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Netflix, Amazon may have long way to go in Eastern Europe

If Netflix Inc. and Amazon want success in the fragmented markets of Eastern Europe, they will need to overcome some large obstacles, speakers at Digital TV Central and Eastern Europe said.

SNL ImageAndrey Kolodyuk at Digital TV CEE
Source: S&P Global Market Intelligence

Andrey Kolodyuk, founder of Ukrainian streaming service Divan.TV and managing director of Aventures Capital, said Oct. 10 at the video conference in Budapest that pricing and the lack of local content are holding back the success of companies like Netflix and Amazon in the region.

Many Eastern European consumers perceive Netflix currently as "no local TV shows [but] expensive," according to Kolodyuk.

Nikola Francetic, head of content, media and broadcasting at Telekom Austria Group, largely agreed.

"Global guys are not really localizing, and [their] price point [is] too high. Twenty euros in most markets, that is a tough game," Francetic told the crowd, particularly since a range of new, mostly local players have entered the market recently.

“The scene is getting pretty crowded,” he said.

In fact, consolidation may be inevitable. Kolodyuk teased that "four out of 10 OTT platforms" in Russia and its surrounding markets are currently considering M&A.

“I am not going to tell you who,” he said.

Kolodyuk said he sees the Asian streaming player iflix launching in Europe soon also, which could lead to additional pressure on Netflix and Amazon there.

Couple that with the relatively low awareness of these subscription streaming services and a high use of pirated sites, and the obstacles to getting consumers to sign up become clearer.

Incomes in most Eastern European markets remain relatively modest, which limits consumer spending, especially when they can get content for free elsewhere. Accordingly, Kolodyuk is convinced piracy may be one of the main reasons Netflix will soon give up on Russia.

Live and exclusive sports, however, have proven to be an important driver of streaming services in Eastern Europe.

Even though signing sports deals is an expensive undertaking, "[video] usage shoots up during live events," Francetic said.

In this space, there may be strong opportunities for Amazon and Netflix, as they often have deeper pockets than local players.