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FOCUS: Legal video market could double to 59 bln rbl in 2022

By Yekaterina Yezhova

MOSCOW, Apr 8 (PRIME) -- The Russian market of legal video has soared in recent years, including a 56% growth in 2018 alone to 24.86 billion rubles mainly thanks to a higher number of people willing to pay for content. The industry would likely expand further by 24% per year on average to 58.72 billion rubles in 2022, experts said.

The industry pushes forward in rubles for a third year in a row. Growth amounted to 32% in 2016 to 11.18 billion rubles, value-added tax (VAT) excluded; to 42% in 2017 to 15.89 billion rubles, and 56% in 2018 to 24.86 billion rubles, Json & Partners Consulting said in a research.

The compound annual growth rate (CAGR) will stand at 24% in 20192022. The total income from the provision of legal video services to users could reach 32.44 billion rubles in 2019; 41.82 billion rubles in 2020; 50.49 billion rubles in 2021; and 58.72 billion rubles in 2022, excluding VAT, the researcher said.

Json & Partners Consulting highlighted several future trends, which include a higher revenue of pay models of monetization, mainly subscription; higher incomes from out-stream advertising, which are commercials only for mobile devices; cooperation of market participants; production of own content by e-cinemas; expansion of cross-platforms; and an offer of top quality content.

The main growth factors in 2018 were higher demand for subscription; a widening of advertising tools with out-stream; and a stronger role of local Internet giants Yandex and Mail.Ru Group, which owns the countrys most popular social networks VKontakte (VK) and Odnoklassniki, as well as network My World.

The countrys share in the worlds market firmed in 2018 to 0.6%.

The researcher analyzed revenue of 68 companies, including 15 online cinemas, such as ivi and Okko; 24 TV channels, like Channel One and CTC; 11 pay TV operators, such as Rostelecom and MTS; two digital distribution platforms, iTunes and GooglePlay; and two new segments in 2018: five social networks, including three of Mail.Ru Group, Facebook and Instagram; and 11 aggregators and information services, like Yandex.Video and Afisha.

The market breakdown by income as seen by the researcher:

Player type 2017, % 2018, %
Online cinemas 58.8 54.9
Social networks 10.5 13.6
Operators 11.8 9.9
TV channels 10.9 9.6
Aggregators and information services 3.2 8.0
Digital distribution platforms 4.9 4.0

Incomes of operators, TV channels, and aggregators are comparable by volume. In view of their large audience, aggregators and information services will be able to raise revenue faster than the market in the future and occupy the third place in the breakdown, Json & Partners Consulting said.

Online cinemas remained the top earner, followed, although with a huge lag, by social networks.

Alexander Schepilov, head of VKs video platform promotion, said social networks users upload over 3 million videos daily that get more than 650 million views within 24 hours.

This is one of the most popular types of content of the social network. We think that the key difference between VK and other video platforms is the social network component. A video can not only be uploaded and viewed, but also sent to friends and discussed in a public chat, for example, he told PRIME. VKs monthly audience counts 97 million people.

A rising number of authors and partners upload videos and hold broadcasting in VK, like sports events, reality shows, Russian and foreign series, fiction and documentary films. The recent hot examples are live coverage from fashion weeks from World Fashion Channel, interviews with actors Mads Mikkelsen and Christoph Waltz, filmmaker Robert Rodriguez, and a private concert by singer Timati, he said.

Over 80% of views are made on mobile devices. Weve recently observed a rising popularity of mobile viewing of short videos, and the trend will persist in 2019.

The experts studied four models of video monetization. They are advertising video on demand (AVOD) free provision of video services for viewing a certain number of advertisements; subscription video on demand (SVOD) a pay model of giving access to a library of content without any limits for viewing at a flat rate per month; transactional video on demand (TVOD) a pay model of renting out a unit of content to viewers for a limited period; and electronic sell through (EST) a pay model of purchasing of a digital copy of content.

The advertising model soared 53% in 2018, and all the pay models by 62%.

In 2018, AVOD held 57% of the market, or 14.2 billion rubles in revenue, before commissions; SVOD had 24.2%, or 6 billion rubles; TVOD had 9.6%, or 2.4 billion rubles; and EST accounted for 9.1%, or 2.3 billion rubles, VAT excluded.

Schepilov at VK said most videos in the social network are user content, but views are mainly won by content of professional authors and publishers.

VK has several ways of monetization for authors: partnership, when a user uploads a video, which is moderated and complimented with advertisements, which bring income to the author; an advertising model for communities, and native advertisements, when videos mention an advertiser, but are also useful and informative, he told PRIME.

(65.4072 rubles U.S. $1)


08.04.2019 09:56
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