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Analysis

Why did Netflix fail to concur Russian online-cinema business?

Introduction

I will start with a phrase that may sound rather ridiculous to US citizens. Yes, in Russia only a very tiny fraction of people have a subscription to Netflix. In fact, many Russian people do not have a single subscription to an online-cinema. Due to some cultural backgrounds and ad technology in some distant parts of the country some people do not watch films online at all, and 93% of those who watch, use illegal resources. They are already a part of Russian culture; pretty talented people translate foreign films using jokes, irony and satire and make films only better! This is why many people hesitate to switch to official resources; they are adore foreign films that are modified a bit with Russian creativity.

But pirate websites is not the only problem Netflix faced when entering the Russian market. Low incomes, cultural backgrounds and heavy opposition joined forces.

Problems Netflix Faces

Firstly, on average, a standard Russian has an income of about 490 dollars a month. A subscription to an online video service costs anywhere from 3 to 10 dollars, an amount that is not negligible in this case when one has to consider all the other expenses people have to cover. With inflation hitting 6% a year, and salaries not growing by the same percentage, Russians are unwilling to spend money on content, which could be accessed for free through another source.

Secondly, not all Russian people adore the films that are suggested by Netflix: there is a very significant cultural difference between Russians and Americans. The times of the Soviet Union left a very large stain on Russian mentality. People do not want to see that some people lead a happy life somewhere in another part of Earth while they don’t. They want to see movies that reflect the problems they face. That is why genres such as arthouse are very popular in Russia. Netflix does not offer such films. Also, many Russian people, due to Soviet prejudices, are pretty intolerant, and they dislike the idea of seeing people of sexual minorities on their screens.

And thirdly, Netflix has to battle with three very serious opponents: Kinopoisk, OKKO and IVI. For many years, Kinopoisk was just a website about films, where people could discuss their opinions  and put marks —  it was like IMDB – but then it partnered with Yandex, one of Russia’s largest non-governmental companies to open a service that could try to fight with Netflix for the audience. Having an abundance of money and a very talented management, Yandex straight away started buying copyrights for Russian distribution of some of the most famous films and series, such as “The God Father”, “How I Met Your Mother”, “John Wick”, etc. It even received exclusive rights to show Warner Brothers’ “Justice League: Snyder’s Cut” from the first days of its release. Tigran Hudoverdyan, Yandex’s deputy CEO, uses the same tactics as he used when he single-handedly concurred Russian Taxi Business – he attracts customers by setting very small rates at first, and then lifting them when the customers are already acquired. Yandex are basically buying rights to distribute an abundance of famous titles from the largest American film companies, and even Netflix. Many films that one can usually find on Netflix can be found on Kinopoisk in Russia instead. The only issue is that Yandex is spending too much money, even considering the fact that is is Russia’s largest IT company. The question is whether Yandex will manage to gain enough from this business to cover all of the expenses.

Competitors of Netflix in Russia

The other two large companies: IVI and OKKO are less dangerous. Even though OKKO is controlled by Russia’s second biggest company, Sberbank, it is, most definitely, not the service they consider the most important due to great revenues from its banking investment and other IT businesses. But, OKKO has a lot of rights to distribute different sportive events such as the matches of English Premier League or the fights from Bellator MMA. IVI does not have such finances as the other two companies but it has a passionate collective. Opened by a former financier, IVI became a project of his life, and he desires to fight until the end with the giants that oppose him. Even though he does not have the money that his rivals have, he invests reasonably into content that would be unique to the service (something that OKKO and Kinopoisk also do, but rely on less). Also, the management of the company has plans to have an IPO on Nasdaq to receive money for the future development of the business. In 2019, the company already had more than 100 millions of dollars of revenue a year, and this number grew by 50% a year. At that time, IVI was the most popular Russian online media service. All of these factors made IVI an interesting company to invest into, but its IPO was shattered by the COVID-19 outbreak.

Conclusion

To conclude, the most important factors of Netflix’s failure to win dominance in Russia were low incomes, the cultural background of Russian people and heavy opposition from local companies. In my own humble opinion, the last factor is the most significant one.

