Russian Government Prepares Restrictions on Foreign Video Services

MOSCOW, RUSSIA -A general view of Red square and Kremlin-Getty-H 2016
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The move is likely to affect Netflix and Apple TV+.

The Russian government says it will rush legislation restricting operations of foreign video services to protect local competitors from Apple TV+, which launches on Nov. 1 and is expected to offer much lower rates for online video streaming.

"This is a serious challenge," Alexander Zharov, deputy head of Roskomnadzor, Russia's media watchdog, was quoted as saying by the Russian state-run news agency RIA Novosti, adding that steps aimed at restricting foreign video services' operations in Russia should be taken urgently.

Local competitors have been complaining that rates offered by Apple TV+ in Russia will be deliberately much lower than theirs, which is going to jeopardize their business.

A law restricting foreign ownership in major video streaming services to 20 percent stakes was adopted two years ago, but it hasn't been enacted yet because the government has to initiate it by issuing relevant orders.

Now, if the government initiates the enactment of the law, Apple TV+, as well as Netflix, which has been operating in Russia for a few years, will technically be subject to the restriction.

However, the law has a stipulation that might allow Netflix and Apple TV+ to continue operating in Russia. According to the stipulation, only a service whose number of subscribers is over 50% of all Russian video streaming service users is subject to the 20% restriction.

Still, at the moment it is unclear who will calculate the total number of video streaming users and whether it will be mandatory that Netflix and Apple disclose the number of their Russian subscribers. So far, Netflix has not revealed the number of its subscribers.

Apple and Netflix did not reply to The Hollywood Reporter's request for comment.