Sweden's Modern Times Group (MTG) is planning to launch a Ukrainian pre-pay satellite TV service called UA.TV, mimicking an increasingly common business model in Central & Eastern Europe. The new platform will offer a basic package of 58 channels for UAH39 (about €4.00) for 30 days, including five pay TV channels: Discovery Channel, Dyetskyi, and three of MTG's own channels: Viasat Nature, Viasat Explorer and TV1000 Russkoye Kino. MTG is also planning to make available on a pre-pay basis two packages from its existing Ukrainian platform.
In 2008 MTG, in co-operation with set top box manufacturer Strong, launched Viasat Ukraine and then in 2010 increased its stake in the platform to 85 per cent. MTG also owns satellite TV platforms in the Baltic countries and Russia (with 50 per cent stake in Raduga TV). In 2011 the group's total revenues from its pay TV operations outside the Nordic countries were SKr22m (about €102m).
Pay satellite TV has been growing very slowly in Ukraine, reaching a penetration of just one per cent of total homes in mid 2012, far behind free satellite (13 per cent), or cable TV (around 20 per cent of homes). Two other satellite platforms in the country, Poverkhnost and My TV, have already closed as a result of the difficult market, although three others remain: NTV+, Viasat Ukraine and XtraTV, which launched as recently as the end of 2011. One more platform, Lybid TV, a joint venture of Russian set top box manufacturer General Satellite, is planning to launch by the end of 2012.
The Ukrainian pay TV market has to date lacked a low-budget satellite TV platform, although pre-pay satellite TV services have proven popular elsewhere in the region and are in operation in Czech Republic, Hungary, Poland, Russia and Slovakia. Two pay platforms, Polish N and Russian Orion Express, have also launched supplementary low-budget pre-paid services under new brands which have also been successful.
There are many similarities between the Russian and Ukrainian markets. Russia's TriColor has shown how successful a low budget pre-paid satellite TV offer on a market with relatively low penetration of pay TV and relatively low purchasing power of the population can be. Five years after launch TriColor has over eight million pay TV subscribers and about three million registered cards. In order to increase its ARPU, TriColor has recently extended its portfolio to offer foreign channels as well (before 2012 the operator had broadcast only Russian channels), as well as premium and HD channels.
With a DTT launch in Ukraine at the end of 2011 there are now over 30 free to air DTT channels available in the country, so positioning a satellite pay service at the low end of the market makes sense. However, the price for Viasat's new TV service seems to be rather too high for the very low-end market. Even XtraTV, which is targeting middle-end market, offers its service starting from UAH29 (short of €3) a month for which it provides eight thematic pay TV channels (customers choose an eight channel package from genres sport, film, learning, general, and children's ). As UA.TV's customers don't need to subscribe to the basic package, but with the equipment purchased from the operator they can watch just free to air encrypted channels, the new platform should help to strengthen the position of Viasat in Ukraine. Nevertheless, achieving a success similar to TriColor in Russia without any changes to the current pay offer will be challenging.