FOCUS: Sanctions axe e-cinema market’s rise but local players widen shares

By Yekaterina Yezhova

MOSCOW, Aug 8 (PRIME) -- The growth of Russia’s legal online video market slowed down to 5% on the year in January–June after a 31% rise a year earlier, battered by Netflix and Megogo’s departure and the lack of official releases of foreign blockbusters to the benefit of pirates, experts said.

“The people are inclined to be more economical, there are no new releases, and the market fails to earn significant cash,” news and research agency TelecomDaily General Director Denis Kuskov told PRIME.

The country’s market of legal online video services rose by only 5% on the year to 25.909 billion rubles in January–June compared to a 31% leap on the year to 24.748 billion rubles in the same period of 2021 and 71% to 18.840 billion rubles in the same period of 2020, according to TelecomDaily.

The pay model continued to rise to 23.068 billion rubles in January–June from 20.666 billion rubles a year earlier. The advertising model shrank to 2.841 billion rubles from 4.083 billion rubles.

“The absence of new Hollywood content hit revenue,” Kuskov said.

In March, U.S. subscription streaming service and production company Netflix and media service Megogo left Russia. “Netflix users turned to pirate resources. The clients of Megogo melted into the audiences of other online cinemas,” Kuskov said.

By revenue, Kinopoisk, part of Internet company Yandex, widened its market share to 23.2% in January–June from 13% a year earlier. Yandex said in its April–June report that revenue of its Plus and Entertainment Services – comprising Kinopoisk as well as Yandex Plus, Yandex Music, Yandex Afisha, and Yandex Studio – rocketed by 50% on the year to 6.150 billion rubles with “the increase primarily driven by the growth of subscription revenue on the back of the expanding base of paid subscribers and changes in tariff mix.”

Ivi’s share in the market’s January–June total revenue rose to 22.8% from 22% a year earlier. Wink, part of state-controlled telecom and digital company Rostelecom, grew to 12.7% from 10%, and Okko’s share climbed to 11.9% from 11%. KION, the online cinema project of major mobile operator MTS, raised its share to 5.5% from 4%, according to TelecomDaily’s research.

The experts said the country’s market leaders seem to cement their positions, but pirates won more from the current situation “because content of the retreated players stays mainly unique and one cannot get it by switching to one of the legal Russian services.”

Researcher GfK calculated that the number of clients of online cinemas, including free and trial subscriptions, fell to 42% in April–June from 46% in January–March, but rose from 38% in April–June 2021.

The volume of paying subscribers shrank to 28% in April–June from 30% a quarter earlier, yet climbed from 23% a year earlier.

“The withdrawal from the Russian market of Netflix, Megogo, and other services, undoubtedly contributed to the decrease of the total number of subscribers of online cinemas in Russia, but it was a minor fall: most likely, the majority of the clients of the retreated services continued to use other online cinemas,” the GfK experts said in the study.

“In addition to the departure of Netflix and Megogo, other factors could have also influenced the total number of the subscribers – for example, switching of the bulk of the people from entertainment content to news, reduction of new content in online cinemas, weaker marketing activities. At that, the number of city residents who pay for subscriptions showed the minimal change.”

According to GfK, Kinopoisk retained its leadership in April–June, accounting for 14.7% of total subscriptions, down from 15.1% a quarter earlier.

Ivi’s share fell to 10.1% from 12% a quarter earlier. Wink had 7.3% against 7.4%, Okko had 6.7% against 7.9%, and KION’s share rose to 3.8% from 3.7%.

(60.3696 rubles – U.S. $1)

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