Last week the State Duma, Russia’s lower house or parliament, approved in the first reading a bill to limit foreign owners to take more than a 20% stake in online streaming services operating in Russia. The news was reported by the news agency Interfax.
The new legislation applies to audio and video services with over 100,000 daily views in Russia.
Meanwhile, the request to reduce the share of foreign capital is unlikely to apply to services displaying mainly user-generated content, or to mobile embedded apps. Thus major social networks, including Vkontakte, search engines, video hosting platform YouTube, as well as Google Play and iTunes would not be affected by the law under preparation.
“Russia is a sovereign state which seeks to have its own economic space. Meanwhile new services which do have an impact on the public opinion, the economy and national security appear in the borderless Internet. This is why we have suggested [this] regulation,” comments State Duma Deputy Andrei Lugovoi, the lawmaker behind the new legislation.
The bill is less restrictive than the those applying to foreign participation in media companies, and is harmless for serious investors interested in the market, believes Alexey Volin, Deputy Minister of Telecom and Mass Communications.
Netflix targeted by domestic lobbies?
Despite these optimistic views, the new legislation has sparked controversy in the industry.
“The members of the Media Communication Association [the industry association which pushed the bill] will benefit from such rules since they have launched or will launch their own online video services this year. It seems they are tailoring the legislation to their needs,” said Tvzavr CEO Marina Surygina.
“Major independent players with a big share of foreign capital will be forced to restructure their companies. At the same time the investment appeal of online video services will be reduced,” she added.
“It will completely undermine Russia’s attractive investment climate in the internet technology field, which is still in the early stages of its development,” said a few months ago Viktor Chekanov, head Russian streaming site Megogo, a company which will be affetcted by the new law.
The new legislation will affect such online video services as Megogo
Also targeted are Russian companies Ivi.ru and Amediateka, as well as Netflix, which became available in Russia a year ago.
Netflix was recently accused of being part of US government plot by Russia’s culture minister Vladimir Medinsky.
This past autumn the US video streaming service acquired the rights to the Russian serial “Silver-spooner” produced by Sreda, marking its first content acquisition deal on the Russian market.
A fast-growing market
Russians are among the world leaders in online video viewing. In the country, the monthly audience of online video services already matches that of TV channels, according to a recent report by Russian media agency Initiative.
In H1 2016 69.3 million Russians (47% of the population) watched online videos. YouTube is among the top ten Russian TV channels and video resources and the first among online video resources by monthly audience.
Last year the US video hosting giant was followed by two major Russian social networks, Odnoklassniki and Vkontakte, as well as by Rutube (1.56 million).
According to ТМТ Consulting, such online streaming services as ivi, Okko and Megogo are the biggest ones by revenue. This consultancy has estimated the Russian online video market at 3.4 billion rubles (approximately $55 million at the average exchange rate) in 2015.
Sources: State Duma, Interfax, RBC, Kommersant via The Moscow Times
