Standalone Services Can't Survive – NTV's Petukhov

Developing new digital distribution services in western markets is a very different exercise to doing so in other parts of the world. That's an issue Lev Petukhov understands well. As the head of digital services at Russian satellite pay-TV operator NTV Plus, he has spent the last decade working on the operator's digital strategy.

Since 2010, Petukhov has been tasked with identifying new business opportunities and developing products aimed at broadband, TV apps and mobile distribution. One of his early initiatives was to provide exclusive streaming coverage of the Russian and various top European football league matches. Over the next five years, he helped stream 10,000 sports events viewed by more than 2.5 million users. This became the foundation for the operator's streaming service, which has expanded to include pay-per-view and subscription packages, both for time-shifted, on-demand and live streaming services.

Telco Transformation joined Petukhov in Budapest some weeks ago, where he was presenting at the Digital TV Central & Eastern Europe conference, to get more insight into NTV Plus and the Russian OTT market.

Telco Transformation: What are you up to at NTV-Plus?

Lev Petukhov: I have been with NTV for ten-plus years now. I started out mainly focused on the web, but it's grown into a full-time digital operation. NTV-Plus started offering sports content via pay-per-view -- we used a transactional model for streaming major sports content in Russia.

As a pay-TV satellite operator, the company also wanted to expand its capital base and expand to new services. So we started with pay-per-view VoD via online streaming and then grew to add subscription [options] and now we have 100 linear channels delivered via our websites.

There is still a lot of sports content, and you can get it via a transactional model or via a monthly subscription. If you are a satellite subscriber, you get it almost complementary, there is just a small fee for all services -- web, tablet, smartphone etc. Or you can be a pure digital subscriber [without the pay-TV satellite service] and get the content via desktop, mobile etc.

TT: Not everyone will be familiar with NTV, can you give us a short introduction?

LP: NTV is a major satellite pay-TV operator. It started in 1996, and has been in business for 20 years now. It is the premier pay-TV operator in Russia. It is not the largest but the brand is recognized as a premium-quality, premium-customer service provider. We have had an edge with ARPU for a long time, and we lead in several categories. We were the first to offer HD in Russia, then 3D and then digital streaming as well. And we will be first to UHD. In terms of digital strategy and innovation, I think we are well ahead of the others.

We are not a leader in terms of subscribers, but we have a premium brand, we beat others on quality and ARPU.

TT: What is NTV's subscriber base, and how many subscribers do you have for the subscription streaming service?

LP: I'm not really focused on that side, I'm more focused on rolling out new services. I think the current subscriber base is 1.2-1.5 million subscribers for the satellite service. And we have about 300,000 unique users in the last year that have purchased at least one pay-per-view (PPV) event for our sports service. The subscription service is newer, about 30,000 users -- in terms of actual active viewers, which I think is the only meaningful measure -- and we plan to add another 20,000 over the next ten to 12 months to reach a goal of 50,000.

TT: What kind of content are you offering?

LP: We felt sports was the natural way to bring the digital story to the customer base. Viewership of streaming services here isn't quite as far along as in some western markets, but over time we have been able to introduce linear channels [with other genres of content.]

We offer movie channels, and also have classic Russian crime dramas, produced in the 2000s. These are not available now on broadcast channels. We have also partnered with Amediateka, the company that has licensed the rights to HBO content, such as Game of Thrones in Russia. That is localized [subtitled or dubbed] into Russian. And we have integrated it, so users can access the Amediateka content without leaving the NTV-Plus platform.

NTV-Plus offers a lot of options: sports, movies, HBO content, classic crime dramas and via live channels, VoD, subscription or PPV.

TT: What do you think is the key to success in the Russian market?

LP: It's very hard to stay in the market for a streaming service. You can't stay in the Russian market independently. You need partnerships. You cannot survive as a standalone service, because you just won't get enough customers before you run out of money. You need to pay for content rights, then there is the technology investment, marketing…

If you are a part of a TV operator, you can afford it, and rely on the existing customer base to some extent. That's also why the big telcos also do OTT -- Beeline, MTS, Megafon -- have all done something. Even Amediateka started as a standalone OTT service but is now looking for partners. In this market ARPU is low, for OTT and for pay-TV. It's very hard for a new service to take-off. You have to last three to four years before you get over that first stage, that first period of the project.

You also need to have something that is different, out of the box. We have the edge in sports, Amediateka has the advantage of HBO's exclusive content. You have to find that advantage that no one else has, and build on that, exploit it. That's what you need to succeed in the Russian market.

TT: What do you see as the major trends in your market over the next five years?

LP: Well, some people are saying that it is overhyped, but I personally think [the TV experience will somehow be combined] with virtual reality (VR).

As soon as someone introduces a comfortable device for viewing VR, and some format that is compatible with set-top boxes -- maybe that's where pay-TV can take another step with VR.

The other is streaming, and work with the development of streaming protocols. Satellite has no problem transmitting video but streaming still needs some kind of breakthrough. Bandwidth is the first challenge. I'm not a technical person, but there are people telling me that there are advancements that will allow us to reduce bandwidth without losing video quality.

Other than that I would only say that the speed of technology development is very fast now. It's not like in the past where you didn't need to change, you could wait years for new technology. Now you cannot allow yourself to be slow. You have to innovate all the time, look at other markets to see what is coming, and always think one to two steps ahead. It's becoming more crucial from year to year.

— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation