Weekly 20 November 2021

Censorship & streaming

Hello! This week our top story is about how the rise of online streaming platforms has attracted regulation and censorship. We also look at why some top state-owned banks are creating special investment funds for officials, and whether tension between Russia and the West could be a result of an upcoming Putin-Biden summit.

Online streaming platforms face regulation, censorship

Online movie streaming in Russia has become so popular it is beginning to attract government attention — in the form of fines, restrictions and possible bans. There were several examples this week of an official push for regulation of the sector. Online streaming looks like it will end up being as heavily censored as Russian television.

  • Media watchdog Roskomnadzor is looking at ways to ban online services from showing films and series that promote “non-traditional sexual relationships and sexual deviancy”, Vedomosti newspaper reported Tuesday. Shows of this nature would be grounds to block a streaming service. In addition, Roskomnadzor is considering extending a ban on the promotion of ‘non-traditional sexual relations’ to minors — infringements could be punished by a fine of up to 1 million rubles ($13,630) or a 90-day suspension. Roskomnadzor fined streaming services Megogo, Okko, ivi and Kinopoisk on Tuesday for failing to show advertising about the dangers of tobacco.
  • The head of Roskomnadzor apparently referred to a recent speech by President Vladimir Putin when discussing new measures against online streaming. However, presidential spokesman Dmitry Peskov said he was not aware of any legislative proposals following Putin’s address.
  • In addition, Roskomnadzor began this week issuing warnings to online movie services over sexual content and bad language. This largely affected Megogo (one of Russia’s top 10 online movie theaters) after it screened Russian movie Nobody knows about sex. Roskomnadzor’s objection was that the film aired with a 16+ certificate, not an 18+ rating. However, when the film was released in 2006, the Minister of Culture approved a 16+ rating. Megogo subsequently changed the rating to 18+ and bleeped out offensive words. Similar demands — less swearing, less sex — were made in writing to other online streaming services like ivi, Start and Kion, employees told Vedomosti.
  • Like the rest of the Russian movie business, online services also face direct political pressure. Acceptable topics for new movies or series are heavily restricted — with elections, officials, corruption and LBGT+ topics especially problematic — the BBC Russian Service reported earlier this month. The BBC Russian Service found that actors who express support for jailed opposition leader Alexei Navalny find it almost impossible to find work. A PR representative from one online streaming service said that, in the build-up to September’s parliamentary elections, actors were instructed to ‘behave normally’ — code for no criticism of the president, or the ruling United Russia party.
  • Online streaming services are a relatively recent arrival in Russia. The first online movie theaters were Ivi, Okko and TVzavr, which launched in 2009 and 2010. Their popularity exploded during the pandemic and, at the end of 2020, the major players had a combined revenue that was up 50 percent year-on-year to 38.9 billion rubles ($531 million), according to TelecomDaily.
  • Ivi was the biggest streaming service in the first half of 2021, with 24 percent of Russia’s online movie theatre revenue. Next was Kinopoisk HD (owned by internet giant Yandex) with 14.1 percent, then Okko (controlled by state-owned bank Sber in the fall of 2020) on 12.4 percent). U.S. service Netflix is gradually increasing its share and was in fourth place with 8.9 percent, while YouTube had 7.9 percent.

Why the world should care

For many years, online series and movies were seen as a far freer medium than television. But there are more and more signs this period is now at an end.

 

Special investment funds seek officials as clients

State-owned VTB and Sber launched specialized mutual investment funds this week aimed at government officials who are restricted in their ownership of foreign securities.

  • Russian legislation prevents officials from holding accounts with banks based outside of Russia, or to own — or use — foreign financial services.
  • In a bid to get around this, VTB Capital Asset Management announced Thursday that it is setting-up two new investment funds for officials. Sber Asset Management is launching an equivalent fund, Kommersant newspaper reported the same day. Sber’s fund will invest in shares and bonds of Russian companies, as well as government bonds. Similarly, Ingosstrakh Investments, a division of one of Russia’s leading state-owned insurance companies, is reportedly planning to offer a similar option next year. This is the first time we have seen such products offered on the Russian investment market.
  • With rates on savings accounts falling and a continuing boom in digital financial services, private investment is increasingly popular. However, it’s not standard practice to indicate the jurisdictions in which such funds might work — and this is a problem for officials seeking to invest their cash. Even many Russian companies – like online marketplace Ozon, internet giant Yandex, and metals firm Evraz — are officially headquartered abroad. It’s a problem easily solved for wealthy investors who can pay for personalized services, but not for more run-of-the-mill clients. There have even been cases of officials being obliged to close their accounts after uncovering violations, according to Kommersant.
  • Asset managers traditionally profile clients via geography, age, gender, professional and even religious beliefs — but ‘officials’ are an extremely small subset, according to the head of Alfa Capital, Irina Krivosheyeva. In her view, such funds for officials are “a headline grabber.”

Why the world should care

Russia has avout 850,000 officials, but, in reality, the legal restrictions on investments only apply to a fraction of them. Nevertheless, state-owned banks clearly now see ‘officials’ as a business opportunity.

 

 

Geopolitical tensions rise ahead of Putin-Biden talks

From Ukraine to Belarus, tension between Russia and the West rose rapidly this week. Is this really the prelude to a military conflict, or could it all just be saber-rattling ahead of an end-of-year encounter between Putin and U.S. President Joe Biden?

  • White House spokesperson Jen Psaki did not rule out the prospect of further talks between Putin and Biden when questioned by reporters Thursday. And, earlier that day, Russian president’s press secretary Dmitry Peskov admitted there could be online talks before the end of the year. Newspaper Kommersant first wrote about a possible summit earlier this month, suggesting the two leaders could talk online before the New Year and meet in person early in 2022.
  • According to Peskov, the topic of a meeting between the Kremlin and the White House would be the North Atlantic Treaty Organisation (NATO) and the situation in Ukraine. Western media has for weeks reported that Russia is moving military personnel and equipment to the border with Ukraine. An article in The Washington Post, for example, highlighted social media posts showing military trains and convoys carrying equipment, including tanks and missiles. A spokeswoman for the Russian Foreign Ministry, Maria Zakharova, described these reports of a military build-up on the Ukrainian border as “an information salvo” fired by U.S. media.
  • News agency Bloomberg last week reported that Washington was warning its European allies that Moscow is considering an invasion of Ukraine. The next day, Bloomberg published another article suggesting Moscow is not seriously considering a military option — just wishing to indicate it would use force if necessary. The agency’s sources, including some close to the Kremlin, explained that Russia wanted to make it clear that any further Western efforts to supply weapons to Ukraine, or expand NATO’s military presence, would cross a red line. Putin himself referred to ‘red lines’ Thursday, claiming the West does not take Russia’s warnings seriously enough.
  • Ukraine was not the only Russian neighbor to dominate the headlines. For the second time in three days, Putin spoke Friday with Belarusian president Alexander Lukashenko about the migrants on Belarus’ borders with the European Union. Both parties expressed serious concerns about the “unacceptable, brutal actions of Polish border guards”. However, Lukashenko also told Putin about a telephone conversation Wednesday with acting German Chancellor Angela Merkel. This was Lukashenko’s second discussion in two days with Merkel, after which Minsk said that representatives would be appointed to start talks aimed at resolving the crisis. The number of migrants at the border has since fallen.
  • The almost completed Nord Stream 2 gas pipeline was also back in the news this week when Germany, which has worked hard to complete the project, announced it was suspending the necessary certification. This could delay the full operation of Nord Stream 2 until the middle of 2022. Some experts have argued that the importance of Nord Stream 2 to Putin outweighs that of any sort of speculative military venture in Eastern Europe.

Why the world should care

It’s unlikely all these issues could be solved as part of a triumphant summit between Putin and Biden. However, recent tension between Russia and the West is perhaps best understood as jostling for position ahead of such an encounter.