Translated by
2019/07/11 00:14:55

Online video (market of Russia) Online movie theaters

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Content

Models of monetization of video services

  • AVOD (advertizing video on demand) – advertizing. Video is followed by a certain number of advertizing messages;
  • TVOD (transactional video on demand) – paid. Lease by the viewer of unit of video content during limited time;
  • SVOD (subscription video on demand) – paid. Access on a subscription to library of content for a certain time without restriction of number of viewings;
  • EST (electronic sell through) – paid. Acquisition of the digital copy of content by the user

Structure of the market

  • Online movie theaters are content aggregators giving an opportunity of watching video both via the websites of projects, and through applications of services for mobile platforms and Smart TV. For example, ivi, Amediateka, Okko, etc.
  • TV channels – the broadcasters monetizing first of all the content on the Internet on paid or advertizing model (STS, Channel One, TNT, etc.)
  • Operators are the operators of paid TV who implemented services of viewing paid video content on prefixes (STB) in the form of VOD or cinema halls on allocated channels (Rostelecom, Beeline, MTS, etc.)
  • Platforms of digital distribution are video content aggregators providing applications for mobile platforms and Smart TV with a possibility of viewing without binding to network of specific provider (iTunes, Google Play, etc.).

2019

Deputies permitted to insert some advertizing into Internet video

The State Duma rejected the bill providing restriction of demonstration of advertizing in online video. Only 89 parliamentarians voted for adoption of the relevant amendments in the law "About Advertising". Broadcast of a meeting could be seen on the website of the State Duma[1].

The bill was entered in February by deputies from a batch of LDPR Alexander Starovoytov, Vasily Vlasov, Elena Strokova, Oleg Lavrov, Sergey Marinin, Pavel Shperov and also the vice-chairman of the State Duma Committee on ecology and environmental protection Kirill Cherkasov and the Chairman of the Committee on work, social policy and affairs of veterans Yaroslav Nilov.

Bill essence

According to the rejected bill, video content on the Internet can be interrupted by advertizing only after demonstration to the viewer of warning that the commercial insert will begin soon. The exception is made by only sponsor's advertizing.

Besides, advertizing it is impossible to interrupt religious video records and video content with duration less than three minutes. In such rollers it is possible to show sponsor's advertizing, but only at the beginning and at the end, at the same time the cumulative duration of inserts should not exceed 15 seconds.

Any advertizing, including sponsor's, it is impossible to interrupt broadcast of propaganda materials — it is stipulated by the legislation Russia about elections and a referendum. In videos which can be watched exclusively for a fee no advertizing should be.

Cases when the producer on the website or on the page in social networks places materials of information character about the goods with himself, are not considered as advertizing. Also information on activity of the company, actions, actions, discounts is not considered advertizing. Information on discounts and actions can also be placed on resources where different coupons and discount tickets are offered, it will not be advertizing too.

Dmitry Medvedev charged to consider release of online movie theaters from the VAT

The prime minister Dmitry Medvedev in March, 2019 charged to handle an issue of release of online movie theaters from payment of the VAT, Vedomosti with reference to the minutes of Government council for cinema writes. It is specified that the meeting took place on March 15, 2019, assignment is given to the Ministry of Finance, Ministry of Culture and the Ministry of Telecom and Mass Communications, completion date - till July 5, 2019.

Vedomosti notes that online movie theaters ask to provide several years them tax benefits as sale of tickets by normal movie theaters is not assessed with the VAT, and online movie theaters provide to the population services of the same sort, at the same time paying the VAT at the standard rate of 20%. On council, according to Vedomosti, this question was brought up by the founder of ivi [Tumanov Oleg]], Tumanov confirmed it.

2018

IAA TelecomDaily: 16.49 billion rub (+46.3%)

According to IAA TelecomDaily, total revenue of legal online video services in Russia at the end of 2018 made 16.49 billion rubles (at the end of 2017 it equaled 11.27 billion rubles). Revenue gain year-on-year made 46.3%. According to the forecast of the agency, the market will save annual growth rate at the level of not less than 30-35%, thus its volume at the end of 2019 can exceed 21.4 billion rubles. Among players of the market the gain of a share was provided by only IVI and OKKO whereas YouTube lowered for last year the share in the Russian market. Online the TVZavr movie theater for the first time left number of the most growing players, having taken only the 7th place.

The paid model high rates increases a share and continues to dominate over advertizing model. In structure of revenue of online video services at the end of 2018 its share made 63%, having added nearly 6 items since the end of 2017.

In proportion the share of advertizing revenues decreases. And the share of paid model (tVod + ESE and sVOD) reached 2/3 in a total amount of the market, it is the share of advertizing model (aVod) only a third.

The largest online video services in the Russian market at the end of 2018 were ivi, YouTube and Okko with shares of 23.9%, 14.7% and 12.8% respectively. Nearly a half of all revenue is the share of three these players. Megafon TV (+87.4%), Okko (+79.9%) and ivi (62.5%) remained leaders in growth of revenue. The Tvzavr company, for the first time for these years, left the first three on revenue development, having taken only the 7th position.

Among the main trends of the Russian market of online video services it is possible to select the following:

  • Growth of a market share of paid model of rendering services over advertizing: the ratio of these models in a total amount of revenue already makes 2/3 to 1/3 and the gap continues to grow.
  • The share of the citizens using nonlinear watching video (watching movies, series, TV programs on the Internet at least once a week) continues to grow from year to year: in 2017 it made 38%, in 2018 — 41%.
  • In structure of consumption of nonlinear viewing the PC and notebooks dominate though they also lost 1 item p in a year, 47% were the share of them. In 2018 27% of users watched online video from mobile devices and another 26% from home screens.
  • Penetration of Smart TV continues to grow. So, in 2018 sales of "smart" TVs made nearly a half: 2.7 million from 6 million pieces, and their penetration grew from 15.2% to 17.1%. The Russian park of TV-receivers of Smart TV at the end of 2018 made 19.1 million devices. 79% from them are connected to the Internet.

J’son & Partners consulting: 24.86 billion rubles

Total sales of the market of legal video services from provision of services in Russia in 2018 were 24.86 billion rubles excluding VAT. It is assessment according to legal video in the Russian Federation since many online movie theaters expand geography of the presence and have income from foreign citizens. The share of Russia in the universal market increased in a year a little and made 0.6%.

The industry increases the third year in a row growth rates in rubles. If in 2016 growth was 32% in relation to 2015, in the 2017th 42%, then in 2018th already 56%.

The pacing factors influencing growth:

  • Demand of users for subscription model increases.
  • Growth of advertizing stock at the expense of advertizing out-stream.
  • Gain of a role of the Russian Internet giant (Yandex and Mail.ru).

Online movie theaters accused "Yandex" of the help to Internet pirates

Search systems are the main source of traffic on piracy resources, St. Petersburg International Economic Forum online movie theater ivi.ru Oleg Tumanov SimilarWeb" Yandex.metrics " follows from the presentation of the CEO shown during (PIEF) which is based on data,[2].

The share of "Yandex" in search traffic of ten largest piracy resources, according to these data, makes 78%. At the same time at ivi.ru the traffic share from "Yandex" is equal to 15%, the share of Google on this indicator makes 60.3%.

The income of owners from the solution of a question with placement of illegal content on the Internet can be increased by four-five times, is mentioned in Tumanov's presentation.

The board member of Association of producers of cinema and television, cofounder of the Cosmos Studio production company Alexander Akopov within the session on PIEF said that "Yandex" is the main piracy platform today. He specified RBC that both "Yandex", and Google are engaged in piracy, but from the Russian service of damage it is more many times.

