Visitors to the former Soviet Union – especially Russia and the Ukraine -- no doubt remember the massive, if monotonous, housing projects that are the country’s legacy from the 1960s. At the time, those fortunate enough to move into one of the country’s new blocks of flats had all the modern conveniences. In fact, in addition to water, gas and electricity, they had what amounted to another utility: cable television.

But that was almost 50 years ago. In the years since the collapse of the Soviet Union in 1990, some of the country’s major utilities and factories have undergone privatization. In many cases this is fueled by a new class of millionaires who were able to take advantage of unprecedented economic opportunities and the country’s vast natural resources.

In the Russian communications industry, some telcos are offering “triple play” (telephone, TV and Internet) to those who can afford it. WiMax is a hot topic.

Two tiers of viewers

The fact is, for the nouveau riche, there are myriad opportunities in Russia today. For those who can pay, life has become very Western. In the pay-TV arena, this means one tier of viewers principally located in metropolitan Moscow and St. Petersburg who can receive digital programming similar to that received by Western viewers. TV advertising revenues are increasing by 30% annually and there are now over 115 quality localized Russian language channels available with the number increasing every month. Subscribers pay the equivalent of $10-40/month.

But there is also a second tier: Viewers who are still watching the analog cable TV that came with their building. This includes an estimated 17 million homes where subscribers pay up to $5/month. Until recently, no one was predicting increasing the ARPU (average revenue per user) for these second-tier subscribers.

The major players currently offering service to first tier subscribers include:

• NTV Plus. Direct to the home (DTH) satellite operator with an estimated 500,000 subscribers. Gazprom Bank is a major shareholder.
• Kosmos TV. Local MMDS (cable via microwave) operator based in Moscow.
• Stream TV. IPTV operator that uses NDS Synamedia® content protection. It is part of the Sistema Group, which delivers services to several million homes in Russia.
• Comcor TV. Moscow-based cable operator that uses NDS middleware, VideoGuard and EPG. Growing at a rate of 50,000 new homes passed each month.

Considering the burgeoning middle class that is quickly adapting to Western-style comforts, it is only a matter of time before the estimated 14 million homes that currently have analog pay-TV, begin opting for premium digital TV service.

What NDS offers

Through Elogar, the local agent, NDS will be demonstrating VideoGuard Express, at local trade exhibitions such as Nat Expo in November and CSTV in February 2007. Both are being held in Moscow.

VideoGuard Express is ideal for emerging Russian operators. It is a low-cost entry level solution that requires minimal customizing. Components include smart cards, conditional access, middleware, and a Russian-language EPG. Its strengths include the fact that it offers security as well as bundling of the middleware and the EPG.

Flexibility is essential for the Russian market which is currently in the process of consolidation. (At present there are numerous small operators with 5,000-10,000 subscribers, but this is also changing rapidly with three major conglomerates, each with over 3 million subscribers.)

Because it features a flexible EPG, broadcasters who use VideoGuard Express can customize their offering without NDS involvement. Seasonal changes and a variety of promotions are completely under their control.

Another advantage of VideoGuard Express is that the STB includes middleware. As businesses grow, more advanced middleware can be downloaded because the STBs are not linked to any legacy systems. In addition, STBs can evolve, and operators can avail themselves of multiple box vendors so that the user experience remains unchanged.

For Russians living in housing developments built in the 1960s, their outside view may not be the most esthetic. But when they avail themselves of the new digital pay-TV services that are quickly coming their way, what they will be able to view on their TVs amounts to a new type of Russian revolution.

For more information:

VideoGuard Express