FICCI Frames 2023: India continues to be an advertising-led market for OTT

A panel consisting of Aamir Mulani, founder and CEO, Playbox TV; Ambesh Tiwari, business head, audio and studio, Pratilipi; Ajay Chacko, co-founder, Arré; Amit Dhanuka, executive VP, Lions Gate; Nachiket Pantvaidya, ex-group CEO, Balaj Telefilms; Nitin Burman, vice president and head - non-subscription revenue, Aha Media; and Praveen Chaudhary, director, retention engagement and growth strategy, DTC marketing, Warner Bros Discovery, APAC, discussed the right revenue model for OTT platforms.

 

The talk was moderated by Pankaj Krishna, founder and CEO, Chrome Data Analytics and Media.

 

Responding to Krishna’s question about the way forward, Chacko stated that OTTs need to look at business models.

 

“Business models in the OTT space have changed two-three times in the last six to seven years. An OTT player ends up getting their revenue through subscription or advertising but the disruption is coming in the way of modelling. The tech end (YouTube, Meta) and storytellers and influencers have found their value. The gap is now for those broadcasters who are looking at OTT options and those local players turning to advertising-based video on demand (AVOD). MX Player had 1,000 million downloads and was supported with advertising content, yet it was sold for lesser than it was acquired,” he said.

 

According to Mulani, the big challenge is creating a platter of options for consumers.

 

“India is seeing two or three OTTs being launched every three months and they are fighting for the same audience. The big challenge is creating a platter of offerings for the consumer. The cost of acquiring customers through advertising is far more than what they earn from the customer. India has 300-400 million cable TV consumers who are paying for content because they get multiple offerings. Something similar is needed in the OTT space,” he said.

 

Krishna then asked Chaudhary whether the content Discovery produces is viable and profitable as the cost of producing it could be more than what the network earns through subscription.

 

After answering in the affirmative, Chaudhary said, “We are convinced of the opportunities and thus have improved the content drastically, which has helped Discovery.”

 

Chaudhary also pointed to the current ecosystem in the country helping.

 

“Every Indian has UPI so can make transactions easily. E-mandates have solved auto-renewal issues too. The industry is evolving for the better too. We are looking at long-term benefits and have good results,” he said.

 

Krishna then mentioned how the most-viewed shows are on platforms like Disney+ Hotstar and MX Player and asked Chaudhary about how OTTs like Discovery+ can take them on, to which Chaudhary said there’s scope for more than two players in the market.

 

He said, “Not everyone needs the scale of MX or Disney+ Hotstar. We are a different proposition and can live in our space.”

 

Dhanuka stated that the way going forward has to be a hybrid model. He stated, “If a customer has a relationship with a telco, we should go there and be part of it. The same with aggregators too. If there’s an advertising model too, yes we should do that. And also look at bundling. No one model will work for all.”

 

Agreeing with Dhanuka, Burman who runs non-subscription revenue for Aha Media, also called for a hybrid model.

 

Stating where Aha scores over national players, he said, “When a national platform releases content for South, it’s not language specific. It’s just catering for South India. But South India is a Europe of its own with four distinct languages. We started with a subscriber model because our TG knew what OTT was already. If you want to reach a national audience and rural India, you need a hybrid model,” he said.

 

He added that Indian consumers are more savvy about watching ads if it meant a reduction in the price of the content.

 

“Indian audience is okay to see ads in between content, but it needs to be capped. What was a turning point for us was when we created content along with brands (branded content within shows).

 

Pantvaidya pointed towards the IPL and how Jio acquired it for Rs 23,800 crore, to show the importance of advertising for OTT in India.

 

 “If you want to be a business of scale and be big in India, you need to have advertising. We need to give people content for free,” he said.

 

He added that in the future, OTT and e-commerce need to be merged. “That’s the intersection of OTT. Gaming is said to be big too, but I haven’t seen it yet. AVOD versus SVOD is a done race now which has been won by the former.”

 

Agreeing with Pantvaidya, Tiwari added, “Google’s share has dipped now and eaten by Amazon. Jio has got a crore-plus viewers at any point during the IPL too. We have realised that consumers are willing to pay for content, but we have to be innovative too. One innovation left in the OTT space is the creator economy. Creator-led micropayments could be an interesting space.”

 

Potential game changers

 

Krishna asked the panel to discuss the potential game changers that can help OTTs grow numbers.

 

Dhanuka stated, “We have seen how Amazon has shown how to merge content and e-commerce. Consumers follow content and there are enough and more players right now. 

 

Advertising/bundling/advertising models will play a massive role in the future.”

 

Pantvaidya explained that he wasn’t sure about the merging of e-commerce and content.

 

“I don’t think I’m watching content to learn about brands and vice-versa. The big change is the democratisation of the audience and how. JIo’s looked at YouTube viewers and looked to convert them to IPL viewers by offering the IPL for free.”

 

Tiwari spoke about platform loyalty.

 

“If you put out the right content, people will watch it. The big risk is the platform loyalty with creators. We saw how TikTok creators moved overnight to other platforms when it shut. Consumers follow creators and that’s underappreciated.”

 

Pantvaidya stated how the digital versus TV debate will be thrown out of the window.

 

“Every year 10-15% old TV viewers are moving to connected TVs. This is a country where consumers are looking for free or near-free content. With connected TVs and mobile phones, the way forward has to be advertising,” he said.

 

Burman closed by stating that focus on content is imperative.

 

“India is a huge market and we’ll have consumers for all content. There will always be niche customers too. Customers on Disney+ Hotstar lost out because HBO moved out. That shows the quality of content has to be the best. From the monetisation point-of-view, ads will play the largest role,” he said.