At the introductory conference of the sixth international forum KIEV MEDIA WEEK, the heads of major Ukrainian media groups and production studios, as well as representatives of state bodies in the sphere of television and radio, discussed the possibilities for the development of the national media business, shared the main achievements over the past year, and identified the main challenges currently faced by the industry.

Vladimir Borodiansky, head of StarLightMedia group, noted that in the current circumstances it is extremely important “to become a part of life of the consumer, and go beyond television”. That is why the group is implementing a number of projects that essentially are the off-air extensions of their on-air products. Recent statistics show that in the past year approximately 100 thousand people tuned in to the off-air shows of StarLightMedia group, and that means that, hopefully, the group is moving in the right direction.

The co-founder of Film.UA Group Sergei Sozanovskiy also stressed upon the importance of “rolling out the media business at 360°”. “A year ago we began to tentatively raise the subject of 360°, but now, with all that is happening, we begin to understand that if we don’t take the media in all possible directions, in the future we can stay out of work,” he said. For example, over the last year Film.UA confidently advanced the segment of Ukrainian feature filmmaking, launched a line of animated feature projects, and in the future hopes to release at least one animated film a year; they have launched their own television channels, and have started actively developing their digital direction.

Vladimir Zelensky, Artistic Director of Kvartal 95, is convinced that “you need to expand your product as much as possible, with the highest number of platforms involved, and do it successfully.” According to Zelensky, the main direction in which the company has engaged in recent years has finally “borne fruit”. Namely, the American corporation Fox acquired the rights to the format of the series “Servant of the People”, so that the representatives of “Kvartal” are hoping that “the Americans will produce the first season, and the main titles of it will say: based on a Ukrainian format”.

The Marketing Director of Megogo Ivan Shestakov explained that, in recent years, the company has served not only as an online cinema, but also as a provider of television services.

Also present at the press-conference, executive director of the Motion Picture Association of Ukraine Victoria Yarmoshchuk and the head of the Expert Council of the Ukrainian Academy of Television Valentin Koval told the press about the activities of their organisations.

The Deputy Head of the National Council of Ukraine on Television and Radio Broadcasting Uliana Feshchuk spoke about the upcoming changes to the rules of the relationship between the government and the industry, and also stressed on the importance of the Kіnokraina initiative, which invokes a number of structural changes in the area of state support of Ukrainian film and TV production. Anatoly Maksimchuk, deputy director general of the StarLightMedia group, elaborated on the initiative’s objectives.

There will be two revolutionary innovations in the sphere of state support of the film industry: the possibility of state support for productions of serial content (up to 50% of proven production costs), as well as the introduction of the cash rebate system for producers (including foreign) of the funds spent on the territory of Ukraine. Over the past year, much has been achieved in this direction – not only was the bill registered, but it even passed Parliament in its first reading. So the whole industry is waiting for the Parliament to finally adopt the bill (the vote is scheduled for this Thursday).

A lion’s share of revenues for the Ukrainian television groups are provided by revenues from advertising, while the profits from digital activity or from selling their own content are too small in comparison. The total volume of the TV advertising market (which this year is projected to slightly exceed 4 billion UAH) cannot “cover” the cost of producing high-quality TV content, especially if we are talking about serial content.

Borodiansky explained that, currently, the production cost of the cheapest of TV series is in the range of $30-40 thousand per hour of content ($60 thousand for something more high-quality and not the cheapest). At the same time, according to Borodiansky, an hour on television brings in about $5000, and that is if the product showed good performance (share at the level of 10 and above). So the industry is able to cover the cost of the cheapest projects by doing reruns, but can only dream of a TV series on the level of The Sniffer.

One of the most logical ways out of this situation, according to Vladimir Borodiansky, is a natural reduction in the number of players on the Ukrainian TV market.

“If we want to remain profitable, there needs to be just two media groups. Then these two media groups will have profitable broadcasting businesses, and the rest – profitable businesses in content creation”, considers the head of StarLightMedia.

At the international conference FORMAT SHOW, it was revealed that the global format market has doubled in the period from 2004 to the present time: if in 2004 the figure was $2.4 billion, now it has reached $5 billion. There are several reasons for this.

Firstly, many have moved away from the previously accepted model of licensing the finished format. Channels started to make pre-sales deals directly with the creators of the format, rather than ordering the production from local producers.
Secondly, the local format production is booming, because the demand for American formats is dwindling, while the world stage has been entered by such countries as Israel, South Korea and Japan. In particular, Turkey started attracting more and more interest, not least thanks to TV series.
Thirdly, OTT platforms and video-on-demand platforms, like Netflix, are increasing production of original formats. And their presence in various countries only stimulates adaptation and orders of new projects for local markets.

Notably, most of the experts are of the opinion that in 2016 the cost of licensing formats will increase compared to last year. But at the same time, they tend to believe that their number will also increase.