2017

TelecomDaily: 11.6 billion rubles excluding VAT (+37%)

According to IAA TelecomDaily, total revenue of online movie theaters in Russia at the end of 2017 made 11.6 billion rubles (excluding VAT). At the end of 2016 – 8.5 billion rubles. Growth in a year was nearly 37%. The provided digits have the minimum error in relation to actual market size online of video and much less, than at colleagues from other analytical agencies which take estimates of players of the market, without check of reality of the provided data. A significant amount of the market participants working on the AVOD model is shown in advertizing revenue of the company by advertizing budgets which were placed on a video resource by the advertiser, others – means which came to the platform. Therefore, the first reflect revenue without deduction of the commission to the agencies (it makes about 40%), others – with its deduction. Also a part of the companies shows revenue considerably big, than comes to them to accounts of the Russian companies, thereby implementing transfer of a part of money to accounts of the third parties without payment of taxes. All this does the market not transparent and puts the companies in unequal conditions in terms of recognition of results of their activity in professional community. Financial reporting systems are one more reason of bias of the market: some players publish the reporting under IFRS, others – under RAS which indicators it is often incorrect to compare among themselves (for example, revenue from access to an annual paid subscription of service according to IFRS will be recognized as parts within 12 months, and in RAS – it is single-step in a month of connection of an annual subscription). Thus, many data on market sizes and shares of the companies published in media, for today, are incorrect and strongly distort real economic indicators of the market, interfering it with objective and transparent assessment. Distinctive feature of the report is obligatory comparison of the financial information provided by the companies with their financial statements (RAS, IFRS), recalculation of data and attempt to lead indicators to a single system of coordinates that gives the chance considerably to lower an error of estimates and to see more reliable digits.

For the reporting period it is possible to select the following:

  • Market leaders on total sales at the end of 2017 are: IVI wins first place from shares of 20.9%; Youtube takes the second position from shares of 15.5%; Rostelecom, the attendee, only from operators of broadband access, in rating takes the 3rd place from shares of 10.4%.
  • The share of paid model from year to year increases and reached 56.5% at the end of year; the share from advertizing model, on the contrary, decreases and at the end of 2017 reached 43.5%.
  • The TVZavr company (+108.1%) became the leader in revenue development among all online movie theaters of the Russian Federation for the period 2016/2017, further there are Megafon (+89.8%), Okko Online movie theater (+78.5%)
  • The maximum audience share of online video remains behind category PC and notebooks (48%), on home screens 26%, are the share of mobile screens – 26%
  • The market shows significant growth, however at the same time many companies all the same try to provide the achievements with even big exaggeration that, in fact, blurs a true picture. The reasons of it are on a surface as almost all them them are offered for sale and there is a need to improve activity indicators.
  • The most open companies i.e. which provided on demand all necessary reliable data up to financial statements are Tvzavr, Rostelecom, ivi.


Pacing factors of market development of online video

  • The attention to online video services from the state will grow. The first essential amendments are already adopted to the legislation regarding regulation of online movie theaters. They were actually equated to media and limited a share of the foreign capital in 20% (provided that the share of users from the Russian Federation exceeds 50%). Rules of issue of distribution certificates on movies including for demonstrations through services "video on demand" changed.
  • Despite all available difficulties (pressure of legislators, a limited gain of the new audience, economic instability and so forth), the current situation is favorable for development of online movie theaters. Online services "video on demand", working in a legal segment, in the next years have high potential of development in the domestic market as there is practically no competition from potentially powerful rival – operators of a pay TV.
  • Blocking of piracy resources considerably affect behavior model of users and, as a result, promote growth of paid models of monetization. Online movie theaters are faced by an important task - to create a habit of the appeal to online video services, to acquire characteristic situations and circumstances of use of legal video services.
  • If earlier building of libraries of content was one of the main instruments of the competition, then now competitive struggle will be is the cornerstone by understanding of needs of the viewer, his preferences concerning genres of video, screens and typical circumstances of viewing. Experience of foreign movie theaters shows that production of own content – one of powerful tools in competitive struggle which allows to attract and hold users.
  • In the next several years the share of watchings long video through applications of Smart TV will grow, and it will mainly occur in a segment of legal video services.

For data collection the following sources were used:

  • Data of the companies (information exchange and replies to the requests of business indicators);
  • Reporting of the companies under RAS and to IFRS;
  • Expert poll, including within discussion of trends of development of the sector;
  • Systems of statistics (GA, SimilarWeb, Webomer and so forth);
  • Results of the commonly accepted programs of measurement of the market of online video (TNS, ComScore, etc.);
  • Researches of other agencies and analysts (GfK, ATs VI, etc.);
  • Industry statistics (Ministry of Telecom and Mass Communications, Rosstat, IAC Governments of the Russian Federation, etc.);
  • The other opened and closed sources.

J'son & Partners Consulting: 15.89 billion rubles excluding VAT (+42%)

At the end of 2017 the volume of the Russian market of legal video services reached 15.89 billion rubles excluding VAT (+42% to previous year). Total sales of players on advertizing model grew by 37.3%, and on all paid models - for 49.6%. According to estimates of J'son & Partners Consulting, by 2021 income of the market of legal video services can increase to 34.3 billion rubles. At the same time the annual average rate of a gain in 2018-2021 will be 21%[3].

The industry of online video grows around the world (+26% in income for 2017). Due to exchange rate stability the share of the Russian market in universal income grew from 0.5% in 2016 to 0.6% in the 2017th.

In a year in structure of the market there were next important changes. AVOD remains the most widespread model of monetization, but its share decreased from 60.5% to 58.5%. The subscription (the market share increased from 11.2% to 18.1%) grows at the advancing rates that moved it already on the 2nd place.

Online movie theaters occupy a market share in 71.6% (11.37 billion rubles excluding VAT). For 2017 the list operationally of the profitable companies increased again. TV channels increased a market share to 12% (to 1.91 billion rubles) and moved to the second place. The market share of operators made 11.5% (1.83 billion rubles). 780 million rubles (4.9% of the market, reduction by 1 items) earned platforms of digital distribution.

Key trends of market development of legal video services in Russia are:

  • Growth of revenue from paid models of monetization
  • Growth of video advertizing through more active participation in this segment of the market of the Russian Internet giant
  • Cooperation of operators of paid TV, online movie theaters, TV channels.
  • Increase in volume of the offer of content in 4K
  • Production of own content by online movie theaters
  • Integration of linear television into online movie theaters

Data of Mediascope

In 2017 only 26.3 million Russians used stationary PCs for watching video on the Internet. It is 9% less, than in 2016. Decrease in an indicator was caused that the increasing number of users browses online video from mobile devices. In September, 2017 the number of users in these two categories evened out, i.e. desktops stopped being a fixed asset watching video on the Internet. For viewing now more than 26 million Russians[4] too use mobile devices[5].

The Mediascope analytical company which carried out in December, 2016 and December, 2017 of a research among the Russian users at the age of 12-64 years from the cities with the population more than 100 thousand came to such conclusions human. According to Natalya Dmitriyeva, the CEO of Gazprom-Media Digital company which works at the video advertizing market, "in some age groupes, including among active buyers of 20-35-year age, to a third of Russians uses exclusively mobile devices today".

Advertizing budgets

Despite rapid redistribution of watchings video between the PC and mobile devices, the budgets selected for mobile and desktop advertizing practically did not change. About 1.6 billion rubles were spent for mobile advertizing in 2017 in Russia that makes only 20% of advertizing budgets of Runet in general, Gazprom-Media Digital reports. It while more than 40% of advertizing stock, i.e. the space provided to advertisers for placement of declarations are the share of mobile devices.

Dynamics of the market of video advertizing in Russia
Dynamics of the market of video advertizing in Russia

Gazprom-Media Digital explains inadequacy of distribution of advertizing budgets with lack of reliable tools for measurement of mobile advertizing. Mediascope provides data on advertizing in mobile applications only since the beginning of 2018, and tools for measurement of advertizing in browsers still are in development. By 2018 Gazprom-Media Digital predicts increase in a share of costs for mobile advertizing up to 30-40% of advertizing budgets, i.e. up to 3-4 billion rubles. Expected growth rates can be from 87% to 150%.

Video advertizing

If to speak separately about video advertizing, then the volume of this segment of the market was 8.3 billion rubles in 2017 that is 25.8% more than a similar indicator for previous year. Gazprom-Media Digital predicts to this segment slower growth, than at the advertizing market in general. In 2018 the market of video advertizing will grow approximately by 20%, having approached 10 billion rubles.

At the same time in 2017 the amount of funds which are put in video advertizing by federal advertisers increased by 23%, Gazprom-Media Digital proceeding from the analysis of own network reports. 47% of all means arrive from producers of convenience goods, 19% — from producers of medicines.

