Online Entertainment Service

Performance indicators

2020: Revenue - 462.96 million rubles, profit - 24.38 million rubles

The Entertainment Online Service company, which manages Netflix's activities in Russia, earned 462.96 million rubles in 2020 and received a net profit of 24.38 million rubles. The business indicators of the online cinema in the Russian market are disclosed for the first time.

The financial results are cited by Kommersant, referring to the SPARK-Interfax system. It reports that Netflix payments to suppliers and contractors in 2020 amounted to 220.4 million rubles, 2.9 million rubles were spent on labor in the country.

Since October 2020, all transactions of new Netflix users in Russia have been going through Entertainment Online Service LLC (fully owned by the National Media Group).

Revenue of Entertainment Online Service reached 462.96 million rubles in 2020

According to the estimates of Mobile Research Group analyst Eldar Murtazin, for the incomplete fourth quarter of 2020, the number of subscribers to the service could exceed 500,000 if we take into account the total revenue and divide it by the average revenue from the subscriber in the amount of 830 rubles. According to his forecast, the paid audience of the platform for the year may grow to 1 million people.

By the beginning of April 2021, the minimum price for a Netflix subscription is 599 rubles per month, users are available a standard plan for 799 rubles and a premium one for 999 rubles. According to the director of the Internet Video Association Alexei Byrdin, if you take the maximum cost of the tariff, then the service has at least 180 thousand subscribers.

Based on the fact that the Netflix base in Russia exceeded 100 thousand users, Roskomnadzor should include the platform in the register of audiovisual services, notes Byrdin. Then, as the expert explains, she will have to fulfill regulatory requirements, including, for example, marking content, storing data of Russian users in the country, register a separate legal entity. All these requirements, he said, will entail additional costs.^[1]

History

2022

Loss of 25% capitalization due to departure from Russia

On April 19, 2022, Netflix video service shares fell 25% in the post-market price after the company reported the loss of 200,000 paid subscribers in the first quarter of the year and the risk of a reduction of another 2 million subscribers.

The last time Netflix, which at that time has 221.6 million subscribers, reported a loss of customers in October 2011.

The company noted that the decision to suspend work in Russia, made in early March, deprived the streaming service of 700,000 users.

Class action lawsuit against Netflix

On April 13, 2022, the Law Office "Chernyshov, Lukoyanov and Partners," representing the interests of Netflix users, filed a class action lawsuit against the American Netflix service in the Khamovnichesky District Court of Moscow. The basis for the lawsuit was a violation of the rights of Russian users in connection with the unilateral refusal of Netflix to provide services in Russia. The amount of claims at the stage of filing a lawsuit is 60 million rubles.

In early March, the Netflix streaming platform announced the suspension of services to Russian users at the end of the paid period without the possibility of renewing the subscription. At the same time, the Netflix contract with subscribers of the service is public and does not provide for the possibility of unilateral refusal to fulfill obligations. In accordance with the Civil Code of the Russian Federation and the Law "On Protection of Consumer Rights," such actions are a direct violation of user rights.

One of the ways to protect consumers from unfair actions of the company is a class action lawsuit. In conditions where a large number of people have the same type of requirements for the same defendant, this is the most effective remedy. Violation of consumer rights is obvious, we will seek from Netflix to comply with the requirements of Russian law, "said Konstantin Lukoyanov, senior partner of the Law Office of Chernyshov, Lukoyanov and Partners.

More than 100 users of the service announced their desire to join the class action lawsuit. The filed statement of claim against Netflix unites an initiative group of 20 people in accordance with the requirements of the Civil Code of the Russian Federation. The amount of claims at the stage of filing a lawsuit is 60 million rubles and includes compensation for non-pecuniary damage caused to citizens, as well as a fine in the amount of 50% of the amount of compensation for non-pecuniary damage awarded by the court. In addition, in case of non-fulfillment by Netfix of the court decision, the defendant will be charged a court fine (astrent) for each day of non-fulfillment of the court act.

Those who consider their rights violated, and Netflix to be held accountable for unfair actions in the Russian market, may join the lawsuit already filed. To do this, you need to contact the Law Office.

Suspension of registration of new users against the backdrop of a special operation of Russia in Ukraine

On March 7, 2022, Netflix, against the backdrop of Russia's special operation in Ukraine, announced that it was terminating its activities in Russia, being one of the largest media companies that left the market.

New customers will not be able to register, and it is not yet clear what will happen to existing accounts, the company said. In Russia, the service has more than 1 million customers.

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