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A decision on the first-ever OTT license issue in Ukraine was passed by the National Council for TV and Radio Broadcasting at its session dated August 9, 2019. It was issued (on a par with the IPTV license) to OLL.TV, an internet TV service. Both the technologies are covered by the single nationwide license.
On-line media Broadcast.net.ua met with Borys Danylov, Director, Digital Screens, to talk about the OTT/IPTV market in Ukraine and how it feels to be the first.
Q: Ukraine’s first ever OTT license.
Why have you chosen to show the way? And why just now?
B.D.: It’s fairly easy in fact. We found ourselves at the stage of the IPTV re-licensing. That is why it is only logical that we wanted to time the relicensing to coincide with the OTT issue.
In general, it has been long since we started heading for it. OTT license is a step toward establishing good and fair rules of the game in the market enabling to give a clear-cut definition of OTT and what it means providing products to be bought by customer in terms of OTT.
Q.: What did they say at the competent authority when you came to get your license?
B.D.: They said: well-done, good that you become the first one, it’s high time, all tools have already been created.
OPP versus IPTV: what’s the difference? What is the difference from the audience standpoint?
B.D.: Interactivity factor, primarily. When it comes to OTT, that is a possibility to deal with personal broadcasting, i.e. to address each and any client separately, a possibility for any provider as well as for the signal source to create individual retranslation channels with all the ensuing consequences and possibilities. However, when it comes to IPTV we deal with multicast and broadcast works unilaterally toward a provider’s network. In addition, uncontrolled propagation of the signal might be blocked either by network tools or by TV signal encryption
Q.:It looks like our future lies with the IPTV/OTT market…
B.D.: Yes, it does. The IPTV/OTT market would hold the lead in the pay TV market. If we want to honestly make money of it, we have to establish rules of the game and set the example. We do hope that our example will be a good precedent. Media Group Ukraine has a transparent view of the issue enabling us to have a dialogue. Speaking of the regulator, we’ve managed to lay the basics and now we have to address the right holders while acting in the same way with service providers so as to turn up in the common legal framework and to agree on uniform rules : the subject of the services, the way we provide them and how it should be controlled by the regulator.
Q.: What about the OTT license and its implications for business?
B.D.: First and foremost, our example sets the precedent for all of our colleagues to enter into the legal/ licensed framework. We hope this would help structure the market.
Secondly, relicensing helps us solve inner problems related to regional channels, their packaging, and other business issues.
Q.:Satellite signal coding and PAY TV development prospects.
What about the PAY TV market prospects?
B.D.: It is my understanding that in 2-3 years broadcasters would get more revenues from PAY TV than they do now from advertising. Thus the attitude to PAY TV as shared now by broadcasters and programme service providers will be subject to change. If the forecast is correct, millions of subscribers are in store for us as compared to those hundreds of thousands each of us has now in this segment.
It no secret at all that the more screens are connected to Internet the higher is the quality demand from consumers. And the number of requests are growing very fast. By saying that we mean not only TV sets but also mobile applications, iPads, set-top-boxes. That is why the IPTV/OTT distribution base is growing rapidly. And encoding is a means to make the base perceive television not as just a free service but as a valuable product that is worth its money,
Q.:Oll.TV service today.
What’s the difference between OLL.TV and other OTT providers?
B.D.: Firstly, we have exclusive football with its own packaging. Secondly, we lay emphasis on Ukrainian signal formation. However acquisitions still account for a great deal of non-adapted content. We are thinking of how to get over the difficulty. We are aware of the fact that adaptation (Ukrainian track) would call for more funds in the near future than content creation.
Q.: What is the cost of OTT license?
B.D.: The license does not prove too costly for us. Not millions of hryvnias but rather tens of thousands which is quite an affordable price. The reason is quite simple: we managed to save funds by way of re-issuance of licenses as a single one entitling us to provide programming services throughout Ukraine.
Q.: What about an advertising model , how does it work?
B.D.: OLL.TV does not use any advertising model. We are looking into the issue but not exactly using it. What we have now is just subscription and transaction to a lesser degree.
Q.:However, you follow two schemes, such as b2b and b2c. Which of them is the main one?
B.D: Direct sale to a subscriber - b2c- is sure more profitable since the revenues are not shared with a partner. Although b-2-b is a good sales channel enabling to access quite a number of subscribers simultaneously.
As for b-2-b we establish a platform variation branded for our partner who integrates its billing system into our platform; and while connecting its clients to the TV service it sends a message to our platform either to open or close access to any relevant subscription. Thus this client is accounted for, access is opened to them and payment settlements with the rightholder begin.
Q.:Any changes for subscribers in connection with transfer to Vega Telecom? I am in the know that Dighital Screens might be back under control of Media Group Ukraine.
Nothing has changed for subscribers, we have been a separate legal entity since long. As to the return to MGU, we are in the middle of it all looking into relevant decisions and procedures to get back to the Group framework.