The most aggressive advertizing policy is conducted by players of the market of financial services. Jointly advertisers from banking and financial sector increased in 2017 the budgets selected for video advertizing by 2.5 times. Along with it inflow of new advertisers from the specified spheres on the video advertizing market is noted. According to Dmitriyeva, advertisers are ready to be spent for video advertizing on mobile devices even in the absence of precise measurements of audience.

RAEC and Okko: 13.64 billion rubles

In 2017 RAEC together with Okko online movie theater conducted a research of development of the Russian market of online video services from 2010 to 2017. 'Ecosystem of online movie theaters of Russia 2017'[6]. Research purposes - to describe online video ecosystem in Russia, to trace dynamics of development of consumption of online video from 2010 to 2017, to identify key players in the market of online movie theaters and model of monetization of content, to study audience and structure of consumption of online video in Russia, to define the place of the Russian market of online video in the system of world video consumption and extent of its influence on an ecosystem of digital economy of Russia.

According to results of the conducted research, the volume of the Russian market of online services in 2017 will be 13.64 billion rubles. Besides, 70% or 7.83 billion rubles of revenue in 2016 fall to the share of online movie theaters.

The largest players of the market at the end of 2016:


Analysts of RAEC give the following digital indicators on this cut:

Online video

Online music

  • 2.8 billion rubles in 2016
  • 3 billion rubles v2017 to year (+7%)

Online video

  • (the AVOD model is considered in the Marketing and Advertising segment)
  • 4.6 billion rubles in 2016
  • 5.1 billion rubles in 2017 (+12%)

Online music

  • 2.8 billion rubles in 2016

The audience of online video in Russia made 69.3 million people or 47% of the population for the end of 2016. Experts also note growth of audience of legal online movie theaters of Russia. Today it makes 39.6 million people, and in 2013 it made 21.7 million people.

'At the end of 2017 the paid model of watching online video for the first time overtook advertizing. The general ratio of advertizing revenue and the user payments made 42% and 58% respectively. It is possible to note that in Russia the culture of consumption of legal content gradually forms. 71% of users are ready to pay for legal content. 38% already buy or rent watching movies or series', - Sergey Plugotarenko notes.

In spite of the fact that most the large online movie theaters which are present at the Russian market use mainly monetization model by means of advertizing, most of experts and representatives of online movie theaters note growth of number of the users paying for content.

As of the first quarter 2017 the number of the paying audience made 3 million people, and the number of paid transactions for 2016 was 15-20 million. In general, in 2016 the general amount of the user payments at the Russian online movie theaters was 2.34 billion rubles.

Video services explain growth of indicators of the user financing, including the adaptation to work in the conditions of piracy and also growth of popularity of SmartTV.

Smart TV is one of the main platforms on involvement of the paying audience. According to the experts for the end of 2016 Smart TV park in Russia made 13.8 million devices from which 69% were connected to the Internet. The leader in an audience share of Smart TV in average monthly audience is the Okko online movie theater: at the general size of average monthly audience of 1.5 million people the audience share of Smart TV at Okko makes 76.8%.

83% of the audience of online movie theaters prefer a free consumption pattern of content with viewing advertizing, only 3% of users buy a paid subscription. The average price most of which of users are ready to pay for content unit - 50-100 rub.

For the last few years digital windows - periods of time between a premiere of the film at movie theaters and on the Internet were significantly reduced, today the gap averages 6 - 8 weeks while 5 years ago it made 16 weeks.


According to the results of a research the conclusion was drawn that the market of the online video services working in a legal segment in the next years has the considerable potential of development in the Russian market and also drivers and the limiting factors of development of online movie theaters and consumption growth of legal video are defined.

Drivers:

  • Growth of penetration of the Internet, development of 3G networks and LTE which allow to consume online video content most comfortably at a high speed without interruptions
  • Development of payment systems which allow to purchase paid content by method, convenient for users
  • Increase in level of service of online movie theaters, increase in quantity of content
  • Low quality of piracy services
  • Development of new technologies: VR, 4K, etc.
  • Emergence of the new devices suitable for watching online video
  • Growth of popularity of TVs of Smart TV which already began to force out normal TVs promptly
  • Growth of the involvement of users to this type of service thanks to an opportunity for the user most to select content on interest, to comment and exchange views
  • Expansion of geography of provision of services by the Russian video services

The limiting factors:

  • Insufficient level of digital literacy of users
  • Preserving of the high level of illegal consumption
  • Rather high cost of content and services
  • The competition from other types of online entertainments and services (a game, social networks, etc.)
  • Excess regulation

The list of counters of audience for online movie theaters

Roskomnadzor published in sentyaby the recommended list of the programs intended for determination of number of visitors of the websites – news aggregators and online movie theaters.

Seven resources, in particular, were included in the list: Sputnik, Yandex.metrics, "Reyting@mail.ru", "Rambler/Top-100", Mediascope, Liveinternet and HotLog.

According to amendments in the federal legislation, the duty to set one of the programs offered by Roskomnadzor intended for determination of number of users of the website is assigned to owners of news aggregators and owners of audiovisual services.

Technique of determination of number of users of audiovisual services

Roskomnadzor approved[7] a technique of determination of number of users of online movie theaters. The regulator suggested to count single appeals of unique users to the website within a day.

Department will receive these data on the basis of public information in the form of open data. Besides, the software for fixing of number of users can be used. If these methods will be unavailable, Roskomnadzor will send an inquiry to the owner of online movie theater.

It will allow the regulator to provide uniform approach to determination of number of users of the websites of audiovisual services, access to whom is provided for a fee or on condition of viewing advertizing. Such information resources will be entered in the register of audiovisual services.

If the online movie theater is visited by more than 100 thousand users from Russia in day, it will be entered in the register of Roskomnadzor and will have to observe provisions of the new law. They, in particular, include restriction of participation of the foreign capital, prohibition on distribution of video containing signs of extremism, age marking of content, etc.

Law on regulation of online movie theaters

The president Russia Vladimir Putin signed the law on regulation of online movie theaters in May, 2017. The document regulates legal status of the audiovisual services monetizing the services due to viewing advertizing or providing video content for a fee.

Owners of news aggregators are obliged to set one of the computer programs offered by Roskomnadzor and the users intended for determination of quantity an information resource on the Internet. The similar duty is entered for owners of audiovisual service. Also for them other duties are fixed: not allow use of service for the purpose of commission of penal acts, disclosure of the data which are the state or other specially protected by the law secret, the distribution of the materials which are containing public calls for implementation of terrorist activity or publicly justifying terrorism. The law also provides creation and maintaining the register of audiovisual services.

The Russian legal person or the citizen of Russia who does not have nationality of other state can act as the owner of audiovisual service. In other cases stated in the law, the decision is made by the government commission. These restrictions do not extend to the business entities having a strategic importance for ensuring defense of the country and security of the state. If the Russian audience makes more than a half of users of service, restriction for participation of the foreign capital in such company is introduced.

At the same time audiovisual service are not the information resources registered according to the law on media as online medias, search systems, information resources on which audiovisual works are placed mainly users.

In the Administrative Code the administrative responsibility for violation of the restrictions imposed on Internet services is established. In case of detection on audiovisual service of information distributed with violation of the law, Roskomnadzor directs the requirement about taking measures to elimination of the revealed violations. In case of further violation or non-execution of requirements the regulator takes legal action with the statement for access restriction to audiovisual service.

The law became effective on July 1, 2017.

On July 1, 2017 became effective Federal law No. 87-FZ "About introduction of amendments to the Federal law "About Information, Information Technologies and on Data Protection" and separate legal acts of the Russian Federation" which entered the concept "audiovisual service".

The website, information system or the computer program which are used for formation and (or) the organization of distribution to the Internet of set of audiovisual works, access to which is provided for a fee and (or) on condition of viewing the advertizing focused on the Russian consumers, and access to which within a day makes more than hundred thousand Russian Internet users, is recognized as audiovisual service. For the purposes of the Law the registered network media, search systems and information resources on which video is loaded mainly by Internet users are not considered as audiovisual services.

