Extremely attractive Runet


Russia was ranked the third in the list of online media’s investment attractiveness on the market of developing countries.

Russia, China, India and Mexico became the most attractive countries for online media investment, informs Ernst & Young.

As the company’s report says the reason for the developing countries’ investment attractiveness is the rapid growth of the Internet connectivity. In 2016 developing countries are expected to have 2 billion broadband access users in the Internet. And it’s twice as much as in developed countries. In 2014-2018 the number of smartphones will be doubled on the emerging market.

The estimate was made thanks to DiMAx method that takes into account 36 different factors, for instance Internet connectivity, average rate of broadband access, the number of smartphones in the country, digital advertising and e-commerce development, GDP growth, the number of economically active people, etc.

Moreover, DiMAx estimates copyright protection level in the country, digital piracy, the simplicity of doing business, foreign business within the country, political, economic and legal risks and tax expenses.

John Nendick, the Head of Global Media & Entertainment in Ernst & Young admits that the emerging markets’ main goal is to develop mass media digital tools at high speed.

“The majority of the developing countries have many young users with a good potential for income growth. These countries deploy rapidly 3G and 4G networks that have a democratic access to the Internet,” explains Nendick.

China became the leader in the developing countries’ list and the 5th in the general ranking. Its population is 534 million (aged 15-40). The country’s predictable GDP growth is 7.1% per year (2014-2017), and the number of broadband access users is 618 million. Such factors as the law percent of foreign investment in the sphere of online media and the prohibition of Google, Facebook and Twitter didn’t influence the Chinese ranking.

Russia was ranked the 3rd after China and India, which is absolutely a great result, considering that in China and India live overall 2.5 billion people.

In the general ranking (that includes developed countries) Russia is the 10th. The US, Japan, Germany, the UK, China, France, South Korea, Australia, India are also in the TOP 10.

Ernst & Young experts distinguish 6 main factors that have a favourable influence on the Russian online media investment attractiveness.

They are the large urban population, the high level of consumer spending, 87% of the broadband access (in cities), 50% of smartphones extension (in cities), the active digital market and the favourable tax conditions for digital mass media investment.

The negative factors are the political instability, the high level of digital piracy and the state restrictions on foreign business in the mass media.

Dmitry Galperin, the Investment director at Runa Capital believes that the restrictions mentioned above lower the Russian mass media investment attractiveness.

“Moreover, at the moment the political instability and the macroeconomic indices are the main factors that influence the investment decisions in Russia. The companies in which income grows faster than the dollar rate are still attractive, for foreign investors included,” states Galperin.

Text and pictures by GAZETA.RU