The cost of producing content for video platforms increased by 30%
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Online cinemas have increased the cost of producing their own content, in the first quarter the figure grew by 29%, to 54 billion rubles, and by the end of the year it will exceed 207 billion rubles, calculated in TelecomDaily. The reason was both an increase in the volume of the content itself, and an increase in costs. Production studios have raised their prices by 30% this year, according to analysts. However, while the costs are more than paid off: the revenue of online cinemas from the sale of their content is growing, according to experts, faster than expenses.
Costs for the production of films, videos and television programs in January-March increased year-on-year by 29%, to 54 billion rubles, calculated in TelecomDaily. According to the agency’s forecast, by the end of the year the indicator will exceed 207 billion rubles, having increased by 33%. The volume of content on the platforms is also increasing, says Denis Kuskov, CEO of the agency, “but the same actors and studios are involved in the production, the latter, in turn, raised prices by 30% in 2023.”
Mr. Kuskov stressed that after the outbreak of hostilities in Ukraine, there were problems with filming equipment – both with cameras, various components, and software. “Equipment is in short supply, new ones are more expensive, but you still have to buy,” he notes. The Russian film industry uses 90% of foreign equipment, which has no competitive domestic counterparts, the industry “critically needs government incentives,” RBC reported in May.
In the spring of 2022, many foreign streaming platforms left Russia, including Netflix. Universal, Disney, Sony, Warner and other Hollywood studios have suspended operations in the country and have begun revoking their film licenses. This has led to an influx of users to pirated video services. In pursuit of viewers, online cinemas began to increase the production of original content (see Kommersant of May 19).
Ivy predicts a further increase in production costs. This is due to the increase in the number of original projects that the online cinema will release in 2023, “the cost may vary from project to project, but the average price, according to our data, will remain at the level of 2022,” the service representative explains. Evie refused to disclose the average cost of one project in 2022.
Okko also confirms the trend: “Original projects are the main differentiating factor for competing online cinemas, they always top the charts, they are discussed.” The Russian product is gaining popularity not so much because of the liberation of the niche, but because of the improvement in quality, the service representative emphasized. At least ten projects will be released on the platform before the end of the year, Okko says.
Premiere added that the increase in production costs is not only due to the increase in the volume of content, but also to the improvement of its quality, “in connection with this, and also due to external factors affecting the overall increase in the prices of film production in the world, the cost of content is growing year by year. Partially, the price increase was provoked by the pandemic, then by the sanctions, the video service added.
The cost of own production at online cinemas will inevitably grow, says Dmitry Kolesov, director of the department of new technologies at J`son & Partners Consulting. “Demanded content from Western studios is not available, the audience is increasingly watching Russian. New titles are needed to meet this demand,” he says.
But the content licensing market will also grow along with income from resale to other sites, Mr. Kolesov believes. Thus, the total revenue of online cinemas Kinopoisk, Ivi, Start, more.tv and Look from the sale of content of their own production (originals) to third-party sites in 2022 amounted to 5.1 billion rubles, Vedomosti reported in April . According to Dmitry Kolesov, this year the figure will at least double.
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