Only the Russian legal entity or the citizen of the Russian Federation who does not have nationality of other state can be the owner of audiovisual service. It is authorized to foreign persons to be only owners of shares in authorized capital of owners of audiovisual services. If the information resources directed to distribution of audiovisual works and having mainly (more than 50%) the non Russian audience, then implementation of ownership, managements belong to such foreign persons or control in the relation of more than 20% of stocks (shares) in the Russian audiovisual service it is possible only on condition of preliminary approval of such ownership, management or control by the Russian government commission for the control of the foreign investments.

The law assigns to the owner of audiovisual service a number of the duties including including, implementation of age marking of the posted video, a compliance with law about elections and rules about distribution of mass media, installation of the program for determination of number of users recommended by Roskomnadzor an Internet resource and also executions of requirements to contents of information distributed by means of such services. Besides, a ban on distribution by owners of audiovisual services of the TV channels or TV programs which are not registered according to the law on media is imposed. Creation of the register of audiovisual services is also provided.

Discussion of the bill of online movie theaters

The State Duma adopted in April, 2017 in the II reading the bill "About an Online Kinotetrakh" (OTT services). The document was pervochalno developed by deputies Andrey Lugovoi and Shamsail Saraliyev, but underwent criticism from the industry, the Ministry of Economic Development and the Government. In the II reading the bill underwent significant changes[8].

The bill provides regulation of activity of audiovisual services and creation of the corresponding register by Roskomnadzor. It will join the services performing demonstration of cinema for a fee or in exchange for viewing advertizing which activity is directed to drawing attention of the Russian audience and whose daily attendance in Russia exceeds 100 thousand.

To foreigners will prohibit to own foreign online movie theaters

To the foreign organizations and also podkontorlny foreigners to the Russian organizations and persons with a double citizenship, more than 20% at online movie theaters from the corresponding register are forbidden to own. But in the II reading this requirement was mitigated: now it will be belongs only to online movie theaters whose audience in Russia makes less than a half from the general audience.

However, and in such cases foreigners will be able to make in specially created government commission an inquiry for the occupancy permit online movie theater. Such permission can be issued provided that it will correspond to "the interests of market development of audiovisual services in Russia". Also permissions can be issued to foreigners on ownership of online movie theaters by the government commission on the foreign investments in strategically important industries.


The amendments adopted in the II reading will allow foreigners to own online movie theaters with mainly Russian audience. Also provisions of the bill do not extend to the services placing the user content - for example, YouTube. Became some of the main candidates for blocking according to present version of the bill Netflix.

Blocking by Roskomnadzor through Moscow City Court

When Roskomnadzor detects a resource which should be included in the register of audiovisual services, to his hosting provider the inquiry for providing information on owners of this service will be sent. Reply to the request should be sent within three days. Then the owner of a resource will have two months on reduction of its work in compliance with the law.

If the online movie theater does not meet the requirement about ownership, then Roskomnadzor will be able to demand through court access lock to it from the territory of Russia. The corresponding claims as the first instance will be considered by Moscow City Court.

To audiovisual service from the corresponding register still a number of requirements will be imposed. They will be forbidden to distribute strong language, information breaking a state secret, to propagandize terrorism, extremism, a cult of violence and so forth.

Besides, online movie theaters should observe requirements of the legislation on elections and to perform marking of the materials prohibited for children.

During the II reading from the bill removed the item which is originally contained in it which obliged online movie theaters to meet requirements of citizens and the organization about removal of unreliable information about them. Removed also item on need of inclusion in the Register of the audiovisual services focused on residents of one Russian region (for getting into the Register their daily attendance had to exceed 20 thousand). But there was prohibition on distribution of the TV channels and TV programs which are not registered in Russia as media.

Counters from Roskomnadzor

In the document there was a requirement about need for owners of online movie theaters to install the online counters recommended by Roskomnadzor. The similar requirement is introduced also concerning news aggregators (regulation of their activity began in Russia in 2016).

Penalties for online movie theaters

One more innovation which appeared in the II reading, this amending the Code of Administrative Offences about establishment of penalties for owners of online movie theaters. For distribution of the unregistered media penalties at the rate from 5 thousand up to 10 thousand rubles, on officials - from 50 thousand rubles to 100 thousand rubles, on legal entities - from 500 thousand rubles to 700 thousand rubles will be put on individuals.

For failure to implement of age marking penalties for individuals at the rate from 3 thousand up to 5 thousand rubles, for officials in the amount of 30 thousand rubles up to 50 thousand rubles, for legal entities - from 300 thousand to 500 thousand rubles are introduced. For dissemination of information propagandizing terrorism or extremism penalties at the rate from 50 thousand up to 100 thousand rubles, for officials - from 200 thousand to 400 thousand rubles, for legal entities - from 600 thousand to 1 million rubles are introduced.

Similar penalties are introduced also for non-execution by owners of online movie theaters the requirement of Roskomnadzor about elimination of violations of the law. Repeated non-execution of requirements of Roskomnadzor will be punished by penalties in the amount of for individuals from 200 thousand to 300 thousand rubles, for officials - from 500 thousand to 700 thousand rubles, for legal entities - from 1 million to 3 million rubles.

The State Duma decided on a concept of foreign video service

The State Duma Committee on information policy proposed in April, 2017 the amendment to the draft of the bill of foreign online movie theaters. The amendment assumes that service will not be defined as foreign if its main audience is made by citizens of Russia.

"If the most part of users is in the territory of the Russian Federation, this resource is not foreign", - RNS quotes the head of committee Leonid Levin.

Foreign such service will be if less than 50% of audience are the share of the Russian users.

Besides, amendments according to which audiovisual services will not be is among by searchers and resources with mainly user content are approved. In total 10 of 16 amendments were approved. The positive verdict to them was also rendered by Association of Internet video.

"We from the very beginning insisted that regulation of the market for the purpose of its development should not limit national players regardless of what structure of property at them. The share of the Russian users is very simple and clear criterion by which it is possible to separate the Russian services from foreign", - the head Alexey Byrdin told it.

In case of adoption of law it will become effective on July 1, 2017.

The government obliged online movie theaters to receive distribution certificates

The Ministry of Culture of the Russian Federation published the explanations concerning application of the changed rules of issue of the distribution certificate on the movie approved by the resolution of the federal government of February 27, 2016. According to changes, the distribution certificate is issued on three methods of use of the movie: demonstration in a cinema hall, rolling on the material carrier and "demonstration of the movie by other technical methods"[9].

As explains the ministry, the public should understand any methods of demonstration of the movie as the last point using technical means, including on the Internet. However demonstration of the movie means of television (including online versions of TV channels) does not join in this concept.

Activities of online stores for distribution of movies by their loading on technical means of the user (downloading) are also not "demonstration" of the movie in understanding of the law, says. However demonstration of movies through VOD services is referred to "demonstration".

"Obtaining distribution certificates on demonstration of the movie by other technical methods is necessary for movies which placement in Internet network was performed after entry into force of the specified resolution", - explain in Ministry of Culture.

The bill of restrictions for video services passed the first reading in the State Duma

The bill limiting a share of the foreign capital in the video services working in Russia passed in January the first reading in the State Duma. 321 deputies spoke in favor for the bill, against two voted.

The document in particular limits to 20 percent a share of the foreign capital in video services whose daily audience within a month makes more than 100 thousand users in all territory of Russia or more than 20 thousand users in one of regions. Also online movie theaters will be obliged to be registered in the register of Roskomnadzor. In case of adoption of law it should become effective since March 1, 2017.

Under operation of the bill as his authors and also representatives of the Ministry of Telecom and Mass Communications repeatedly emphasized, services with the professional, but not the user content, first of all, online movie theaters fall. On such video services as YouTube, its action will not extend.
At the same time the deputy Andrey Lugovoi said that "it is time long ago that social networks became telecom operators" because, according to him, through "Facebook, VKontakte extends terrorism, exactly there hire in ISIL (it is prohibited in the territory of Russia)"[10].

2016

Revenues of the largest piracy online movie theaters of 3.3 billion rubles

In 2016 the market of counterfeit online video grew more than twice, having reached 3.3 billion rubles. At the same time the total income of pirates of Runet in 2016 is estimated approximately at 4.3 billion rubles. And annual losses of the state in the form of the half-received taxes and fees are about 1 billion rubles, Izvestia writes.

