Understanding OTT dynamics with focus on the South

An engaging recent panel discussion held at the recent CII Dakshin South India Media & Entertainment Summit 2023 focussed on the topic, “The Big Opportunity in OTT: For Films & Originals.”

Setting the stage for the panel discussion, Session Chair Anup Chandrasekharan, Member of Steering Committee on CII Dakshin & COO, IN 10 Media stated the OTT industry in India is at a nascent stage with the current market size estimated to be Rs 10,500 crore - inclusive of subscription and advertising revenue; the industry is estimated to grow at 20% on a YoY basis and estimated to reach Rs 30,000 crore by 2030.

Chandrasekharan added, “An interesting fact is that off the Rs 10,500 crore - Rs 6,000 crore comes from entertainment and Rs 4,000 crore from sports. The total number of people who watch OTT in India – including SVOD, AVOD, YouTube, Facebook – is around 40 crore. Of this 40 crore, 13 crore is SVOD audience but if you dissect the number only 5 crore are direct subscribers while the rest is bundled through telecom etc.”

He further said that of the total 40 crore universe, 10 crore was the number of people watching OTT content in South India with 50% of people subscribing to South Indian content coming from outside South India. He also highlighted that the number of original fiction web series’ done in the last financial year in Hindi was 108 while Tamil and Telegu combined were 50. On the other hand, the number of movies on the OTT in Hindi was 88, while the number of South movies – Kannada, Tamil Telegu and Malayalam - put together was around 300.

Starting the discussion, Chandrasekharan asked Ashish Pherwani, Partner, EY LLP (India) on how he saw the OTT industry. Reiterating the market size, Pherwani said, “The size of the entire Indian M&E industry is about Rs 2 lakh crore, of which the total income of OTT platforms in India is Rs 10,000 – 10,500 crore, which is 5% of the overall market and this includes sports, entertainment and news online.”

Comparing the difference in scale between Hindi and South Indian original web series, Krishnan Kutty, Member of Steering Committee on CII Dakshin, EVP & Business Head – Star Disney India for Tamil, Malayalam & Marathi highlighted the point that while original fiction series started in Hindi around six years back, it started in the South around three years back. Kutty added, “We anticipated that it would be a 9-12 month process but the big learning is that the cycle to create a good show takes around 18-24 months; far longer than we expected. Another significant learning was with regards to writing - we and our partners had to learn about writing for a web series as people weren’t familiar with this format. However, we are seeing a consistent improvement in writing today versus what we were seeing two years ago. Having said that, over the next 12 months we will see as many web series in the South Indian languages as you saw over the last 2 or 3 years.”

Ajit Thakur, Co-founder, Arha Media & Broadcasting (Aha), said: “Even in Hindi OTT original series have been hard to create. From the 1970s, America had both regular network television and premium television. So when Netflix and Amazon Prime debuted, there was a ready talent pool of creators, showrunners and writers who had been writing premium TV in America for 20 years. In India, we have the first generation of writers writing for OTT, this is a very different art of writing. It will be a long learning curve and this isn’t a South problem but an India problem.”

Thakur continued, “We have done a few web series in the first two years, however just three to four fired because the writing needs to get better. We pivoted our strategy and this gave us good results. We pivoted to talk shows, such as Unstoppable, a singing show Telugu Idol, a dance and cooking show and it worked well. For originals, we pivoted from eight-part series to our original films that we are commissioning and that is giving us better ROI, till we get the writing in place for long format series. Non-fiction has added variety for the whole family to watch our content. Post Covid-19, 40-50% of people have switched to watching OTT on connected devices, which means the family is watching, it is not private viewing anymore.”

On why Zee5 has not focussed on the Malayalam and Kannada markets despite being leaders in the linear space, Siju Prabhakaran, Chief Cluster Officer – South, Zee5 OTT said, “There are addressable markets where you have a higher internet penetration, paying consumer and bigger ecosystem of content creators. Malayalam films are perfect for OTT, so why would you do original content? The current focus for Zee5 is Tamil and Telegu where we are doing originals and the space is growing. There is a learning curve that we all are having and we are learning from our failures and then creating content that will deliver.”
On whether OTT can be a profitable business Pherwani said, “In India, only 4.5 crore households pay for OTT and it is going to take time to scale up. We have a much higher cost of production and little propensity to pay and that imbalance has to be corrected. You will see a lot of interesting work happening on the aggregation model like the Tata Play Binge where OTT products are bundled, and making it reasonable and increasing the number of paying households for OTT.”

A Hit Learning

The OTT platforms in the South saw an over-indexing of crime with crime becoming the daily soap equivalent of TV. However, there was an interest in other genres from the audiences. Talking about the success of Ayali, Prabhakaran says that the writing and how to make a social drama binge-worthy was crucial. Prabhakaran says, “The logline was interesting and we were hooked. It came as a film idea and we converted it to OTT. Shows like Ayali are just the start and many such shows will come as all the platforms are working on interesting ideas.”

Speaking about Kana Kaanum Kaalangal’s success from the linear platform to the OTT platform, Kutty says, “Kana Kaanum Kaalangal was a success on multiple levels – taking a successful franchise from Television to Digital; trying to see whether a long format product can play over six months on OTT and if the digital consumer will keep coming back for the content. The experiment worked and it was an incredible success on consumer acquisition, retention as well as on engagement.”

Thakur also spoke about Agent Anand Santhosh – a comedy action web series –a collaboration with Infinitum Media, which had seen success with two YouTube shows. Thakur says, “The Software Developer and Surya got over 4 million views on YouTube. We approached Infinitum Media to see if we can find a story and scale up the project. We wanted to see if their organic fans from YouTube will also follow. We chose action deliberately as it was much bigger than the shows they had done on YouTube. We did a weekly release and it worked very well for us.”

Chandrasekharan asked whether it was justified for OTT platforms to be paying exorbitant amounts for buying movies. Pherwani explained, “There are two ways to look at it - one is habit formation. You can get people to start downloading and viewing the app for a certain kind of content repeatedly, creating a habit which is justifiable in the short run. I don’t know if this can be justified over a five or six-year period. There have been some cases where this investment is at a level where recuperating the investment may not happen.”

Pherwani also raised the question of whether OTT platforms will be able to rationalise the content cost?

Prabhakaran noted, “OTT platforms are currently in the phase of acquiring customers. There will be some premium content but every platform is looking create its own franchise of content. There is a tremendous potential to position big star films as events and surround these events with other content to build your platform experience.” On his part, Kutty said, “We are working on products which are at X cost and also products which are at 15X cost. When people subscribe to our platforms, sometimes we need to give scale to grab attention. We will eventually move into a mix of x number of products which are tentpole properties and x number of products which are habit forming.”

Chandrasekharan also raised concern among producers and content creators about the rejection rates of ideas and the time taken for green-lighting scripts. Prabhakaran suggested producers take the independent route and protect their IP. He said, “If there is a script that a producer strongly believes in then there is an alternate model. Film producers take a risk in films, so why don’t they take this risk in OTT and make the web series themselves. For the next five years, it will be a demand driven market as between all of the OTT platforms we will need 50-60 originals in every language every year. The producer’s retain the control and the IP as they have taken the risk of making it.”