July 2019

Roundtable meeting with one of the Digital OTT Heads of a large broadcaster in India

By ANKIT KEDIA

Key takeaways

• Currently the advertising market for OTT players is c.Rs 30bn with YouTube garnering bulk of the ad revenues while subscription market size would be c.Rs 12bn with Netflix and Hotstar being the top-2 players. Currently, the industry has 350mn monthly active users.
• Typically there are three models with telcos – one is the sampling method, where the telco provider gives free subscription to users, for which it gets a significant discount from the content The second is where the content resides with the telcos and they pay to the content owner on a per-subscriber watching the content basis. The third model is the click to parent app and deals are on a lump-sum basis.
• Technology cost could be Rs 1.0-1.5bn for 50-70mn monthly active users, and it is linear with an increase in subscriber base. The responsibility of storing content lies with the content owner, who bears the cost.
• Movie-deals are signed with producers before a movie is released, but payment is mostly made only after content is released. Acquisition cost has increased for movies and original content, as every player is looking to grab the most; movies from big studios and famous artists have already been signed for the next two years.
• OTT is not impacting TV viewership as bulk of the former is non-TV prime-time. Over the medium term, there could be some impact at the premium end, where customers have multiple options. However, advertising growth will be faster towards digital.
• Currently there are 450mn smartphones in India, of which 300mn are actively used to consume digital videos. 9mn units are being added on a monthly basis, and over the next 3-5 years, active customers could double to more than 600mn consuming digital videos. Availability of 4G through Jio has helped, and good work has been done to provide quality fibre connectivity to the consumers at home for wi-fi. Premium customers are using various devices to cast the content on their TV sets.
• A big challenge for the OTT industry is availability of content and solving the problem of payment systems – customers not opting for or having second thoughts about auto debit for paying subscription charges.
• Does not believe that censorship would happen on OTT platforms anytime soon; they will continue to work on self-censorship.