Netflix, Amazon struggle in Russia while tackling piracy

[grimm]

Netflix and Amazon have yet to make an impact in what is a rapidly expanding OTT market in Russia.

According to Kommersant, local providers put this down to how well they have themselves adapted in order to tackle piracy.

Quoting data produced by TMT Consulting, it adds that Russia’s OTT market grew by 40% in volume to R4.8 billion (€68 million) in 2016. At the same time, the OTT audience grew by 3% to 39.6 million.

Significantly, the research looked at the performance of the largest players, with the quoted revenues being exclusive of VAT and minus the commission of ad sellers. Furthermore, iTunes and Google play were excluded from the results.

There has also been an important shift in the balance of revenues earned by OTT players in Russia.

Although advertising was at one stage the main source of income, it is now viewers’ payments. This year, the latter are expected to amount to R3.4 billion, with advertising bringing in R2.9 billion. Paid video services will be the main driver of an OTT market expected to grow by 21% this year to R6.3 billion.

Okko and Amediateka are currently the only two services completed dependent on user fees.

Meanwhile, Netflix and Amazon entered the Russian market in 2016.

TMT Consulting notes that they offer little local content, while domestic services are more aware of the needs of users and have adapted to work in conditions in which piracy exists.