RR Media Exec: Russia’s Economic Crisis Not Stalling Digital Media Evolution

Photo: RR Media

[Via Satellite 03-27-2015] RR Media launched a new office in Russia approximately 18 months ago, comfortably ahead of the nation’s recent economic downturn. The sliding ruble has strained markets, but RR Media executives say the trend toward higher quality video and broadcast capability continues to remain strong in the country.

“It is very strange. The economy is in a difficult situation in Russia, everybody knows that, but we find opportunities to upgrade clients’ abilities even in this period,” Shlomi Izkovitz, vice president of global sales at RR Media, told Via Satellite.

According to Izkovitz, Israel-based RR Media is the main foreign provider of distribution and other broadcast services to Russia. The company is working with Russia Today, Channel 1 Russia Digital Family, Bridge Media, Russian Media Group and a number of international channels from outside Russia.

RR Media, formerly RRSat, is diversifying from focusing just on delivery by satellite to become a full media service provider. The company performs distribution for 700 channels around the world and full media services for 160 channels. Izkovitz said the dominant service is currently distribution to cable head-ends, assisting customers with penetration to cable, satellite and IPTV platforms in all aspects. RR Media is using its Moscow office to steady the situation and continue to provide new services.

“We are working on a couple of big size projects with a few big media companies inside of Russia, and hopefully soon we will see results from that. Additionally, we just launched two new HD channels on our Yamal platform to Russia and [the Commonwealth of Independent States] CIS. This shows that the situation is improving and that we have the ability to provide the digital media solutions that our customers need at this time,” he said.

Not all media companies are weathering the current economic situation so favorably, though. A number of those with a significant part of their business in Russia today are responding “badly,” according to John Tinker, Maxim Group’s senior media and Internet analyst.

“It’s obviously extremely political, and the media business there is doubly political particularly for anything on the news side,” Tinker told Via Satellite. “If you take what’s already a tricky country to deal with and then you take the currency issues, it’s even harder.”

Plummeting oil prices can make these challenges even more difficult to surmount. But at the same time the movement among broadcast companies toward better video continues undeterred.

“All the trends that are taking place here and elsewhere are still going to continue in Russia,” he added. “The digitalization trend is not over — it is a global force.”

Izkovitz concurred that there is still momentum toward new technologies despite the currency woes.

“Until recently, the Russian market was a very traditional market, normally working in SD format in a [Digital Video Broadcast-Satellite] DVB-S platform. We started to promote HD on [Digital Video Broadcast-Satellite Second Generation] DVB-S2 that was not very popular in Russia … we are changing the standards in Russia regarding the quality of channels. The Russian market is really traditional and it is very hard to introduce new technologies, but I think now people are understanding,” he said.

In addition to distribution within Russia, RR Media is also working with customers to leverage sales outside the country. Broadcasters with distribution to places such as Europe and the United States are paying in euros or U.S. dollars. Likewise Izkovitz said European and American media companies with a presence in Russia are in discussions with RR Media to continue distribution services should the economic downturn worsen.

“If the crisis becomes more critical, we will be their backup. We will be the company that delivers them inside Russia. This is a huge concern of these big networks, and we are adjusting this phase of planning so, if it happens, we will be able to support these tier-one networks,” he said.

Some broadcasters that previously did playout in-house are looking to reduce capital expenditures (capex) by transitioning these services to RR Media, which recently started transmitting a few channels from Israel. Izkovitz said foreign broadcasters continue to show strong interest in Russia, including many faith-based channels. The company recently started distributing channel content by satellite from Christian Television Network, and sees opportunity for more pay-TV and ad-supported Free-to-Air (FTA) platforms in the future. Tinker noted that economic downturns often hit advertisers more acutely, which could influence the types of channels that last. Still, Izkovitz is confident the Russian market will recover and continue to demand better digital media services.

“I think [Russia] will be stable and continue to grow,” said Izkovitz. “There is a lot of opportunity with a lot of niche channels that are starting in Russia. There is a lot of interest by Christian channels from all over the globe to be in Russia, and I think it is a great market that will continue to grow.”