Destination IPTV: Impressions from Russia
We all know people who say “I don’t watch TV anymore” – that number is growing and a generation of young people seems to be turning away from TV to watching video online. This is a problem everywhere in the world but in Russia it brings a very specific problem. If the broadcasters start to struggle, some may not survive. If that happens, who will provide the content for IPTV?
I was recently a guest at Sviaz-Expocomm 2012, Russia’s largest international exhibition for the telecommunications industry, and was not that surprised to see that IPTV was the main talking point.
Perhaps I shouldn’t have been surprised to see many Russian media businesses and individuals are already embracing the concept of IPTV and looking for new ways to monetise the concept. Telecommunications companies like MTS and Beeline have already launched their own IPTV portals that can be accessed via your Internet-enabled TV or laptop. They are competing with the TV manufacturers such as LG who have launched their own IPTV apps that sit on your Internet TV and enable you to access content – free from the restrictions of TV channels.
Furthermore, all the major pay-TV providers such as NTV+ are also ahead of the game – with substantial additional video services accessible through your existing TV set-top box or cable. The buzzword of the conference was “if content is the king – then the portal is the queen”. Russia seems to be on a par with the rest of the world when it comes to embracing this new medium.
But, and perhaps this is not surprising, the one stakeholder who seems to have not yet embraced IPTV is the broadcasters. Frankly speaking, I suspect some broadcasters know little or anything about IPTV. This is both worrying and baffling. The broadcasters seem to have little idea that they are standing on the edge of an abyss – and it requires some drastic and quick solutions to prevent them dropping off the edge.
Across the world – TV stations are becoming increasingly terrified of the prospect of IPTV. Few embrace it with open arms. The problem is the same one that faced the music industry: once upon time we all listened to music on CDs but then we started to download music – eventually we started listening to music on Internet-enabled devices. That’s when we stopped paying for it. Now TV is facing the same prospect.
TV channels have all the costs of running channel (including licenses) but are increasingly losing audience to the Internet – that means ad revenues are falling.
The reality is that few consumers will bother to watch a broad TV channel if they can watch content whenever they want for free. Add to that the growing demand for niche content (like surfing, fashion, dance music etc.) and you see a real prospect of TV audiences declining to a critical point. Nowhere is this more true than in Russia where the consumer is adept at finding free content – legally or not. A TV connected to the Internet will offer you content from anywhere in the world whenever you want. This is something you have been able to do on your laptop for years – but now you can do it on your big screen at home. It is difficult to see how Russian broadcasters will cope against this onslaught.
Due to the nature of Russian broadcasting the vast majority of domestic TV content is made by the broadcasters – compare this to Europe and the US where most of the content is made by independent production companies and it is clear that the loss of broadcaster could create a content vacuum. Of course, foreign-made content such as Desperate Housewives, Top Gear or Heroes will always be popular – but what about the domestic market?
Currently, the content you can get via portals such as Beeline or NTV+ is a mix of foreign content and programmes lifted from regular broadcasters – there is little or no bespoke IPTV content. So who will make it in the future? Well, the answer may be another surprise.
Remember that currently IPTV is unregulated – as free as the Internet. So what is to stop a foreign broadcaster creating a Russian language channel from outside of Russia’s borders?
Sounds unlikely? Well, it’s worth remembering that the Russian TV audience generates around 8 billion dollars worth of advertising revenues every year – an appealing prospect for some of the world’s better known international broadcasters who fancy a piece of the Russian pie. The Russian Internet advertising revenue pot is also in the low billions with the overall advertising spending in Russia likely to soon overtake its European neighbours. Tens of billions of dollars of ad revenues in a market underserved by domestic content creators sound like a dream coming true. Discovery, MTV and others have long had a foothold on Russian TV, but expect more to follow in the coming years.
So how will the authorities police a channel that has no official presence in Russia? Short of blocking web traffic – there is little that the authorities can do to block foreign video streams – and even if they do – no doubt the viewers will find a way around. These are issues faced by all telecommunications regulators but with Russian broadcasters burying their heads in the sand – it may be that Russia won’t wake up to this problem before it’s too late.
Author: Wesley Dodd, Director of Business & Consulting, Celebro Media Networks (London)
This feature was published in Russian on ComNews.ru, Russia's news publication on telecoms, media and IT: http://www.comnews.ru/node/66489
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