Sergey Petrov: combining efforts in the market of Internet advertisement will give more than 600 billion rubles

President of the “Media-Communication Union” Sergey Petrov on the eve of the RIW-2015 spoke about the changes in market conditions, the market growth potential of Internet advertising in the media field and the plans of market participants.

– Last year at RIW 2014 you presented the concept of development of the industry. What has changed in a year?

– Indeed, last year “Media and communications Union” in conjunction with PWC has developed a “Strategy for the development of media and communications industry”, which included 15 strategic initiatives. Initiatives aimed at the development of each element of the value chain in the industry of media and communications: from the production and aggregation to delivery and content consumption.

Over the past year in the economy and the industry changes, long-term pace of recovery of the macroeconomy has declined. This, in turn, influenced the Outlook of most industry segments, so in 2015 we updated the Concept to reflect current market conditions. At the moment the prospective size of the market, as the effect of the implementation of the concept, “ISS” estimates that more than 600 billion rubles.

– What will be achieved growth of the market?

– We remain confident that the market growth is impossible without reducing the level of piracy of consumption. Currently up to 90% of network traffic is pirated content, and the annual loss due to piracy amounts to more than 28 billion rubles. When the piracy level in Russia will drop at least a few percent, we will be able to make a huge leap! The market will gradually saturated demand legal content and user-friendly services.

Moreover, when any major online video platform with attractive libraries, and will be able to watch exclusive premieres, users will be willing to pay for the services of paid TV. And the development of infrastructure of content delivery will provide the technological basis for implementing the concept of seamless consumption always and everywhere, where a key role is played by the quality of access.

We estimate that if the introduction of the paid model of content consumption, the industry’s revenue will grow by 65% to 485 billion rubles in 2015, up to 800 billion rubles by 2025. By this time about 35% of incomes of TV and video services can make payment by users. It is, indeed, a huge jerk, which the market is able to do at activation of three main today of the drivers of growth, including expansion of online video, the development of pay TV and wireless broadband access.

You mentioned video as one of the drivers of market growth. Current developments in this market? Attitudes of consumers?

We see that gradually changing the model of providing content to consumers. The users will have even more demands to watch content on those devices, and at a time when it is convenient. Advertisers react to changing needs. Their increasingly attracted to a model in which access to the video is provided along with the advertisement.

However, we believe that consumers who have broadband access to the Internet can easily make such a format, because they can “skip” the ads. When given a choice – to watch or not to watch the promotional video – there is a high probability that the consumer will view and subsequently respond to it.

In the segment of video advertising, as well as in pay TV, we see great potential. MKS anticipates that an increasing share of online video advertising in the total market from 1.7% in 2015 (2.1 bn) to 13% in 2025 (27.2 billion roubles). While overall revenues in the online video segment by 2025 will reach the order of 84.5 billion rubles against the expected 3.7 billion rubles in 2015 (an increase of 32% compared with 2014).

– Last year at RIW 2014 you presented the concept, what I plan to tell this year?

– The “ISS” started implementation of the strategic initiatives formulated in the framework of the Concept of development of the industry in 2014.

In the roundtables organized by the “MKS”, we plan to discuss the initiative of consolidation of industry players to reduce the availability of pirated content, will present the “classifier” and estimates of the quantity, dynamics and structure of the pirate market as well as practices to combat piracy. Partners and participants of the forum will give its assessment of the effectiveness of existing measures and give proposals to combat piracy.

Also one of the key issues will be stimulate the proliferation of pay models and new ways of content consumption. Participants will talk about current trends and limitations of the pay-TV market in Russia, and will present proposals for its development.