Major players in Russian video streaming services are securing funding and launching original content production, as the segment is recording strong growth, bneIntellinews writes.
In 2019, Russian online video streaming segment grew by 50% to reach 17.1 billion rubles ($237.5 million), a study by TMT Consulting says, adding that this year, it is likely to grow by another 40%, hitting the 24 billion ruble ($333 million) mark.
Russia’s largest video streaming platform, ivi.ru, said last month it is considering an IPO on Nasdaq by the end of this year with JP Morgan Chase underwriting the floatation. The service previously secured $40 million in funding from a group of top Russian and foreign investors.
The IPO would make ivi.ru Russia’s first online video service to go public, also making it the segment’s highest valued company, worth over $700 million, according to analysts quoted by Kommersant. Total investment in ivi.ru to date has not been revealed, but, according to previous reports, investment funds ru-Net and Tiger Global Management and Profmedia group injected $30 million in the project at the launch time, and Baring Vostok, which has made several highly successful tech investments, added another $40million in 2011.
According to a study by TMT Consulting, published in early March, ivi.ru is responsible for 36% of Russia’s online video service segment.
Meanwhile, the streaming segment’s business model has been evolving. When the first online video services were launched about 10 years ago, they relied heavily on advertising as the main source of revenue.
However, over the last couple of years, there has been a shift towards subscription revenue, and, last year, the subscription revenue accounted for 59% of the segment’s total revenue, for the first time ever exceeding the advertisement revenue.
As the subscription model prevails over the ad model, growth in ad revenue in 2019 was more modest, at 13%, year-on-year, to 4.2 billion rubles ($58.3million).
According to TMT Consulting, the main factors driving growth in the online video segment over the last couple of years are increasing numbers of users paying for online video content, higher penetration of smartphones and smart TVs, as well as licensing deals between Russian studios and Hollywood majors. The Russian government’s recent efforts aimed at fighting online piracy are apparently paying off, as well, bneIntellinews writes.