New DTH platform to launch in Ukraine

Viasat Ukraine, the Ukrainian DTH platform owned by Modern Times Group and Strong Media Group, has started test broadcasts from the Sirius4 satellite, planning commercial launch in Q1 or early Q2 2008.

Viasat Ukraine was established in 2006 in Kiev as Vision TV, and in March 2007 the company was awarded a licence for satellite broadcasts in the Ukraine. In November, 50 per cent of its shares were purchased from Strong Media Group by Modern Times Group, the latter being the owner of pan-Scandinavian and Baltic satellite operator Viasat. The company was subsequently rebranded as Viasat Ukraine. Viasat also owns a number of national channels already broadcast in the Ukraine and other Eastern European countries including Viasat History, Viasat Explorer, TV100 East and TV 1000 Russian Kino.

Initially Viasat Ukraine planned to launch its TV service before the end of 2007, but was delayed, as the company failed to finalise agreements with the channels it intended to broadcast. Currently, the operator plans to offer 60 locally and internationally produced channels. Channels will be broadcast in DVB-S2 with MPEG-4 compression and the company will use NDS Videoguard encryption with MediaHighway middleware. Set-top boxes will be supplied by Strong. NDS will also provide the EPG system, while Strong's dealer network, which was established in the Ukraine in 1999, will be used for the distribution of hardware.

It is expected that with the cost savings of using Viasat proprietary content (Viasat History, Viasat Explorer, TV100 East and TV 1000 Russian Kino), as well as the platform enjoying the advantage of having a vertically integrated set top box supplier, Viasat Ukraine could offer a basic package for as little as $10-13 per month, substantially lower than prices offered by its competitors (for instance, NTV+ in the Ukraine provides its basic package for about $20).

Our take...
A snapshot of the Ukrainian pay-TV market gives an indication that Viasat can launch its satellite service with every chance of success.

Currently approximately 95 per cent of the 3.5 million Ukrainian pay-TV households (which account for a little less than 20 per cent of total TV households in Ukraine) receive pay TV from cable TV providers. The 4 major players are Volya, Information Technologies, Lugan Cable Television and Black Sea, which provide TV to about 25 per cent of the total pay TV market in the country. The largest, Volia, has 600,000 subscribers, including about 150,000 digital homes.

In February 2007, the first satellite TV service launched in Ukraine, provided by the Russian firm NTV+ (represented in Ukraine by New Television Technologies). However NTV+ with more channels (about 80), high quality programming and therefore a relatively expensive service, targets the high-end market, whereas Viasat's offering is designed for the higher volume mid-low end of the market.

As IPTV services as yet have not been fully launched in the Ukraine (Comstar, Golden Telecom and UkrTelecom plan all to launch in 2008), the market will consist of the cable companies, NTV+ and a pay-DTT platform, launched in April 2006 as Maximum TV.

As the majority of TV subscribers currently live in cities, whilst rural parts of the country are poorly supplied by pay-TV services, in addition to the advantage gained by broadcasting in digital, the coverage will give the new operator a key advantage over the cable TV companies. Moreover, the one million free DTH homes in the Ukraine may become a good source for Viasat's growth in the future.

In the nearer future, however, the situation may well become more complicated, with another Ukrainian company, Poverkhnost, launching its own satellite pay TV service. Poverkhnost is currently working on carriage agreements with channels, as well as on its billing system, and is likely to launch by the end of this year. The most important factor – the pricing of Poverkhnost's packages is as yet unknown, however, as the company currently specialises in sports content (with three channels – Sport 1, Sport 2 and Planet Sport), it is almost certain that the company will end up a competitor to Viasat TV. Consequently, Viasat might be well advised to launch soon and build its subscriber base before the real competition starts.