At another level, the big boys are splurging to provide compelling content, the only key differentiator in this business. The problem is this content is five to 10 times more expensive than TV content. The six big players together invested Rs 2,700-Rs 3,000 crore on original content (including sports content such as Hotstar’s on IPL) last year. That figure will rise exponentially since most OTT players are expanding the number of original content offerings. “OTT companies
that were producing three to five original programmes a year will now do 15 to 20 and the focus will be on quality and innovation,” says Rajiv Bakshi, CEO of content producer Big Synergy Media.
This could be a risk. The BCG report says the industry rustled up just $500 million in revenues, of which advertising accounted for 82 per cent. If paid subscription remains the challenge, so do ad revenues. There are 300 million active subscribers every month on OTT platforms.
But advertisers look for average daily
active subscribers — which is 20 to 25 million, according to industry estimates, a fraction of what social media giants rack up.
have to compete with the Facebooks and Googles, which get the bulk of the digital advertising pie because of huge numbers of daily active users. Until average daily active users go up in OTT, their share will be small,” says a senior executive of an advertising agency.
Still, there are upsides to the business for OTT players to tap creatively. One is online consumption habits. “There is no debate that video is the preferred mode of consumption on mobiles, so any consumption increase will always be followed by monetisation,” says Gourav Rakshit, COO of Viacom 18 Digital Ventures, which runs the Voot channel.
BCG’s reports predicts that over five years (from 2018-2023), revenues will jump tenfold, and subscriptions will account for 32 per cent (almost double its current share). Most companies
expect to break even in the next four years, if not earlier.
The potential for growth is robust —currently only 16 per cent of media consumption is on digital (25 per cent among the youth). Smartphone subscriber numbers are also expected to grow and so will data consumption. And the number of annual households with annual income of over $15,400, who can easily afford an OTT subscription, is expected to double from 8 per cent in 2016 to 16 per cent in 2025, BCG says.
But differentiated content will be the key to success. Zee 5, for instance, has focused on regional content and offers options in 12 languages. “We have 76 million active monthly subscribers and half of them see content in regional language. We are among the few to have produced original content in all the languages,” says Tarun Katial CEO of Zee 5 India. The company is also expanding its customer base through tie ups — like with Airtel and Vodafone who offer it free to some customers. It has also collaborated with travel portal makemytrip, which offer discounts on member subscriptions.
Voot, which plans to go the subscription route soon, is producing original content focusing on two segments —women and the youth. “We want to over-serve the two segments in which we have a lot of experience. Our conclusion is that it is big enough in the foreseeable future,” says Rakshit.
Meanwhile, Netflix and Amazon are betting on Indian content. Netflix has announced nine new original series and 13 new films and Amazon has been a big player in acquiring movie rights – Gully Boy is one example.
Jio from the Reliance stable is creating a bouquet of OTT offerings primarily aggregating content in music (it bought Saavn), cinema, TV and news.
Most of this content is tied only to its 300 million-plus customer base (except music) and is free. But it is also taking the first cautious steps towards building original content for its subscribers through Jio Studios, say company sources.
Clearly, the next few years will determine the big boys of the game.