According to suppliers of illegal online video have the research "Economy of the Piracy Websites — 2016" of Group-IB company, the highest income in this sphere. If in 2015 they earned 1.5 billion rubles, then in the 2016th is already twice more.

You watch Copyright on the Internet in more detail

The Ministry of Economic Development against the bill ISS

The Ministry of Economic Development (MEDT) criticized the bill "On Regulation of OTT Services" which was introduced to the State Duma by deputies Andrey Lugovoi and Shamsail Saraliyev. The text of a response is available at the disposal of CNews[11].

Foreigners will not show cinema to users of Runet

Foreigners and also the Russian organizations in which foreign entities possess 20% and more will not be able to control the online movie theaters included in this register. So work in Russia of such services as Netflix, will become impossible. In some cases the government commission on the foreign investments will be able to grant permission to foreign investors to own such services. Under operation of the bill the services posting the user video, for example, of YouTube should not get.

Online movie theaters which will be included into the register of Roskomnadzor will have to fulfill a number of the requirements. They will not be able to use the platforms for commission of punishable acts, promotion of terrorism and extremism, distribution of a pornography, disclosure of the state secret, a pre-election campaign, etc. Also age marking for protection of children from information, harmful to them, will have to be observed. Besides, owners online movie theaters will oblige to react to requirements of the citizens and the organizations about removal of information which is false, breaking a goodwill or violating the right to private life.

How to define the online movie theater focused on residents of Russia?

The MEDT specifies in the response that in the bill there is no technique of determination of that circumstance that the online movie theater is focused on residents of Russia. The bill understands as it online movie theaters which levy a payment from residents of Russia or place the advertizing focused on Russians. But the present legislation does not contain a definition of the advertizing focused on drawing attention of Russians or inhabitants of any certain territory, warn in the ministry.

"Corruption factor"

Even more objections caused determination of the online movie theater focused on residents of one territorial subject of the federation – the corresponding technique is also absent.
"The specified bill provision in the provided edition, according to the government decree "About Anti-corruption Examination of Regulatory Legal Acts and Projects of Regulatory Legal Acts", can be regarded as the corruptogenic factor "the width of discretionary powers" which is expressed in uncertainty of conditions of decision making", said in a withdrawal of the MEDT

The MEDT dropped a hint of doubt and the determination of audiovisual products which is rather used in the bill. "It is not clear what the legislator understands as set of movies, movies, other audiovisual works and TV channels, TV programs, video programs" — specify in the MEDT. In the bill thus tried to describe audiovisual services.

Also the MEDT considers it necessary to specify determination of the organizer of audiovisual service. In the current version of the bill it is the person performing formation and/or the organization of distribution in information communication networks of audiovisual products. But the concept "formation of audiovisual products" contains only in the Concept of development of TV and radio broadcasting in Russia for 2018-2015 and concerns only the broadcaster — the legal entity performing TV and radio broadcasting according to the license for broadcasting.

If the online movie theater ceases to correspond put in the bill of requirements for attendance, its owner can send to Roskomnadzor an inquiry for an exception it from the register. The MEDT considers that Roskomnadzor should monitor attendance of resources and, if necessary, exclude them from the register. At last, the bill obliges online movie theaters to designate the official responsible for execution of requirements of the legislation. But in the MEDT consider it expedient to permit online kinotetram to define an order of observance of requirements of the legislation independently.

Experts against the bill ISS

The working group "Communication and IT" at the Government of the Russian Federation prepared the conclusion on the bill of regulation of online movie theaters drafted by the Media and Communication Union (MCU). According to Kommersant[12], experts whom representatives of the Russian Association for Electronic Communications were among, Open network, Internet video, Association of Internet of Things and also a number of the large companies gave a negative assessment to the bill.

According to the edition, experts concluded that changes will lead to the market monopolization of online video by the players participating in development of the document whereas at the moment they occupy only 12% of a segment. Developers emphasize that their document only unifies the market.

Outputs of experts can be provided in the State Duma Committee on information policy already in the nearest future.

Amendments in the existing legislation regarding regulation of online movie theaters are stated in the document, and the main innovation – OTT is actually equated to media, projects with monthly audience more than 100,000 users fall under it, and foreign ownership of such services is limited to 20%. If the bill is adopted, all video services will have to be registered in the register of Roskomnadzor, in advance check the loaded content regarding observance of the Russian legislation and also delete irrelevant or false content about users at their request. Besides, to online movie theaters will prohibit to place a pre-election campaign[13].

ROTsIT against the bill ISS

When forming the bill the interests only of one group – domestic manufacturers and sellers of video were considered, and the interests of users were ignored. The bill the existing type harmful will affect most online movie theaters which create legal professional services for our users.

Adoption of the bill as it stands will allow to assign the status to the companies developing cable TV, OTT and VoD services legislatively. It is supposed that it will increase transparency of their activity which should be directed to increase in opportunities of consumption for audience of Runet.

The Internet should eliminate infrastructure barriers to increase in level of information independence of Russia, but not create them. The bill in the current edition can create 'gray spots' and barriers to consumers. Today there are no services capable in one step to substitute world resources (the websites, film studios) which could provide the solution of fundamental educational and entertaining tasks.

'Proposed measures of regulation look unreasonable and excessive. Closing the companies access to the foreign investments, the bill as a result limits possibilities for development and scaling of video services. Eventually it will lead to gain of a position of piracy resources on the Internet and again will create a discomfortable and safe environment for users of Runet', – the director of ROTsIT, Grebennikov Sergey considers.

ROTsIT opposes artificial restriction of various interactive services on the Internet. ROTsIT will actively interact with regulatory authorities regarding reduction of the bill to realities of the market and requests of millions of users of Runet.

Video service YouTube will not fall under law restrictions about regulations of online movie theaters, and concerns that it can leave from Russia, are not true. The RNS service with reference to the deputy head reported about it in November Ministry of Telecom and Mass Communications of the Russian Federation Alexey Volin. He emphasized that restrictions will not extend to services with mainly user content. "So professional content can be too, but its existence is not a reason for restrictions. A question in specialization of service" — the official reported. According to him, information that YouTube, allegedly, can leave the Russian market after adoption of the bill is "panic reading by lawyers who live by the principle that nothing is impossible and therefore frighten both themselves, and others".

"Yandex" and Mail.ru against the bill ISS

Protest against the bill on regulation of web messengers and online movie theaters in the Russian market expressed in November, 2016 "Yandex" and Mail.ru.

"Yandex" and Mail.ru filed a petition in the Ministry of Telecom and Mass Communications concerning the bill on regulation of messengers. The companies consider that the regulation option offered for consideration will only limit development of the Russian services for fast message exchange and audiovisual online resources.

The media communication union (ISS) made earlier the offer according to which the companies owners of messengers should identify users and sign agreements with the Russian telecom operators and also introduce restriction for dissemination of information, in particular that which violates the law of the Russian Federation. Under the bill foreign participation in authorized capital of the same online movie theaters should make no more than 20%.

The web companies Russia To Nikolai Nikiforov expressed to the Minister of Communications concern about current situation in the letter: "The offered restriction of the foreign capital in audiovisual services will promote decrease in availability of legal content, leaving of foreign investors from the Russian market, and the lack of the competition in this market will lead to quality degradation of services and degradation of the market in this part".

Bill ISS of regulation of online movie theaters

Deputies Andrey Lugovoi (LDPR) and Shamsail Saraliyev (United Russia) introduced in November to the State Duma the bill regulating work of online movie theaters. Write Friday Vedomosti about it. The Media and Communication Union (MCU) which integrated several largest telecom operators and media holdings was engaged in development of this document. Authors of the bill claim that they continue consultations with the industry that however do not confirm the independent associations and the companies which are not entering the ISS.

Amendments in the existing legislation regarding regulation of online movie theaters are stated in the bill ISS, and the main innovation – OTT is actually equated to media, projects with monthly audience more than 100,000 users fall under it, and foreign ownership of such services is limited to 20%.

However, this restriction does not extend to the strategic enterprises and also to projects which activity is regulated by the international treaty or the decision of government commission for the control over the foreign investments. The former version of the project mentioned also messengers, but this part was not included into the final version (for messengers it is going to develop separate regulation).

