FOCUS: Mobile operator MTS’ new e-cinema may get 2% of 2021 market

By Yekaterina Yezhova

MOSCOW, Apr 26 (PRIME) -- Major mobile operator MTS has launched new online cinema KION to become one of Russia’s top three by 2024, while analysts say MTS may gain up to 2% of the 40 billion ruble online video services market by the end of 2021.

“Launching an online streaming platform under a new brand is a major milestone for MTS as well as a strategic step forward…This provides a great opportunity for us to strengthen brand loyalty across the entire MTS ecosystem. By tying the platform to our other services – as well as leveraging our big data and AI capabilities – KION will be able to provide customers a unique, personalized content offering at an attractive price point,” MTS President Vyacheslav Nikolayev said in a statement.

KION is an over-the-top (OTT) video streaming platform for mobile devices and smart TVs featuring thousands of films and hundreds of TV channels. Its library will have MTS original and partner content, including TV channel Channel One. MTS Media CEO Igor Mishin is in charge of the project’s development together with the operator’s three other means of delivery of MTS TV content – satellite, cable, and IP TV.

MTS did not disclose investment in the initiative, while Yevgeny Mironyuk, an analyst at investment company Freedom Finance, said that the operator has everything necessary to develop an online cinema, and yet additional expenses may amount to tens of millions of U.S. dollars needed mainly to produce original content.

“KION is a successor of online cinema MTS TV, which also included satellite, cable, and IP television. According to the company, more than 11 million people in Russia had television services via MTS as of the end of 2020, but researcher J’son & Partners counted over 2 million MTS TV clients,” Mironyuk told PRIME.

MTS said it wants to join the market’s top three by the end of 2023.

News and research agency TelecomDaily earlier valued the total revenue of the country’s online video services at 38.9 billion rubles in 2020, up 52% on the year. The leaders were ivi with 22.5% of the market, Okko with 13.6%, YouTube with 9%, Netflix with 8.4%, and Wink with 7.3%.

“By revenue, MTS has 0.5% of the online video market, which is consolidating. I think that there will be three to four players holding some 70% of the audience in three years. They may be ivi, Okko, KinoPoisk, Netflix or Premier, for example,” the agency’s Director Denis Kuskov said.

“From the point of view of financial results, KION may get 1.5–2% of the market by the end of 2021.”

Online cinema subscribers paid 315 rubles per month on average in January–March, and 27% of the users still watched video for free, which means after watching advertisements. By audience, ivi had 34.3% of the market, KinoPoisk had 20.8%, Okko 11%, Netflix 9%, Wink and Megogo had 7% each, according to TelecomDaily.

“The main advantages of the project are Mishin, investment from MTS’ core shareholder Sistema, and partnership with Channel One. It’s obvious that KION’s content will not only be shown on its own website, but on other websites. Another advantage is that MTS as a connection operator may give free traffic for the service. The disadvantages are high content production costs and stiff competition with other market players,” Kuskov told PRIME.

He said that MTS counts not only on own clients, but also on a wider base.

MTS said KION will present 25–30 premieres by the end of 2021 and offers a new flexible film format, called “kinostories”, when viewers can watch them in full or in 10–15 minute segments.

“Looking ahead, we have filled our pipeline with a slate of originals, with new exclusives premiering every month in 2021. We are launching new formats and building a personalized recommendation system that will provide a qualitatively new viewing experience – in the future content will adapt to our lifestyles, and not vice versa,” Mishin said in the statement.

(75.0893 rubles – U.S. $1)

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