Guest post by Kirill Filippov, CEO of SPB TV
This year, the participants of the annual St. Petersburg International Economic Forum (SPIEF), which was held in May 22-24th 2014 for the eighteenth time, talked about the IT industry shifting towards developing in emerging markets.
There are many reasons for that, indeed. First of all, emerging markets provide investors with a solid potential of growth. In 2013, according to Ericsson Mobility, the top 5 countries in terms of net additions were: China (+30 million), India (+10 million), Bangladesh (+6 million), Indonesia (+5 million), Egypt (+4 million).
More open and better norms and regulations for the IT sector often provide more opportunities for IT companies in these regions, as compared to Europe or North America, where somewhat stricter regulatory and normative environment often slow down innovation which lead to losses in money, time and other things.
Therefore, IT companies with roots in Russia are actively looking in that direction. The most far-seeing act as international companies with several affiliates abroad at global locations in their operations. We could give an example of Kaspersky, JetBrains, IC, Gamos and especially SPB TV with its R&D base in Russia with representation and operations offices in Europe, North and South America, and Asia. Since recently, Asia is becoming a major point of interest too.
Speaking about emerging markets, we have to emphasise how important it is to create an infrastructure enabling the best and fastest services. Up-to-date technologies – their expansion and a skillful treatment of systems functioning on their base – are essential for many countries in South America, Africa and Asia, of course. A gap between the potential of 4G and capacity of existing networks gives a strong vector to move forward, and leads us from exclusivity to the “economy of scale”, in other words – to mass production. Sometimes, it demands unusual solutions. For so much, the advantage of Russian IT specialists – their ability to accomplish non-typical tasks – may be crucial on emerging markets.
But how to monetise the efforts – that’s the question! At SPIEF, IT experts and business leaders exactly discussed it. Once again emerging markets give us an opportunity to promote products instead of being outsourcers as many IT developers from Russia, for example. Sure, there is a lack of financial resources for investments. But if you can apply your technology in different conditions without great investments, or, you can invest in your technology for the sake of your future profit – this is a good solution: a turn-key technology and profit sharing partnership.
The situation is mostly favorable to OTT-video services. According to Cisco Visual Networking Index, in 2013, 53% of the consumed mobile traffic are mobile videos, and the figure is forecasted up to 69,1% in 2018.
But how the profit will come? There are two principal practical ways: subscriptions and advertisements. Their rivalry will hardly come to end in foreseeable future. According to Multimedia Research Group, substantial amount of subscriptions in OTT-market will make about 37% by 2017, whereas the ads profit will make 49% (sales of the content will make another 14%). Although being approximate, these figures prove that people appreciate viewing content for free, which is especially typical for developing countries.
TV advertisements are very traditional, and, at the same time, the most innovative monetisation tool for a TV service. Good targeting will provide viewers with useful experience, and also may be highly appreciated by local advertisers. Replacement of ads breaks on streamed channels is an additional source of monetisation for both channels and providers. The common interest of all of them is obvious.
Another helpful opportunity enriching the viewing experience is interactivity. Currently, interactive technologies are developed in Russia by specialists of SPB TV, who are ready to bring them everywhere in the world. This solution not only enriches the users’ experience but also opens more formats for monetisation: when viewers are involved into action, it stimulates their interest to the service. And also, isn’t it practical when people are buying goods just while watching a show or a movie?
Today’s innovations will be a usual thing in the future. So, there is always a way to new development and opportunities that currently lie ahead in emerging markets.