Sources

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Weekly Summaries

30th of August – 5th of September

U.S. Forces Left Afghanistan

The last U.S. forces left Afghanistan last Monday. Their departure ended a 20-year long occupation. The war in Afghanistan cost the U.S. over $2 trillion and left more than 170,000 people dead. Shortly before midnight, the last 5 American cargo jets left the Kabul airport, leaving behind many Afghans, including former members of the security forces. The Taliban and fighters celebrated the U.S. departure and gunfire could be heard across Kabul. A day later, President Biden once again defended the withdrawal, claiming that it was a choice “between leaving or escalating” the situation.

Other News

  • The return of a Napoleonic general, Gen. Charles Etienne Gudin, was supposed to improve relations between France and Russia, two countries that have long had difficult diplomatic relations. However, when the ceremony took place, the Presidents were not to be seen. 
  • The leader of Guinea’s special forces led a coup, announcing on state television that the constitution and government had been dissolved. Whether he will be successful is still uncertain.
  • Less than a year after he started office, Prime Minister Yoshihide Suga of Japan said that he would not seek re-election
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Weekly Summaries

5th of July – 11th of July

Lebanon’s Crisis worsens

The World Bank announced that the current crisis Lebanon is facing could rank among “the world’s three worst since the mid-1800s,” according to the New York Times. In the past year, Lebanon has had to cope not only with the outbreak of the coronavirus but also with the deadly explosion in Beirut’s port. This has meant that Lebanon’s GDP has decreased by 40% from 2018 ($55 billion) to 2020 ($33 billion). Its currency, the Lebanese pound, has decreased in value by 90% since fall 2019. Furthermore, Lebanon currently hosts one million refugees from Syria. All of these factors make it a very difficult and bad situation, providing little hope for people that things may change for the better soon.

Other News

  • After the assasination of President Jovenel Moïse of Haiti, four people who were suspected of being involved in the assasination were shot dead and two arrested by the police. Later on in the week, two Americans and 15 Colombians were detained as well. In recent months there had been protests, demanding Moïse to step down as poverty and hunger continued to increase. Increasingly, armed gangs have also been taking control over streets, causing chaos in what is already the poorest country in the Western Hemisphere.
  • The Ever Given container ship, which famously blocked the Suez Canal, is finally on its way to continue its journey.
  • Italy beat England in the UEFA Euro 2020 Final, which took place on Sunday, 2:1 after a dramatic shootout. The game took place in the Wembley Stadium in London.
  • A military plane crashed in the Philippines after missing a runway. Onboard were 96 soldiers and crew members. At least 50 people died, including 3 civilians. Later on in the week, a “regional passenger plane with 28 people on board crashed in eastern Russia,” according to the New York Times, as well.
  • The U.S. handed over its final airbase in Afghanistan, ending its military presence in the country after almost two decades.
  • A mudslide in the Japanese town of Atami has left more than 80 people missing.

Fun Fact

England’s deer populations have spiked as the outbreak of the coronavirus halted hunting activity. On a more serious note, the increasing numbers of deer poses serious challenges to the survival of wild plant species.

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Weekly Summaries

10th of May – 16th of May

Tensions between Israel and Palestine

The worst violence between Israel and Palestinian groups since 2014 has been seen in the past few days. The conflict escalated over the final Ramadan weekend. Since mid-April there have been daily clashes on Jerusalem’s streets. Over Ramadan, the Israeli government had imposed a daily limit of 10,000 people to gather for prayers at the Al Aqsa mosque. Based on these restrictions, tens of thousands of Muslims were turned back from the mosque. However, that is not all since the possible eviction of six Palestinian families from the Sheik Jarrah district has caused tensions to escalate even further. On May 8th, the holiest day of Ramadan, tens of thousands of Muslims gathered at the Al Aqsa mosque. Israeli police therefore blocked many Muslims from entering the compound, based on the restriction. Two days later, on May 10th, Israeli police also used CS gas and stun grenades inside the mosque. In response, Palestinians condemned this action and rockets were also fired by Hamas, which targeted Israeli communities bordering the Gaza Strip, with some rockets even reaching the suburbs of Jerusalem. Since May 10th hundreds of rockets have been fired from Gaza towards Israel and the Israeli Air Force has carried out airstrikes on Gaza. Dozens of civilians have been killed. 

