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.
The amount of the deal was not disclosed, but RBC heard from industry analysts that MegaFon’s stake might have been valued between 1.5 and 2.7 billion rubles (from $19 million to $34 million at today’s exchange rate).
Citing company representatives, the business news and research company reported last week that MegaFon considers investing up to 5 billion rubles ($62 million) in the service in the next three years.
Touting itself as “the fastest growing player” on the Russian market, Start claims 1 million 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 $300 million 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.