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Aleksandr Remezovsky, Director, Department for Pay Channels Distribution and Media Platforms, Media Group Ukraine: on internal challenges faced by Pay TV and worldwide trends.
Pay TV within Media Group Ukraine
Q.: Would you speak on Pay TV operations in Media Group Ukraine?
Pay TV distribution within Media Group Ukraine may be divided into a few segments. First comes Fotball 1/Football 2 channels distribution via cable; then – distribution of channels, such as Ukraine, NLO TV, Indigo TV; Amediateka, partnership content is the next segment we distribute and finally comes international versions of Ukraine and NLO TV – Ukraine 1/Ukraine 2 and NLO TV 1/NLO TV 2, respectively. These four blocks account the Pay TV content within our Media Group linear distribution.
We are planning to go forward based on attracting/inviting other partnership channels/content which we would be able to promote in Ukraine thus getting revenues, on the one hand, as well as winning new reliable external partners on other markets. But these are future prospects.
Q.: What about the current strategic development areas in pay distribution?
The maximum possible monetization of the content available. As of today we are present in 85% of local cable operators’ networks. Besides, we do work with all major cable providers.
Q.: Nevertheless, Pay TV is essentially driven by Football 1/Football 2, isn’t it?
Yes, it is. When it comes to Footballs, and I mean both of them, they can boast exclusive content first and foremost. While we have exclusive broadcast rights to matches such as those of Champions League, Europa League, championships of Italy, Belgium, Ukraine’s National Team, the UEFA Nations League, 2020 Qualifiers. These channels are regarded as the engine room and drive of sales for sports content. Sale is task number 1 in the realm. Channels Football1/Football 2 is 100% Pay TV product as it is, which is monetized through distribution, i.e. selling rebroadcast rights in networks. They may be watched with cable providers, another option – satellite dish upon connection to Xtra TV and finally in the Internet by way of buying subscription for OTT service from Oll.TV.
As far as other channels are concerned and, in particular, Ukraine, NLO TV, Indigo TV (making financial gains through from advertising, among other things) they have been payable in cable networks since 2017. Our coverage accounts for 85% of all households which is a good performance rate. These channels are also available in T2 digital.
Football. Anti-Piracy Campaign and Mutual Assistance.
Q.: Piracy is actually a painful subject for Ukraine, isn’t it?
Sure, it is. But we have achieved some gains in fighting it. Let’s take cable networks. We do have absolute control over them, 100%.
That‘s where we rely on weekly monitoring systems, both, ours and partnership as well. The system means that illegal uses of our signal (if any) by a cable provider becomes known to us in a week’s time which enables us to duly apply relevant sanctions.
Examples are not far to seek. Let’s take the Gorizont case in the city of Dnipro. The said company used to «pirate» our football content in breach of its obligations pursuant to the relevant agreement. We filed a police report. As it turned out, other media groups had been also wronged by the same infringer.
As regards the extent of piracy in general, it is rather a sore point issue and, in particular, for Football 1/Football 2. It is worth noting that Xtra TV, our satellite platform, is switching over to the cardless system and Verimatrix platform character encoding. This would essentially enable us to protect our content from card sharing by gradually moving our viewers to a legal environment and thus personalize the subscriber base. These steps would sure be effective.
Q.: Would you comment on content protection online?
We‘ve got a system of our own based on daily monitoring of more than 200 resources (OTT inclusive) where our channels might emerge.
Servers, however, turn up in different locations, data stores transferred. Tracing an infringer is no child’s play and thus one has to act promptly. There are two options. Either coming to terms directly or appealing to the cyber police. Direct negotiations bring about up to 80% of favourable results.
Q.: How come that you manage to achieve such an encouraging result?
People are aware of the fact that infringements are toxic and might entail a lot of trouble. Some of them, however, are sure of their impunity and this is the case for the cyber police to intervene.
The anti-piracy campaign online - is what seems the most complicated thing of all. Whereas we have defeated piracy in cable networks, are now taking effective actions in the realm of satellite, but as regards the world-wide web, I would call it a quixotic endeavor, fighting a losing battle. Nevertheless we have to fight the battle, otherwise the pirates would act regardless of anything.
Q.: Would you comment on arrangements/relationships with other market players on Ukraine’s Pay TV market?
No wonder, we are cooperating with other media groups exchanging info on pirate sources and resources. Suppose we have uncovered the infringers, secured our content but other media groups’ channels still remain at risk, so we just inform them of the infringers.
All of us are intent to work in this market and to further improve it. Therefore mutual assistance is only logical. It is worth noting that viewers would stand to gain by it.
It is not only at the national level that the fight against piracy has intensified, it is a global trend. American and European majors are also proactive in the area. Liability is what makes all the difference; and, in particular, it might be a criminal sanction abroad and the infringers might get off with only a fine in Ukraine.
What we deal with is intellectual property which accounts for hard labour and effort of dozens, hundreds of content creators. This is a huge and powerful business intent on money earning and it should feel itself protected and secure.
Satellite encoding - a leap in the dark.
Q.: There is every likelihood that terrestrial channels would be encoded on the satellite in January 2020. Any implications for Ukraine’s Pay TV market? Which exactly?
