Over the past seven years, according to research agencies, domestic non-terrestrial (pay) television operators have increased their base by 9.1 million new subscribers (households). As a result, by the end of 2019, the number of households with access to pay TV increased by 26% compared to 2013 and amounted to 44.2 million (data from J’son & Partners Consulting), showing an average annual growth rate of about 3.3 %. And the level of penetration of pay TV in Russia (that is, the provision of households with pay TV) amounted to 78% of all households compared to the same indicator in 2013, equal to only 64%.
There is room to grow
But if you look closely at these figures, they are impressive not only by their dynamics, but also make you wary: after all, an average growth of just over 3% per year does not look so dynamic and signals to pay TV operators and top managers of pay TV channels that it is time to grow more intensively. More intensively – in the sense of offering new technologies and services to pay TV subscribers in order to interest them against the backdrop of strong competition from the Internet and beyond.
Alexander Losev, financial expert at Alpari:
What is service penetration at 78%? This means that the market is almost completely saturated with such a service, and the consumer, in this case the viewer, can get tired of it and switch his attention to a fundamentally new service. And the good old terrestrial TV is not far behind: after all, by the end of 2019, more than 98.4% of Russians received access to 20 channels of free digital terrestrial TV in the DVBT-2 standard. This became possible thanks to the state program for the transition to digital broadcasting, which was carried out by the state broadcasting operator Russian Television and Radio Broadcasting Network.
The most dynamic pay TV segment, compared to the more traditional cable and satellite TV that existed in the West back in the 20th century, is IPTV, that is, a television signal distributed via the Internet. Over the past seven years, the number of IPTV subscribers has grown 2.3 times to 8.4 million, and the average annual growth rate in the number of subscribers in 2013-2019 was 12% compared to the more modest growth rate of the Pay TV market as a whole.
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Pay TV has fewer benefits
Until 2019, pay TV attracted viewers with a wider selection of TV channels, including interest-based channels, and better digital picture and sound quality. But today, the Russian viewer, spoiled by high-quality free-to-air TV, will not be surprised by just one good “picture”. Therefore, telecom and pay TV operators have to increase their subscriber base through new interesting offers, expanding the number of TV channels in service packages offered to subscribers, profitable tariff plans, and exclusive content.
Thus, the largest Russian telecom and pay TV operators, such as Rostelecom, Tricolor-TV, ER-Telecom and NTV Plus (together covering a 62% pay TV market share), offer customers such high-tech services as interactive TV, video on demand, mobile applications, etc.).
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Over the past two years, OTT applications developed by pay TV operators have become a qualitatively new phenomenon in television technologies. The OTT application will allow you to watch your favorite TV channels and TV shows wherever there is Internet and from any computer or mobile device. This is a new service for delivering a TV signal to a subscriber using Smart TV. In particular, MegaFon-TV was able to significantly increase its share in the pay TV market in 2019 thanks to the promotion of OTT applications.
Another important innovation in 2019 was the creation of so-called ecosystems of services, that is, offering the subscriber a group of the most popular video and television services: libraries of video content, music videos, TV series, etc. So, in 2018-2019, such ecosystems began to be created and implemented by Tricolor-TV, MTS, Mail.ru, and even some large television companies. In October 2019, the More.TV video service, a project of the STS-Media TV company, was launched, and a year earlier, the Gazprom-Media holding and the TNT TV channel launched the Premier/List paid video service, which is in high demand by viewers.
As you can see, the question “which is better: television or the Internet?” is still open, but pay-TV operators believe that it can be answered by integrating Internet technologies and the television we are used to, but in a new high-quality digital format. And if the growth rate of even such a dynamic segment as IPTV gradually begins to slow down to a rather moderate pace familiar to the television market, then the markets for new video services will grow many times in the next few years and maintain a stable interest of viewers in high-quality television content.