Kyiv cable TV company remains undaunted
Russian digital satellite TV is officially coming to Ukraine. Previously, NTV Plus programming was only available through unofficial dealers that sold access cards, many of which were often pirated copies.
With the old package, a subscriber could get up to 60 Russian channels to go with European movie, sports, news, music and other popular channels for as much as $67 per month. Those times seem to be over.
Ihor Davydenko, general director of New Television Technologies (NTT), the official partner of NTV Plus in Ukraine, says that along with distribution of the programming that will start in February, his company will also be in charge of protecting copyrights and combating market piracy, or “cleaning up the market,” as he puts it.
Davydenko says he will capture the market using “economic tactics,” adding that NTT plans to offer subscribers more attractive pricing.
Current distributors who do not sign agreements with his company by the end of February will be taken to court, he said. Changing the encoding of the access cards will help eliminate illegal viewing of NTV Plus, he added.
Sputnik, a Crimea-based magazine covering satellite television estimated in February of 2005 that up to 80,000 Ukrainians could be receiving NTV Plus. Presumably, they were receiving the signal using pirated cards and other schemes.
According to Davydenko, it remains unclear, however, what percentage of them will be affected by the change in access codes, in case they do not sign official agreements either with NTT, or with official distributors.
A Kyiv-based company that sells NTV Plus packages said its subscribers will not be affected by possible encoding changes, as the company has a deal “directly with NTV Plus in Moscow.” Kazakova denied that NTV Plus has any agreements with Ukrainian companies other than NTT.
Davydenko estimated that his company will invest $500,000 to launch the project, adding that much of the money will be used to establish a call center that would take orders from subscribers.
Anastasia Kazakova, head of the press service of NTV Plus, explained that it took NTV Plus a long time to start its official operations in Ukraine, but added that their market research of Ukraine shows that only now is the country ready for satellite pay TV.
The relatively steep sign up costs, from $20 to $60, and required purchase of a satellite converter with dish costing from $250 to $600, won’t be a problem for the Ukrainian market, in his view.
Davydenko said he plans to target clientele in above average income brackets, primarily private home owners where cable TV service is not available.
TV for the wealthy
Davydenko is optimistic about the “legalized” future of NTV Plus in Ukraine, adding that he expects his legal subscriber base in Ukraine to hit 40,000 this year. In comparison, the company claims to have more than 430,000 subscribers in Russia.
Programming offered in Ukraine will largely be similar to what viewers in Russia receive, except that here the channel will offer international versions of Russian public channels that would have proper copyrights for Ukraine.
The sports programming will also be altered to avoid any copyright infringements. In the future, Ukrainian public channels will be added to the packages, he added.
Despite some programming differences, Salyamov, vice president for strategic planning and development at Volia Cable, said NTV Plus can hardly threaten his company’s business as Volia offers similar programming for less: it costs $17 for its premium package of 75 channels.
Up to 40 of these channels overlap with NTV Plus content he said, adding that the installation and equipment fees at Volia Cable on average cost $65.
“NTV Plus can hardly be considered a competitor, as we have our own cable network,” Salyamov said.
Volia Cable is currently available to nearly 80 percent of Kyivans. The company has some 37,000 digital TV subscribers on top of nearly 500,000 analog customers.
Scant competition
NTV Plus seems unlikely to face fierce competition from other satellite TV operators, either.
Serhiy Demyanchuk, marketing director of Channel 1+1, one of Ukraine’s two leading TV channels, said that few Ukrainian companies can afford to invest in such costly ventures, where startup can often cost as much as $50 million. In Ukraine the long-established NTV Plus will not face such costs.
Demyanchuk also said that the NTV Plus project would be unprofitable if it began with a focus solely on the Ukrainian market, where the population stands at some 47 million. Russia’s population exceeds 140 million.
Kazakova of NTV Plus said her company reached a breakeven point on the Russian market in 2004 – the eighth year of its operation.
Demyanchuk said another factor that would greatly discourage anyone to begin such a project is the huge piracy on the market, especially in smaller cities other than Kyiv.
Volia Cable’s Salyamov shares the concerns of Demyanchuk and Davydenko about piracy, as he says that all satellite pay TV channels are distributed illegally to private subscribers DTH (Direct-To-Home) in Ukraine. The coming of NTV Plus, he says, is the first attempt to start doing this on the books. “At the moment, there are simply better ways to spend $50 million in Ukraine,” Demyanchuk said, adding that Ukraine is somewhat similar to Austria, where the market is dominated by German satellite companies.
