MegaFon invests in fast-growing challenger on Russian online video market

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By East West Digital News in Moscow November 12, 2020

MegaFon, a major Russian mobile phone operator, is to acquire 33.8% of Digital Media Holding LLC (DMH), the parent company of the Start video service, reports East-West Digital News (EWDN).

The amount of the deal was not disclosed, but RBC heard from industry analysts that MegaFon’s stake might have been valued between RUB1.5 and 2.7bn ($19mn to $34mn at today’s exchange rate).

Citing company representatives, the business news and research company reported last week that MegaFon is considering investing up to RUB5bn ($62mn) in the service in the next three years.

Touting itself as “the fastest growing player” on the Russian market, Start claims 1mn paid users. The company has issued more than 30 original films or series, some of which have made available on international platforms Amazon Prime (‘Gold Diggers’) and Netflix (‘Better Than Us’).

MegaFon’s capital injections will allow Start to increase the production of original content and develop related business projects.

The Russian online video market is usually valued at around $300mn for 2019. The main players are domestic platforms ivi, Okko, Amediateka alongside foreign players YouTube, iTunes and Google Play. At the beginning, the business model of Russian online video platform relied primarily on advertising revenues. However, user-generated revenues now exceed advertising revenues.

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