With a population of approximately 150 million people, Russia offers a huge market opportunity for digital services. But if you look beyond the country's borders, at the larger population of Russian speakers around the world, that is estimated at more than 250 million. Add Ukrainian speakers to the mix, and now you have a potential audience of 300 million-plus.
That's the opportunity OTT offers -- the ability to cross borders and aggregate an audience around the world for a particular streaming video service. And that's the opportunity Andrey Kolodyuk identified eight years ago, when he decided to launch Divan.TV. A serial entrepreneur, he launched his first business in New York in 1992, and has gone on to build more than ten companies across the IT, telecom, Internet and media sectors, generating $1 billion in total revenue.
Divan.TV is an OTT service aimed at Russian and Ukrainian speakers scattered around the world. It has now expanded to 200 countries with a range of both live and VoD content. Telco Transformation met up with Kolodyuk to discuss his reasons for launching Divan.TV, the impact OTT is having on pay-TV in eastern Europe and the primary requirements for success in the region.
Telco Transformation: What is Divan.TV?
Andrey Kolodyuk: Divan TV is one of the earliest TV streaming services aimed at ethnic groups. It is now available in 200 countries worldwide. Our first step and focus was to target the 300 million Ukrainian and Russian-speaking audience around the world. As for now, we have 1.5 million registered users for our "freemium" and premium subscription packages. We carry 200 live TV channels as well as VoD content, and our users can watch this content anywhere, оn a variety of screens.
TT: What drove your decision to launch it?
AK: The idea of creating Divan.TV came to me back in 2008-2009, when I looked at people who were struggling, downloading movies from file-sharing services and other pirated services. This was a difficult and long process at that time. And I realized that sooner or later someone will develop something similar to the App Store for TV, and people will be able to use it the way we are now using smartphones.
I also knew that Apple TV was also going to create a revolutionary product in this area. Then I watched an interview with Steve Jobs, who pointed to the problem of contracting for TV content. But I understood that the revolution cannot be stopped any more, consumers are ready for it. Linear TV alone cannot satisfy people anymore.
I also knew that the American market was rather conservative and it was decided to concentrate efforts on the Ukrainian and Russian-speaking audience, which is about 300 million worldwide. I was living in the States at the time, and I realized how much our diaspora needed such content. That's how we identified this target audience, and started to work on this service.
TT: What are the key requirements for an OTT service to be effective in your market?
AK: We focused on local content, as well as Hollywood. We were the first OTT service that negotiated agreements with local TV channels for OTT rights. Thanks to our bundling of linear TV and SVoD, we can get the most popular and demanded content in the region. We also understand that the Commonwealth of Independent States [CIS] is a very price-sensitive region, that's why our offering starts from $2 per month for 98 TV channels.
And we have developed our own recommendation service to solve problems with the discovery of content. Partnering with the best smart TV vendors such as Samsung, LG, Sony, Phillips and others is also an important part of our strategy. One of our main principles is that our service provides content in a legal manner, and that's how cooperation with these vendors became possible.
TT: Do you see partnerships as being important to your market strategy?
AK: As I said, we have a promo/collaboration with Smart TV vendors, and we also cooperate with ISPs. In fact, we have a list of more than 40 partners that provide our service to their customers. This helps make our service more accessible to our audience. Also, together with content owners, we have created our own TV channels. These are channels like Yoga TV, Brain TV and Fighter+.
TT: How concerned are you about Netflix, Amazon and other global players?
AK: I think that global services have limited chances in the CIS market if they do not solve key issues.
Firstly, they need to reduce their prices from $10-$12 to $2-$5. Secondly, they need to license local versions of international TV programs like The Voice, X Factor and others which are available exclusively on local channels. These TV shows are the most watched content among this target group. Global OTT players must have a competitive local library, but today it is very limited.
If these problems are not solved by the global players, there is one more alternative to succeed in the CIS market: buy a local OTT service. Currently, four out of the top ten OTT services in the CIS are evaluating some kind of merger or acquisition activity.
TT: What features or new technologies do you think are most important for OTT services?
AK: OTT services have a lot of content, if you consider all the live TV channels as well as the entire VoD catalog. It's important these services try and solve the customers' resulting problem with content discovery. At Divan.TV, we have developed a unique recommendation service that provides the viewer with personal recommendations on his personal interests. So we are one step closer to the client. And 42% pf our viewers use it regularly today, and this figure is continuing to grow.
TT: What are your plans for the next few years?
AK: We are focusing on the Ukrainian and Russian-speaking audience living in North America and Europe today. We also plan to add a Polish package as the next step.
The company continues to develop technologically. We are going to launch Android TV, interface 3.0, on 15 smart TV vendors, [with a] completely new and redesigned website. We believe in the future all pay-TV providers will transform to OTT services, and those services that offer personalized content offerings and experiences will be the winners.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation