The satellite set-top box can also be linked to the Internet.

Oleg Popenko, a TV and media analyst at research company J’son & Partners Consulting, told Russian Connection the launch was the operator’s intention to diversify business.

“The decision will help MTS provide clients with a full range of services and save on networks of signal delivery. The uniqueness of the offer, including a great deal of interactive services, may be reached with the use of a 3G modem and a SIM card with the mobile Internet,” Popenko said.

MTS said that out of 160 channels of the basic package, offered at 1,200 rubles a year, 30 channels are translated into a high definition (HD) quality. The starting package also includes regional versions of television channels for the Far East, Siberia, the Urals, the Volga, north and south of the country. Thematic entertainment, sports and children’s packages will also be available.

Broadcasting is done from the ABS-2 space apparatus, whose digital signal is available for 95% of households from the western exclave of Kaliningrad to Vladivostok in the Far East.

The installed SIM card allows to switch on additional packages and check the balance. Clients can top up their balance via traditional options for mobile connection subscribers, like a Web site, terminals, and banking cards.

Sistema Mass-media provides licenses for satellite broadcasting and the lease of satellite channels. MTS, in its turn, is responsible for the general management of the project, cooperation with rights’ owners, construction and support of an onland equipment, as well as marketing, billing, sales and maintenance.

“MTS counts on a positive effect of the project on its business thanks to pay TV services sales, reduction of spending for the provision of cable and digital TV, sales of satellite content on the business-to-business market and the involvement of new mobile subscribers,” MTS’ Latsanich said.

The interface of smart-boxes was specially produced for MTS and gives access on the TV set screen to an interactive television program, exchange rates, maps, traffic information and newswires.

“The transformation of the content consumption structure has become one of the main trends on the pay TV market. Users got tired of linearity and want a tailored approach with a bright design and an appealing interface,” Vitaly Studitskikh, director of the MTS satellite project and general director of TsTV, a unit of Sistema Mass-media, said.

“Responding to clients’ wish, we’ve modified the service, we don’t only offer TV content under the MTS brand, but we provide high-tech set-top boxes, our own television interface and an option to split information and customize content.”

Popenko from J’son & Partners Consulting said that the Russian market of pay satellite TV market counted 14.37 million households as of the end of June. The largest players in the segment are Tricolor TV, Orion Express and NTV Plus, he said.

“Emergence of new operators at the moment is obstructed by an aggressive marketing policy of companies-leaders. However, in the mid-term prospect, MTS may gain a loyal audience thanks to high brand awareness,” Popenko said.

The analyst said that he does not know of similar services among cellular behemoths. “Large cellular operator AT&T showed interest to the acquisition of the DirectTV company, the second largest satellite operator in the U.S in early 2014. In the segment of pay TV we can speak about successful launches of similar services by U.S. satellite operators DirectTV and Dish Network,” Popenko said.

“The start of Over the Top (OTT) video services equipped companies with an option to transmit signal to such devices as smartphones and tablets, which increased coverage.”

(45.7926 rubles – U.S. $1)

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