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Report: Netflix Readying Russian Launch

4 Jan, 2016 By: Erik Gruenwedel

Netflix is reportedly set to launch service in Russia as early as this month on select LG Electronics “smart” televisions and Rostelecom set-top boxes, according to Russian news service Izvestia.

A Netflix representative was not immediately available for comment. The subscription streaming video pioneer, which is operational in more than 50 countries, has stated a goal to be functioning in 200 countries by 2017. 

The SVOD business model in Russia remains in its infancy, with consumers heretofore targeting the on-demand transactional home entertainment market. Nearly 7 million Russian households have Internet-connected “smart” TVs, which represents about 11% of all Russian Internet users, according to research firm TNS Global. 

“If Netflix is ​​able to offer good content and good service, you will be able to teach Russian users about the subscription model,” Vitaly Whistlers, an LG manager in Russia, told Izvestia.

Rostelecom, which claims to be Russia's leading long-distance telephone provider, has 11.4 million fixed-line broadband subscribers and more than 8.4 million pay-TV customers, of which more than 3.1 million use set-top boxes.

“Our company traditionally does not comment on … commercial negotiations,” said Valery Kostarev, a representative with Rostelecom.

Russian pay-TV service Amediateka, which is reportedly working on a SVOD, believes its access to new release movies for rent and purchase will trump Netflix.

“We dominate new movies on the model of buying or renting a lot of Russian [content]. So I do not think that we would be a Netflix competitor. At least not right away,” said Tvzavr Marina Surygina, an Amediateka executive.

Alexander Akopov, chairman of the Assocation of Film and TV Producers in Russia, reiterated that the strength of Netflix’s content — not price — will determine its success. With much of the Russian and Hollywood theatrical slates distributed digitally by third parties, Akopov doubts Netflix can succeed without that content.

“It all depends on what kind of content they can get from the [content] owners,” he said.

At the same time, Russian movie distributors were surprised last year when Google Play launched an app on LG TVs with new-release movies significantly discounted compared with Russian pay-TV services.

“It is difficult to say about the success of [Netflix’s] arrival. We will see,” Akopov said.

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