Bombing in Afghanistan

Last weekend, a bombing in the Dasht-e Barchi neighborhood, which targeted female students. The triple bombing caused the deaths of more than 80 people, most of them belonging to the Hazara minority. Recently, Hazaras have grown increasingly angry and frustrated, saying Afghanistan’s government is not taking the necessary steps to protect them from these frequent terror attacks. 

Other News

  • Nine people died in a school shooting in Kazan in central Russia
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Weekly Summaries

12th of April – 18th of April

Explosion at an Iranian nuclear enrichment site

Last weekend, there was an explosion at an Iranian uranium enrichment plant, which caused a power shortage. Since then, Iran’s foreign minister has threatened to take revenge against Israel, whom he blamed for the explosion. The explosion comes just at a point when relations regarding the 2015 nuclear deal were resumed again a few weeks ago.

Other News

  • Prince Philip, the Duke of Edinburgh and husband of the Queen of England died. His funeral took place this past Saturday,
  • President Biden has announced that the remaining U.S. troops that are currently still located in Afghanistan will withdraw by the 11th of September, the 20th anniversary of the 9/11 attacks.
  • The U.S. is imposing new sanctions on Russia.
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Weekly Summaries

8th of March – 14th of March

US Stimulus Package is passed

This past Wednesday, the 1.9 trillion US dollar stimulus package passed through the House of Representatives. The bill includes benefits for low-income Americans and also extends the $300 dollar per week supplemental employment benefit until September. President Biden signed the stimulus package on Friday. 

Other News: 

  • A series of explosions at a military base in the city of Bata in Equatorial Guinea killed at least 20 people and injured 500, according to local authorities. 
  • Tens of thousands email addresses have been affected by a hacking campaign against Microsoft. The victims are US businesses and government agencies.
  • Women protested in Mexico City at the residence of Mexico’s president against one of the world’s worst rates of gender violence.
  • The Russian government announced that it would be “slowing” the access to Twitter.
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Weekly Summaries

1st of March – 7th of March

Protests in Spain

The young Spanish generation has been going to the streets in major cities like Madrid and  Barcelona for more than a week now. At first, the protests were a reaction to the arrest of the rapper Pablo Hasel, but now the protests have developed into a much bigger movement. The pandemic has hit Spain’s youth very hard; over 40% of young Spaniards now find themselves unemployed, the highest number in the EU. The current situation is a far-cry from the Barcelona that once was one of the “best places in Europe” for young people.

The Former French President Found Guilty of Corruption

It is the second time in modern French history that a former president was convicted of a crime. The former French President Nicolas Sarkozy was sentenced to at least one year in prison this past week on charges of corruption. Sarkozy supposedly gained confidential information from a judge after offering to help the judge get a job.

Other News

  • Britain and the EU have had some major disagreement this past week. The path to a “normal” relationship between the two parties remains a rocky one.
  • Last Sunday, the Hong Kong authorities charged 47 pro-democracy activists of violating the new Chinese Security Law.
  • New charges have been raised after the civil leader Daw Aung San Suu Kyi by Myanmar’s military which staged a coup a few weeks ago. She now faces a prison sentence of up to 9 years.
  • The U.S. announced sanctions against Russia on Tuesday on the accusation of poisoning Aleksei Navalny
  • Three female journalists were shot in Afghanistan last week on their way home from work
  • After hundreds of Nigerian girls were abducted from their boarding school last week, their kidnappers have now released them
Categories
Analysis

