FOCUS: Projected arts center may benefit MTS if conquers audience

By Yekaterina Yezhova

MOSCOW, Sep 30 (PRIME) -- Major Russian mobile operator MTS proceeds with expansion of its entertainment ecosystem as it agrees with group SAFMAR to participate in the launch of a performing arts center, MTS Live Arena. Analysts say the project would bring the operator extra cash and promote its brand if the venue gains popularity, while MTS hints at bestselling events, including Cirque du Soleil.

“MTS is creating a single entertainment ecosystem on the basis of the company’s resources. This is why events that will be held at MTS Live Arena will be fully integrated into the operator’s other services: ticket operators Ponominalu and Ticketland, aggregator MTS Afisha, which will announce events and create content to promote the place,” MTS press secretary Alexei Merkutov told PRIME.

The mobile operator teamed up with SAFMAR’s unit, commercial real estate managing firm Corporation A.N.D., in construction of the performing arts center nearby Skolkovo Innovation Center, a local Silicon Valley in the Moscow Region. The center with a capacity of 8,500–11,500 seats will open in 2020 and will host 130–170 events annually with a total attendance seen at 700,000 people a year.

“At the stage of final construction and technical fit-out, MTS will equip the site with systems of virtual reality (VR) shooting and broadcasting. The center will fill MTS’ own VR broadcasting service with high-quality content. MTS clients could get extra options and bonuses when buying tickets for the center’s events,” Merkutov said.

The mobile operator will also build a high-speed network of mobile data transfer, including 5G, and equip the center with projection screens of ultra-high definition and a unique digital system of navigation inside the building and a smart parking.

SAFMAR will invest over U.S. $70 million in the project.

“The agreement is signed for 10 years. We’ll invest several dozen of millions of U.S. dollars over the whole period. It’s not a one-time tranche, but annual payments. The contract can be prolonged upon its expiration,” the MTS press secretary said.

Georgy Vashchenko, director of operations on the Russian stock market at investment company Freedom Finance, doubted that MTS would invest more than $30 million.

Dmitry Bedenkov, head of the research department at investment company IC RUSS-INVEST, told PRIME, “It’s hard to estimate the mobile operator’s expenses, but its expenses on the project won’t be the main ones.”

“The project may be interesting for the mobile operator not only from the point of view of promotion of own services, but from the point of view of advertisement and brand promotion. However, a lot will depend on how much successful and popular the place would be in the eyes of the audience.”

Vashchenko at Freedom Finance said that MTS, which is in essence a provider of connection technologies, could have found other means of monetization. “Internet and TV audiences also bring profit, and monetization of online users could be a more promising way. It’s difficult to give an estimate, the center has not been launched yet. One can spend $1 on 1,000 ad impressions or earn over $100,000 on a broadcast of a spectacular competition,” he said.

The venue’s impact on MTS’ brand will depend on popularity of events. “If the site is made a center of attraction, like (Moscow multi-purpose stadiums) Otkritie Arena or VTB Arena, it will push the MTS brand upward,” the analyst said.

MTS expects that with all opportunities of the venue, all its investments will pay back and bring additional value to the operator’s name, which is the most expensive Russian telecommunications brand and the only Russian brand that has been in the rating of 100 world leaders, BRANDZ, for the fifth year in a row, as the operator’s press secretary Merkutov said.

“Besides, MTS intends to earn from the sale of tickets to events, their organization and broadcasting, and extra services, including advertising and targeting, related to work of the venue,” he said.

As to performers, they will be chosen in accordance with MTS Live Arena’s strategy, whose development rests with Anschutz Entertainment Group (AEG) as a strategic business consultant. AEG is a Los Angeles-headquartered sporting and music entertainment presenter and a subsidiary of The Anschutz Corporation.

“MTS plans to become one of producers of future events at the venue. There are no limits in engagement of third-party partners. The venue will mainly target the mass market of entertainment and show, high-profile celebrities both global and local. (Canadian entertainment company) Cirque du Soleil will be one of lessees of the site,” Merkutov said.

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