If the bill is adopted, all video services will have to be registered in the register of Roskomnadzor, in advance check the loaded content regarding observance of the Russian legislation and also delete irrelevant or false content about users at their request. Besides, will prohibit online movie theaters a pre-election campaign.

It is necessary to tell, the previous version the bill ISS was sharply criticized by market participants. It was opposed by online movie theaters and the Internet companies; online services of Yandex.video and "Афиша.Mail.ru" fall under operation of the bill in the existing formulations even (both of these companies have non-resident shareholders, and their shares are traded on foreign stock exchanges). Sharply negative assessment to the bill gave also expert advice at the government. However, despite industry protests, the document came to the State Duma almost without changes.

"Probably, an opportunity to get permission through the government commission somehow facilitates a situation, - Vedomosti quotes the CEO of Megogoviktora Chekanov, - but how exactly while it is impossible to understand, we never dealt with it". Anyway it does not change a situation essentially, he is sure: "In the market of online video in Russia the set of problems, TV channels and producers of movies lose the huge amounts on piracy, but instead of the ISS and now deputies are engaged in the fact that they destroy the most successful video services".

TMT Consulting: 4.8 billion rubles (+40%)

The Rossiisky market of legal online video services at the end of 2016 grew in money for 40%, having reached a point of 4.8 billion rubles. Such digits provide in the report analysts of TMT Consulting. It is important to note that the agency does not consider in the analytics app stores, such as Apple Store or Google Play and also operator IPTV/OTT products, for example, Interactive TV from Rostelecom. Though TMT Consulting considers the "Interactive TV 2.0" which is not demanding connection of the Internet from RTK.

Forecast of market development of OTT video services
Forecast of market development of OTT video services

From the specified 4.8 billion 2.46 billion rubles advertizing (+22% in comparison with 2015) and 2.34 billion rubles - paid model (+65%) brought. The greatest breakthrough in revenue, according to analysts, happened due to growth of Amediateka service and input of thematic subscriptions by the Online movie theater online movie theater Okko.

What factors had a positive impact on the market? First of all, it is work with content - increase in number of new products and exclusive offers and also implementation of a new format - 4K and HDR. Improvement of paid model (first of all, subscription) became the following important factor.

In addition to financial, 2016 was celebrated also by emergence in the Russian market of new OTT services: to us foreign Netflix and Amazon came, OTT-video services opened some more operators of paid TV. "Nevertheless, they do not make the big competition yet: at foreign players of a little localized content, and operator services are expected first of all the subscribers", - analysts note.

At the end of 2016 at 6 players the market share exceeded 5%. The first two positions remained for last year's leaders — ivi and Okko online movie theaters. The third year in a row about a half of the market is the share of these two companies, at the same time ivi share constantly grows (from 28% in 2014 up to 33% in 2016).

The leader in growth rates was the Amediateka service which revenue grew in a year by 2.12 times — it allowed online movie theater to be fixed in number of the largest players of the Russian market.

By estimates of TMT Consulting, the audience of OTT-video services at the end of 2016 grew by 3.0% and made 39.6 million people. Most quickly the audience of Smart TVs (height of 19%) and mobile devices (12%) grew within a year. At the same time the audience of the PC, though remains still to the most numerous, the second year in a row reduction shows.

According to forecasts of TMT Consulting, in 2017 the market of OTT-video services will continue to grow actively. Growth will happen generally due to paid services, market size will grow by 31% up to 6.3 billion rubles.

By 2021 the size of the market of OTT-video services will be 11.4 billion rubles, two thirds of revenue will fall on income from paid services. Average growth rates of the market (GAGR) in the next 5 years will be 10.4%.

The main trends in the next years will become:

  • change of structure of market participants owing to arrival of global players, transactions M&A, entry into the market of OTT of telecom operators and the IT companies;
  • primary development of paid model, first of all subscriptions;
  • orientation of services to the offer of exclusive content, including own production;
  • further expansion of geography of provision of services by the Russian video services;
  • implementation of further steps on market regulation.

J'son & Partners Consulting: 11.18 billion rubles (+32%)

At the end of 2016 the volume of the Russian market of legal video services reached 11.18 billion rubles. Growth in relation to 2015 was 32%. At the same time total sales of players on advertizing model grew by 22.4%, and on all paid models – for 50.4%.

According to estimates of J'son & Partners Consulting, by 2020 income of the market of legal video services will grow by 78% in comparison with 2016 – almost up to 20 billion rubles. Annual average rate of a gain in 2017-2020 will be 16%.

The industry of online video shows high tepa of growth around the world (+25% in income for 2016). For this reason the share of the Russian market in universal volume remained at the previous level of 0.5%.

In 2016 in structure of the market there were significant changes. As before, the most widespread model of monetization is AVOD. But players more and more successfully earn from paid content, making for it many efforts (development of platforms of delivery, advertizing, improvement of service and convenience of payment). As a result in 2016 the share of AVOD in the market considerably decreased and made 60.5%. The subscription which share increased from 3.8% to 11.2% became the main beneficiary. Now she takes the third place in structure of the market and advances a segment of EST.

Online movie theaters collected 70% (7.83 billion rubles excluding VAT) all income. The big contribution to it was made by paid services for audience of mobile devices and Smart TV. In a year the list operationally of the profitable companies increased.

Operators increased a market share from 11.7% to 12.2% (to 1.37 billion rubles) and moved to the second place. Basic reasons of it are growth of base of IPTV subscribers and effort of operators on promotion of Voddlya of the audience of paid TV.

The share of TV channels in a year did not change (11.8%). For nonlinear watching the video they collected 1.32 billion rubles. Introduction of the subscriptions granting the right to watch content without advertizing became an innovation.

660 million rubles (5.9% of the market, reduction by 1 items) earned platforms of digital distribution. Introduction of the VAT at sales of digital content is capable to slow down development of this segment in the next several years because of growth of cost for users.

Key trends of market development of legal video services in Russia are:

  • Increase in attention to the industry from the state. Amendments were prepared and adopted to the existing legislation regarding regulation of online movie theaters by the State Duma in the first reading. The main innovation – they were actually equated to media and limited a share of the foreign capital in 20%. The government the resolution changed rules of issue of the distribution certificate to movies including for their demonstration through VOD services.
  • Increase in cooperation of telecom operators and online movie theaters. In 2016 on such model the VOD-service started Tricolor TV – the player, the first in the number of subscribers, in the market of paid TV of the country.
  • Continuation of blocking of piracy resources. It directly influences change of behavior of most of users and, as a result, promotes growth of paid models of monetization.
  • Production of own content, integration of linear TV into online movie theaters. The main objective of online movie theaters – to differ from competitors as from the point of view of the user at increase in the size of videoshops the difference between different services vanishes.
  • Continuation of expansion of the Russian online movie theaters on international market. Practically all large online movie theaters of Russia are present at the CIS long ago. In 2016 they began promotion on the markets of foreign countries (Europe, the USA) generally for Russian-speaking audience. Calculations are made on a subscription, inexpensive to the western measures, to demanded content (first of all Russian cinema).

Data of Initiative

Almost a half of Russians - 47% of the population of the country or 69.3 million people - consumes video online. In comparison with other countries this indicator is higher than an average, said in the research Initiative which data are provided by Sostav. So, first place on consumption of video is won by Great Britain (77%), after it there are Australia (68%) and Canada (67%). Closes rating Indonesia (9%). Russia advances Spain (45%) in this list and Chile (42%)[14].

"In the first half of the year 2016 the quantity of the browsed video content in Runet grew by 14%. However by the number of the watched videos on one user our country considerably lags behind the developed countries and takes only the 9th place, but on viewing time Russians are in the lead that speaks about the bigger involvement into content", - the chief executive of Initiative Elmira Sabitova told.

According to the agency, 80% of audience watch video at least once in a week, and 44% do this every day. A year ago these indicators were 72% and 41% respectively. On average each Russian on the Internet watches 218 commercials a month, spending for this occupation in the amount 21 hour. And on viewing time Russia is in the lead together with Canada in which for similar time manage to browse 402 rollers.

At home the vast majority of users (95%) watch video. Only 7% of Russians turn on rollers in public institutions and 8% - in transport, however this category has the largest potential thanks to development of wireless networks in public places. On travel on viewing there is time only at 4% of compatriots.