Nord Stream 2 – A step in the wrong direction

Nord Stream 2 is a gas pipeline, that carries non-renewable natural gas into the European Union, from Vyborg, Russia to Lubmin, Germany. According to Nord Stream AG (the operator of the project), the overall costs of the construction of the 764 mile long pipeline are estimated to total around 9.5 billion euros (which is enough money to fund the construction of over 6000, 800kW wind turbines, in Britain). The gas that the pipeline is to carry, lies in northern Russia’s Yamal Peninsula, which holds nearly 5 trillion cubic meters of gas reserves, according to the Nord Stream 2 consortium. The aims of the transportation of the natural gas are to enhance the security of supply, to strengthen the internal market, and to relieve pressure on other sources within the EU that previously supplied all the non-renewable resources since the EU’s domestic gas production is in rapid decline. However, it is debatable as to whether relying on other sources of natural gas is the best way forward for our economies and for our planet. Currently, the EU has committed to finance projects worth 168.7 billion euros, of which 21%  will go to measures to address climate change. Why spend this much money on reversing the effects of climate change, if Nord Stream 2 is to be built? 

Over the past decade, we have seen a drastic increase in the demand for the use of renewable resources, in response to the ever-increasing climate change issue. As we all know, climate change will not only affect the weather and temperature of our planet, but it will also hinder human life and activities in a variety of ways. A simple example of this would be the increase in global food insecurity and reducing crop productivity, which feeds our ever-growing population. Over time, farmers have adapted to the weather patterns, planting crops accordingly, however, climate change is altering temperature and rainfall patterns, potentially affecting which crops can be planted at which times throughout the course of the year. I believe that we struggle to understand that climate change can be positively impacted by the individual efforts of the human race, as many wrongly-believe that this global issue could, and should have been resolved by our governments, therefore deeming the global political system incompetent. While it is true that governments should increase the focus surrounding reversing climate change, individual countries and their citizens must cooperate, to reduce their overall carbon footprint; something that will be very difficult to do with the influx of natural gas delivered by Nord Stream 2.

Categories
Analysis

Will Russia’s New Political Party encourage a new way to Russian Politics?

Currently, in Russia’s political system, the President of Russia, Vladamir Putin,  is head of state and of the multi-party system, with executive power exercised by the government. The government is further headed by the Prime Minister, Mikhail Mishustin, who is appointed by the President, with Parliaments approval. Recently, Russian citizens have been introduced to the ‘New People’s Party’, which was registered with authorities during March 2020. By August, the party saw a staggering 300,000 Russian’s signing nomination papers for their candidates, with the party aiming to put up 100 candidates in 13 of Russia’s regions. The party was originally founded by Alexey Nechayev, a businessman who is also the founder and driving force behind the beauty and apparel company, Faberlik.  The parties ideologies include Reformism, Communitarianism, Direct Democracy and Liberalism, all of which have grasped the attention of the Russian citizens. New Peoples Party has now become the most successful political project among the vast variety of new parties that emerged simultaneously around a year ago. After the election on September 13th, the New Peoples Candidates won seats in four regional parliaments and the city council in Tomsk. Nechayev says “[they] barely failed to make the cut in Krasnodar, falling short of the 5 % barrier needed to be elected a city council by a hair”.  The party signals hope and candour within the country, as they aim to do politics, ‘the normal way’, by rejecting the ‘one-size fits all’ traditional Russian policy. The Party’s programme calls to make small but necessary improvements including: doubling the salary and improving social insurance packages for police officers, combatting low level corruption; keeping taxes low for the self-employed and many more. The party has, however caused tension and feelings of unease to rise throughout the political system, leading to the recent attempted murder of Alexey Nechayev himself. Many of his supporters have blamed the Kremlin, however all accusations have been denied. Should the Kremlin feel threatened by this new and upcoming party?

Comment what you think!

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Weekly Summaries

9th of November – 15th of November

Border conflict between Armenia and Azerbaijan possibly resolved

On Monday, Armenia’s prime minister Nikol Pashinyan signed an agreement which is supposed to end the border conflict between Armenia and Azerbaijan. Armenia will have to surrender the disputed territories. Armenian forces in these areas are supposed to pull out. They will be replaced by Russian peacekeepers. Russia was also the country which helped to negotiate the deal to end the war. However, only a few hours after the announcement was made public, people started protesting in Armenia’s capital city, Yerevan.

France and Austria meet to discuss antiterrorism measures

This Tuesday the French President Emmanuel Macron and the Austrian Chancellor Sebastian Kurz met in Paris. In recent weeks there have been terror attacks in both France and Austria.