The subscribers would migrate and their number would fluctuate. But nobody is certain about the precise figures and migration areas: where from, where to. Cable, satellite and OTT providers are supposed to win by the change. But nobody knows what would happen. It is the market that would stand to gains, that’s first and foremost. The user is to realize: want a premium content: motion pictures, series, sports – you can’t get it free. When going to the cinema we do pay for the tickets. Because production, distribution, marketing calls for a lot of money. Money invested profit expected. The customer would be in a position of making a choice where to get connected to. All and everyone are supposed to gain by it: cable, satellite and OTT providers. Users of cable and OTT/IPTV services would not feel it. But those intent on free or illegal satellite TV will have to make a choice. For example, it would be sufficient for them to buy a receiver and the Xtra TV subscription.
YouTube as an additional means of communications.
Q.: Would you focus on additional content delivery channels you use? What about their audience reach and monetization?
Digital promotion is a separate point. It is just recently that we have become aware of the YouTube Football1/Football2 number of subscribers: 500,000. The figure exceeds those subscribing to some British sports channels. Users are keen on watching content on YouTube. It is worth noting that the channel does not place any key products (say, online broadcasts of matches), but news, highlights, announcements, reviews, interviews. Monetized through advertising, YouTube acts as an additional means of communications with users.
Pay TV success formula: exclusive content and OTT services.
Q.: Pay TV providers worldwide deem it vitally important to offer OTT services as part of the product portfolio. What do you think of the OTT platform market and its implications for the business?
Netflix is just the best example in the case. This is the OTT platform entitled to global rights and home grown production. They view exclusive content as the OTT future. For example, Megogo, Oll.TV establish interior drum-type channels of their own with content available at their disposal. Users choose the OTT services being geared by their unique killer-features because linear content list is essentially the same. Therefore if you are keen on attracting the user you should compare favourably with the others. Speaking of the OLL.TV, that’s football and the football segment.
Q.: According to you, no one needs even good Internet without content?
Definitely! That’s for sure! Internet is a means for content consumption, whether video or audio. In fact, all major market players, including Facebook, are looking toward VoD. A global battle is in fact waged for the wealthy viewer ready to pay for content.
Q.: What is your idea of the Pay TV development over the next five years?
Let’s start with cable. Next thing on the agenda is certain consolidation of cable providers in Ukraine. There are 450 of them now. When it comes to other countries the figure is by one order less. Consolidation would be achieved in two ways: firstly, some of the cable providers will become obsolete due to pure unprofitability and secondly due to mergence, i.e. acquisition of a minor provider by a major one. As regards the analogue cable it will turn into a public help service with a minimal package of channels and a limited number of users. Any user keen on a higher quality service will seek other options. This will give rise to rampant development of other sites and content distribution options. By saying that I mean, first and foremost, OTT and IPTV. They are the things of the future and they will develop at an accelerating pace.
International Experience and New Markets.
Q.: You have recently returned from Croatia, a host of NEM 2019. It is a field-oriented event for Pay TV specialists in Europe. Any new ideas or valuable insights brought from there?
The events of the kind are of interest to us in terms of seeking new partners and possibilities for distributing our products available as of now. I mean Ukraine 1/Ukraine 2 and NLO TV 1/NLO TV 2. Eastern, Southern and Сentral Europe account for an attractive and future-oriented market offering a great variety and number of market players, such as the OTT platform providers, IPTV providers ,cable operators, DTH platforms. OTT platforms are characterized by rampant development rates. Moreover, they afford generous content acquisitions with a certain mix arising: OTT linear television + VoD content, i.e. the things watched within linear TV might become your bonus at the library level. I would say that the trend is currently prevailing but is the thing of the future in the realm of content distribution.
Q.: Would you comment on audiences watching international channels, such as Ukraine 1/Ukraine 2 and NLO TV 1/NLO TV 2?
Of course, we are, first and foremost, targeted at Russian and Ukrainian speakers that have moved there for employment or residency. Hotel business is a separate issue. When coming abroad on business, while vacationing or travelling our fellow citizens would prefer to find domestic content and news in their native tongue. The niche of Ukrainian channels abroad is vacant and that means that it is quite promising.
Q.: Have you done any groundwork in this area? Would you spare more detail on currently available clients, if any?
We are working with Kartina.TV, a major service, and also with OTT providers in the US and Canada. We are at the contract execution stage with Player, a Polish major ITT provider; a few more contracts are at the development stage in Poland. Besides Ukrainian OTT providers are busy making channel packages containing cleared rights entitling them to broadcast outside Ukraine. Our channels are also present in those services.
Q.: Have you struck any free deals?
Nothing of the kind. We are doing business in this country and abroad, while promoting domestic content purely on a commercial basis.
Q.: Why are European providers keen on Ukrainian content?
According to official statistics there are two million Ukrainians that reside in Poland either permanently or temporarily. When it comes to unofficial figures they amount to twice as many. Thus any provider is aware of the fact that it is a great potential for business growth. And they view us as just the perfect partners to meet the interests of the said audience in relevant content.
Q.: Would you give more detail on requirements posed by European providers as ordering customers?
Speaking of technicalities, it is no complicated task while we have a partner delivering the quality IP signal to the end user. As regards content quality this is an issue of fully cleared rights. When acquiring our content our partners are 100% sure that no third party would ever lay a claim to content or rights thus assigned. Plus the quality signal. SD option is also available but there is less demand for it year in, year out. But what they deem of paramount importance is fair dealing and legality because transparency is what they appreciate first and foremost.
The full version of the interview is available at the link: https://bit.ly/2XqzBx8.