OREANDA-NEWS. May 28, 2010. COMSTAR – United TeleSystems (COMSTAR-UTS, LSE: CMST), the leading provider of integrated telecom solutions in Russia and the CIS, arranged the Round Table at Sviaz/Expo Comm 2010 together with Kabelschik, information and analytical journal for cable TV professionals. The subject was “Pay TV in Russia: Growth Strategy”. Information partners of the event were Kompaniya business magazine and Comstar Community, a corporate magazine for partners and customers of COMSTAR-UTS Group.

The objective of the Round Table that was attended by more than 50 professionals of the pay TV industry, including operators of cable, IP and satellite networks, right holders and TV channels, was a joint discussion of the market situation in terms of burning commercial and marketing issues related to the industry development. The agenda included such items as elaboration of the best model for interaction of all market players, future of over-the-air broadcasting channels in cable networks, content quality, competition between domestic and foreign channels, investments to promote content development and networking, issues specific for promotion of TV services. The Round Table was moderated by Yana Belskaya, Kabelschik Editor-in-Chief.

The discussion was opened by Dmitry Bagdasaryan, Deputy Director General – Commercial Director of COMSTAR-Regions forming a part of COMSTAR-UTS Group. He underlined a unique nature of the event that had for the first time united managers and top experts of commercial and marketing divisions of operators, TV channels and distributors, market analysts and representatives of business and industry mass media in the format of a dialogue instead of a traditional conference. Dmitry Bagdasaryan started with determination of several key issues of pay TV development in Russia: mentality of the viewing audience, quality of channels and business models for market players interaction.

“Historically, TV in this country has been a conventionally free service. This is the main reason for difficulties encountered during promotion of pay TV services. At the same time, growth of industry income in 2009, a year of crisis, has shown that this market has a great potential. This is why now it is very important to create a culture of paying for consuming of pay TV content, which is dramatically different as compared to conventional over-the-air TV. Our success will depend on the quality and demand for the product that we together will be able to launch to the market. Currently, more than 80% of nearly 2 million of our subscribers choose TV packages containing non-air channels. However, this figure can definitely be enhanced both in terms of quality and quantity,” Bagdasaryan said.

Round Table participants agreed that one of the most critical conditions for pay TV promotion was content quality. Thus, Merab Gabuniya, Director General of NBC Universal in Russia, took the floor and said that “in principle, a viewer does not care as to where exactly the TV channel is made – in Russia or abroad. The only thing that matters is the quality of programs. Now, foreign TV channels are competing in Russia, which brings about many advantages to market development – competition is always beneficial for the quality.” According to him, one of the factors that significantly contribute to the quality is investments into content production: so far, foreign channels spend much more money on creation and promotion of their products as compared to Russian ones.

Another important aspect is content localization. According to many participants, until recently, foreign channels that were present in Russia were not adapted to our market conditions, while Russian channels were far behind as to the quality. But the situation is changing: foreign channels are targeting at peculiarities of Russian viewers. “Many foreign channels have started to make programs and movies specifically for the national market, in Russian and with Russian actors,” Gabuniya confirmed.

One of the main debatable issues discussed at the Round Table was an advertising model for TV channels that best suits the Russian market. An interesting opinion was expressed by Alexey Krol, Director General of Viasat Holding (TV1000, Viasat Explorer, Viasat History and other TV channels). He noted that commercials must not interrupt a movie or a program. It shall be broadcasted during breaks between different programs instead. Some experts consider that pay TV shall show no commercials at all – this is what makes it different from free-of-charge over-the-air television. According to Dmitry Bagdasaryan, there are different possible options to show commercials on paid channels depending on a business development and income acquisition model chosen by the channel. The main thing is that this model has to be balanced to consider interests of all market players. Thus, if a channel is mainly targeted at advertisement income, it shall pay operator’s services, as viewers are not ready to incur extra costs on these channels, and expenses on communication services provision and promotion have to be reimbursed. And vice versa, if a channel places its stake on high-quality and demanded content, the operator shall include its cost into the subscription fee and make relevant payments to the right holder.

Event participants tried to find out the best ways to attract new viewers, including the audience that does not watch TV, to pay TV services by explaining its advantages. Mikhail Shirshov, COMSTAR-UTS Deputy Director for Mass Marketing, spoke about a new approach to channels packaging and content marketing based on availability of detailed statistics from IPTV operators. “An IPTV operator has a unique opportunity to study viewers’ preferences throughout the whole subscriber base, which comprises some 130,000 households in Moscow. For each of these households, we have exact data as to what people watch most often and which channels they prefer. Based on these data, we make decisions as to include this or that channel in the package or not. This allows the company to follow a flexible approach to TV network content and generate TV packages that best meet consumer expectations, which results in enhanced loyalty of our subscribers.”

COMSTAR Round Tables participants who took the floor also included Alexander Silin, Director General of Ascon (Eurosport channel), Alla Bundina, Director for Development and Marketing of Telco Media (Jetix, National Geographic, EuroNews, FOX Crime and other channels), Sergey Koshlyakov, Director General of Moya Planeta TV channel, Igor Zolotarevsky, Producer General of Art Media Group (NST, NSTV, 24DOC, 24TECHNO and other channels), to name only a few.

In summarizing results of the Round Table, Dmitry Bagdasaryan proposed to operators and right holders to join forces in marketing promotion of channels. He noted that the company policy related to co-operation with right holders and generation of TV packages is based on an aspiration to satisfy current demands of viewers to the maximum possible degree and create new demand for high-quality TV content. “We provide pay TV services to nearly 2 million subscribers in more than 50 cities of Russia, and we are engaged in active upgrade of our network in order to enhance its technological capabilities. This makes COMSTAR national network attractive to right holders, which is beneficial to viewers.”