Authors of a research note that Russians on average use more than two devices for viewing, and the share of the notebooks and stationary PCs involved for this purpose decreases (by 2% and 4% in a year), and the share of smartphones (for 5%) and tablets grows (for 12%). Smart TV (for 33%) became the leader of growth.

The most popular resource is YouTube, it is watched by more than 70% of users. In June the average time of viewing video service was 300 minutes, and the total quantity of the browsed minutes same month is estimated almost at 20.3 million minutes. And the audience of a resource is comparable to audience of TV channels: in the research Initiative YouTube on a scope is in the 7th place after Channel One, "Russia 1", STS, NTV, TNT and Ren-TV, having entered thus ten the most popular projects.

Still high share of viewings is the share of the user video – 83%, and in comparison with last year the indicator grew by 2%. Only 12% of viewings whereas, for example, in the USA[[]] the share makes up to 39%, and the same country is the leader in online video share in the total amount of investments into Internet advertizing (11%)|]] the share makes up to 39%]] are the share of advertizing content [[]] the share makes up to 39%, and the same country is the leader in online video share in the total amount of investments into Internet advertizing (11%)|, and the same country is the leader in online video share in the total amount of investments into Internet advertizing (11%)]] Russia from 6% is in the last place in this rating.

"The largest category in video to advertizing is FMCG in general and food in particular, however the share of FMCG is much higher in video out-stream (83%) whereas in-stream of video is more attractive format for advertizing of leisure and electronics", - Sabitova told.

TelecomDaily: 7.35 billion rubles

According to IAA TelecomDaily, total revenue of online movie theaters in Russia at the end of 1H2016 made 3.1 billion rubles. According to the forecast of the agency, annual revenues can reach 7.35 billion rubles.

For the reporting period it is possible to select the following:

  • The share of paid model from year to year increases and will reach 37.2% at the end of 2016; the share from advertizing model, on the contrary, decreases and at the end of 2016 will reach 62.8%.
  • On total sales among online movie theaters Yotube, IVI and Rostelecom are in the lead.
  • The TVZavr company (+50%) became the leader in revenue development among all online movie theaters of the Russian Federation in 6 months 2016, further there are a Google Play (+40%) and Tvigle (+37%).
  • Showed the greatest decrease in revenue in 6 months 2016 Zoomby companies (-21%) and Rutube (-6%).
  • The TVZavr company (+51%) became the leader in revenue development among free online movie theaters of the Russian Federation in 6 months 2016 (the online movie theaters using the aVoD model mean) also, further there are Megogo (+38%) and Tvigle (+37%).
  • In top-3 online movie theaters of the Russian Federation by the number of units of content in a videoshop Megogo, IVI, TVZavr enter.
  • The maximum share of watching video remains behind category PC and notebooks (49%), on home screens 27%, are the share of mobile screens - 24%. This half-year growth of a share was shown only by category of mobile screens (+4%) whereas in other categories decrease is recorded.

  

In 6 months growth of a market share was observed at the following companies: IVI, Rostelecom, Tvigle, Megogo, TVZavr. In turn positions lost Yutube, Rutube, CTC Media and ITunes. The largest growth of a share from 2014 1 half-year 2016, IVI (+5%) provided, Tvigle (+3.3%), to TVZavr (+2.9%).

  

In the first half of the year growth of a market share was fixed at IVI, Tvigle, Megogo, TVZavr and Channel One whereas Yutube, Rutube, CTC Media lost positions. The largest growth of a share from the total advertizing sales from 2014 1 half-year 2016 at Tvigle (+5.6%) and TVZavr (+4.8%).

Pacing factors of market development of online video

  • Online services 'video on demand', working in a legal segment, in the next years have the considerable potential of development in the domestic market – even despite a limited gain of the new audience, economic instability and other.
  • The period of 'spontaneous' extensive development of service caused by permanent inflow of the new audience sputtered out.
  • If earlier accumulation of volumes of available content remained one of the main instruments of the competition, then now competitive struggle will be is the cornerstone by spectator requirements, preferences concerning genres of video, screens and typical circumstances of viewing.
  • Online movie theaters are faced by the purpose - to create use habit, to acquire characteristic situations and circumstances for consumption of legal video.
  • In the next several years the share of watchings 'long' video through applications of Smart TV will grow: it will mainly occur in a segment of legal video services.
  • Despite all available difficulties, the current situation is favorable for development of online movie theaters as the competition from potentially powerful rival, there are practically no operators of a pay TV.

2015

J’son & Partners Consulting: 8.5 billion rubles

In 2015 the J'son & Partners Consulting company added new segmentation of players in market structure declaration. It is caused by need of more detailed accounting of trends and perspectives of development of the industry. All 50 companies which entered a research are separated into the following groups:

  • Online movie theaters are content aggregators giving an opportunity of watching video both via the websites of projects, and through applications of services for mobile platforms and Smart TV. For example, ivi, Amediateka, Okko Online movie theater, etc.
  • TV channels - the broadcasters monetizing first of all the content on the Internet on paid or advertizing model (STS, Channel One, TNT, etc.)
  • Operators are the operators of paid TV who implemented services of viewing paid video content on prefixes (STB) in the form of VOD or cinema halls on allocated channels (Rostelecom, Beeline, AKADO, etc.)
  • Platforms of digital distribution are video content aggregators giving an opportunity of OTT viewing, applications of services for mobile platforms and Smart TV (iTunes, Google Play, etc.).

At the end of 2015 the volume of the Russian market of legal video services reached 8.5 billion rubles.

According to estimates of J'son & Partners Consulting, by 2019 income of the market of legal video services will grow by 1.7 times in comparison with 2015 - to 14.3 billion rubles. Annual average rate of a gain in 2015-2019 will be 14%.

Because of devaluation of ruble and growth of the world market the advancing rates in 2015 the share of the Russian market in universal volume decreased twice and made 0.5%.

In 2015 AVOD remained the most widespread model of monetization. But its share in the market decreased due to growth of paid services a little. However, according to forecasts of J'son & Partners, AVOD will remain the absolute market leader and will save the share not less than in 65% till 2019.

Online movie theaters are a key link of the market, in 2015 they earned 5.9 billion rubles. At the main players income (by 50-70%), including due to development of paid services sharply increased. It allowed some of them to say operational profitability.

TV channels take the second place on the volume of income from legal video with revenue of 1 billion rubles. It is still less than 1% of advertizing revenues in an air, but rapid growth online of the number of channels and their income will continue.

Operators of paid TV on demand received 994 million rubles from providing video. Over time for them it can become important additional service which will increase ARPU.

Platforms of digital distribution in 2015 earned one million rubles from VOD581. Introduction of the VAT at sales of digital content is capable to slow down development of this segment in the next several years because of growth of cost for users.


Key trends of market development of legal video services in Russia are:

  • Exit of large new players is improbable, but gain existing is possible. Emergence of Netflix in Russia at the beginning of 2016 and possible gain of its positions of the company in 2017 is a striking example. If the company carries out russification of the interface, will review rates and will fill up library with the popular Russian user content, then it can occupy an essential share in the market.
  • Increase in cooperation of operators of paid TV and online movie theaters. Such agreements are profitable to both parties – operators of paid TV receive the ready VOD offer which well supplements basic services, and online movie theaters - new users.
  • Production of own content. In 2016 the release of several new projects which will be a producer of legal video resources is expected.
  • Development of systems of recommendations

Development of the systems of recommendations by many video services to users became the important phenomenon of 2015. A main goal is simplification of a problem of the choice and deduction for the greatest possible time of the viewer in front of the screen. What, in turn, should lead to revenue growth.

2013

J’son & Partners Consulting: 4.3 billion rubles (+116%)

According to forecasts of J'son & Partners Consulting, the Russian market of OTT-video services will grow at the advancing rates in relation to the world market of OTT: during 2013-2017 the market will increase by 4.8 times, at this CAGR 2013-2017 will make 48%. The total amount of the world market of OTT video services will grow from $17 billion in 2013 to $28.9 billion by 2017, and the volume of the Russian market of OTT video services will grow from $98 million to $470 million by 2017.

