‘Content needs to be enough and fulfilling for customer retention’

The telcos are currently much ahead of the curve, but the device ecosystem has been lagging, discussed the panellists at Vibes 3.0- The Everywhere Content conference by Elara Media and Entertainment. The debate was on Distribution: Adoption of Evolving Ecosystem.

“Smart TV has seen a promising growth trajectory. Around 5- 6 million homes currently i.e. 20% of total homes have Smart TV, which shows the underpenetrated market potential,” said the panellists.

The session was moderated by Karan Taurani, Vice President, Elara Capital. Nitin Pawar - Former Senior VP, Content Acquisition & Strategy at Jio; Venugopal Iyengar - CEO, Apalya Tech (OTT Tech Consultant); Rajeev Gambhir - Former VP, Jio FTTH/Den Networks; and Yugal Sharma - CEO, ONE OTT iNTERTAINMENT, Hinduja Group; were the panellists.

They discussed that the telcos are enablers for OTT apps; hence, they are major distribution drivers and they need to throw everything at the customer just to stop the churn in subscribers and retain the existing subscriber.

“To consume uninterrupted video content, broadband is the key; however, penetration is low in India. BSNL and MTNL constitute 43% of the fixed-line and broadband market share. Telcos started on negative growth initially, but currently, they have been growing on the back of wireless connectivity,” the panellists added.

The World has leapfrogged in terms of adapting newer technologies. The pandemic has been global this time and the thus world has advanced 10 years collectively in terms of technology.  The backbone of the digital ecosystem is connectivity, if that is available, then other things can follow, they said.

They also highlighted the fact that currently, fixed line is in 23 million households, and penetration has moved up sharply from 7.0% to 8.8% in the past three quarters, due to COVID-19 lockdown and work-from-home. “In the case of OneOTT, revenue growth was at 65%, adding 1,000 customers per day during COVID hit period. Unless the fiber arrives in the house, content, and apps cannot follow. Of 8.8% fixed line, 90% are still copper; hence, the fiber layout is still has a long way to go.”

Around 250 million homes are up for grabs; hence, the potential for fiber to home (FTH) is huge. Jio will be a big driver for video consumption while FTH will be the future. The scale of Fiber layout by Airtel and Jio has been faster than even Google Fiber at that time.

Currently, over 180 million households have cable TV. Broadband penetration is 30-33%, but the consolidation of a huge chunk of government telcos is yet to happen, which can enable faster layout and better services from private firms.  In the case of OTT platforms, just bringing in content to the table is not sufficient as platforms need to know what is most important to their users and building a roadmap.

Currently, tech investments by OTT platforms is in the range of 15-20% for global firms.

“SVOD revenue growth, excluding telco fixed fee deal scheme, is struggling with metadata, so Disney+ Hotstar also is working on a fixed fee model while Jio is sending only customers. Fixed fee deals are the way ahead in the near term while the minimum guarantee is still a long way to go,” they discussed.

In the initial years, telcos can give maximum reach. But once there is an adequate number of subscribers, OTT can switch to the B2C model. However, the biggest issue for OTT firms is customer retention. Scam 1992 has done wonders for Sony LIV, but the real challenge is the retention of these gained subscribers, and where the credit card is a small portion of subscribers, and it remains a challenge. Content needs to be enough and fulfilling for customer retention 

The OTT industry is fragmented and dependent on telco; revenue share demanded by OTT will be higher, as they are the medium between OTT and customers.