By estimates of consultants of J'son & Partners Consulting, penetration of service OTT in Russia made 25% at the end of 2012 and 37% for 2013. The largest growth of audience happened in 2010 - 2011. By 2017 the spectator audience of OTT-video services in Russia will make 91 million people, having reached penetration of 63%.

In the long term for 2017 change in structure of watching on types of devices is expected. Users more will tend to watch online video on Smart TV, consoles and smartphones, than on personal computers.

By estimates of J'son & Partners Consulting, the total amount of the market of online video in Russia in 2013 was about 136 million dollars, having increased by 116% since 2012. In 2016 it will reach a point of 341 million dollars with annual average growth rate of CAGR of +36%.

Top trends in the Russian market of online video:

  • popularity of the new devices suitable for watching online video (except traditional computers): smartphones, tablets, smarttelevizory;
  • certain progress in fight against illegal content and growth of consumer demand for paid content;
  • growth of the involvement of users to this type of service thanks to an opportunity for the user most to select content on interest, to comment and exchange views;
  • development of payment systems which allow to purchase paid content by method, convenient for users;
  • development of 3G networks and LTE which allow to consume online video content most comfortably at a high speed without interruptions;
  • growth of popularity of TVs of Smart TV which already began to force out promptly normal TVs that is also the most secure channel for monetization of digital legal content on models ("Video on demand" with single payment of a possibility of viewing", "Video on demand", provided on terms of subscription", "Acquisition of the digital copy of content by the user or a general tenancy of unit of content").

iKS-Consulting: 1.65 billion rubles (+105%)

In 2013 the size of the market of online movie theaters in Russia was 1.65 billion rubles, having added 105% in comparison with 2012, and in bilayzhshy time growth will continue. At the same time Smart TV and mobile environments will become drivers in five-year perspective, according to forecasts of analysts. Besides, a role will be played also by the interest of advertisers in new opportunities of interaction with audience through advertizing in online video. Also development of the Russian legislation in the field of copyright protection on the Internet is expected.

According to analysts, distribution of Smart TV and mobile devices is directly connected with development of paid model of access to content which is already implemented by many players of the market (Play, Megogo, ivi.ru). There is an opinion that by 2018 revenue share from paid services will make 50% of all revenues of online movie theaters in Russia and in financial expression will reach 4.6 billion rubles a year.

According to iKS-Consulting, the number of the sold Smarts TVs in Russia reached 6.8 million pieces, and about 60% from them are connected to the Internet. Thus, growth of audience of online movie theaters is explained both by growth in sales of TVs, and increase in number of video services which are already installed on the equipment.

At the market of online movie theaters there are more than two tens players, however 97% of the market control 9 of them.

According to iKS-Consulting, %
According to iKS-Consulting, %

In 2013 turnover of the largest online movie theaters increased by 1.5 times that is connected with growth in sales of Smart TVs and mobile gadgets. Experts of the market note that so far it is impossible to select with confidence only correct model of successful development of online movie theater: there are examples of successful development both on advertizing, and on paid model. The content policy of online movie theater depends on model of business development: ivi.ru and Megogo create the wide and various directory of movies and series, Play is focused on new products, Tvigle provides UGC content (created by end users) and self-produced content. But common feature of development of online movie theaters is the aspiration to cover the maximum audience of all devices, being present at the greatest possible number of platforms.

Distribution of audience of online movie theaters today is as follows: the overwhelming number of people look video content by means of the PC (22.3 million people), at Smart TVs - 6.5 million people, and by means of mobile devices – 4.8 million people. A total quantity of audience of the audience of video content on for 2013 33.5 million people whereas video at online movie theaters are watched by 24 million people.

Growth of audience of online movie theaters is caused not only increase in number of applications for mobile devices and Smart TVs, but also distribution of broadband access in Russia including mobile. Let's remind that this year operators of the big three, in particular – Megafon company, considerably expanded a coverage of 4G/LTE networks.

According to TNS
According to TNS

The behavior of the visitor of online movie theater, according to experts, directly is affected by a method of its transition to the website. For example, the Zoomby resource has the highest rate of referral traffic (link navigation on the third-party websites), however it renders spam effect on audience therefore the share of the visitors of the website who visited only one page of a resource (bounce rate) at Zoomby makes 84%. Most of all indicator of direct jump on a resource at the market leader of ivi.ru therefore the indicator of failure is only 40% of audience. The largest depth of viewing (the number of the browsed pages within one resource) also at ivi.ru, the smallest indicator by this parameter at Zoomby.

Last year was characterized by considerable penetration of mobile devices into the market of online movie theaters. Analysts did not take precise measurements of audience yet, however provide data on number of installations of mobile applications in 2013. An absolute champion on this indicator is ivi.ru, the smallest number of loadings at the Videomore resource.

According to iKS-Consulting
According to iKS-Consulting

The total quantity of loadings of mobile applications of online movie theaters in 2013 made 14.3 million. Monthly mobile audience of online movie theaters – 4.8 million people. Above we already focused attention that most of all viewings video content are the share of personal computers, however distribution by the frequency of viewings absolutely opposite now. Most often users of Smart TVs watch video (11.5 viewings a month), on mobile devices the average number of viewings is 5.9, and by means of the PC only 3 viewings. On mobile devices most often watch content, short on time. Average duration on all devices is 12-16 minutes. The structure of video traffic is more and more displaced towards big screens because of high consumption of video content in Smart TVs. As a result, advertisers even more often consider this platform as the platform for advertizing.

As a result, the advertizing model of business remains key at the end of 2013. The structure of the market of online movie theaters last year looked as follows: 78% - advertizing, 22% - the user payments. Growth of advertizing revenues is caused by increase in cumulative audience of online movie theaters up to 24 million people that makes a third of the Russian Internet users. Also considerably the number of video watching in network increased to 100-200 million viewings a month at market leaders. Also approach of advertisers to the content changes: even more often advertizing becomes interactive and also "adapts" to audience.

Analysts predict that by 2018 advertizing revenues will continue to exceed income from paid model. The volume of a segment will increase by 3.8 times and will be 4.9 billion rubles. Increase in audience of online movie theaters, development of Smart TVs and further "evolution" of advertizing with emphasis on targeting and interactivity carry to drivers of growth.

Revenue growth on paid model is explained by increase in penetration Smart TVs and popularity of applications of online movie theaters and expansion of the content offer at the expense of film distribution new products. An important role in development of online movie theaters is played by the Russian State. Gave adoption of the "anti-counterfeiting" law and rise of a stage of "whitewash" of a segment of video content in Runet are considerable a push to distribution of online movie theaters. However experts consider that piracy problem in Russia is still not fixed.

Users of the online movie theaters working on paid model prefer to pay only for that content which will be precisely browsed. The volume of income from purchases of content (or content units) with a possibility of single (repeated) viewing is 85% and only 15% of audience purchase a subscription to a certain term. It is expected that income gained on paid model in the next 5 years will grow at high rates: on average for 73% a year. Segment volume in comparison with 2013 will increase by 12 times and will be 4.6 billion rubles.

Experts of iKS-Consulting predict that in 2014 growth rates of the market of online movie theaters will exceed 75% and market size will be 2.9 billion rubles. Growth of the market will be dynamic and by 2018 will grow by 5.7 times, having reached an indicator in the financial plan of 9.5 billion rubles at average growth rates in 43%.

Maxim Klyagin, the analyst of UK "Finam Management" gave the assessment to the market of online movie theaters in Russia: "The market of online movie theaters grows very dynamically and, considering the shift of a vector of market development of communication to the sector of mobile data transmission, undoubtedly, saves very considerable perspectives of further expansion. High rates of development of high-speed networks, access reduction in cost, fast distribution of portable consumer devices and very dynamic growth of mobile traffic act as main growth drivers (the audience of the mobile Internet is estimated more than at 25 million people). On this background the structure of consumption of video content gradually changes: online services become more and more convenient and adaptive. Thus, the competition to traditional solutions constantly grows. However, at this stage the volume of the local Russian market remains rather small, scales of legal market are estimated in the range of several tens millions of dollars. Wide circulation of illegal content remains one of key problems of the industry".

1989: Development of the concept in the USSR

Nauka I Zhizn magazine, 1989
Nauka I Zhizn magazine, 1989

Шаблон:Online video Subject