‘The challenge for OTT platforms is to secure a place & make consumers want to pay for it’

The FICCI Frames 2023 summit had a panel discussion on ‘Digital Media: What is the right revenue model?’. The panellists included Amit Dhanuka, Executive VP, Lions Gate; Nachiket Pantvaidya, Ex-Group CEO, Balaji Telefilms; Ajay Chacko, Co-Founder, Arré; Nitin Burman, Vice President & Head- non-subscription revenue; Praveen Chaudhary, Director, Retention Engagement & Growth Strategy, DTC Marketing, Warner Bros Discovery, APAC; Aamir Mulani, Founder & CEO, Playbox TV, and Ambesh Tiwari, Business Head, Audio & Studio, Pratilipi. Pankaj Krishna, Founder & CEO, of Chrome Data Analytics and Media moderated the session. 

The session covered various nuances of content and the AVOD and SVOD aspects. They spoke about how the Indian consumer was evolving in terms of their content consumption journey as well as its effects on their pockets and how the platforms are gearing up to generate revenue and look out for new arenas in order to garner advertising and subscription money.

Chacko said that business models have changed several times. He said, “We started with SVOD and then platforms like JIO and Amazon came with bundle offerings. The business model is where the major disruption has happened. If you ask a traditional broadcaster about their business/revenue model, they will have a very different answer than people from the Google/Meta or content creator side of things. So the tech end and the individual end have managed their business aligned. However, the big question of the revenue model is for the broadcasters or the homegrown players trying to go global like MX Player. There is a huge churn there and the question has not been answered.”

Aamir spoke about how customer acquisition is happening and platforms are trying to catch the attention of the viewers. He said, “In India, there are three OTT platforms being launched every two months. Everybody is fighting for the same consumer. The bigger challenge is that trying to make a place and wanting the consumer to pay for it. The more the players are increasing, the cost of digital advertising is also increasing. What we’re doing at Playbox TV, whenever I meet a content creator or an OTT platform, I say India already has a business model available. India has cable homes, Indian mentality is simple, they want to have a bundle. Over a period of time, the cable TV people will also come to broadband.”

Chaudhary spoke about UPI platforms and the monetary system was making it easier for people. Krishna asked the panellists whether there was a hierarchy in the platforms. To which Chaudhary said, “There is a place for everyone. The bigger challenge is if people are going away from the content offerings that we are putting out then we have to change that.”

Dhanuka said, “There is a hybrid model that is available in the market, there is a freemium model and the subscription model. Within the subscription model, the direct-to-consumer relationship has started, evolving into an aggregation and bundle model. You have to go where a consumer is. If there is a marketplace that is building out an aggregation model for OTT platforms, I will go there. The P&L of each OTT platform is different. Your content investment dictates how you want to build out your revenue and subscribers.”

He added that platforms should look out for who is their TG, what is audience size they want to go after, what is content offerings they have, and who are platforms that can enable these.  

Burman said, “When we started AHA, we wanted to start for their entire south market and all the national platforms when they release content it's not Telugu, Tamil, or Malayalam, Kannada it’s actually four different European countries in themselves. Telugu for us is 100M userbase and from that, we have 30M paid subscribers, which raised people’s eyes on us. Talking about the revenue model, we started off as a subscription model but now we have realized, if we want to reach much wider audiences, we have to pivot into a hybrid platform.” He added that 30-40 % of revenue comes from the non-subscribers who watch content on an AVOD model in the last two years.

Pantvaidya threw some light on the content industry in India. He said, “The broadcasting industry is worth Rs 1,20,000 Crore in which 40,000 Crores comes from subscription, 80,000 Crores comes from advertising. In OTT specifically Rs 2B$ advertising and Rs 1B$ subscription. 

The biggest investment and digital today is IPL being given away free which is 30000 crores. So in my understanding if you want to have a business of scale and if you want to be big in India you have to have an advertising subscription can be a small thing that can contribute 20-30% but at some stage that pivot is very important.”

“IPL has been given free the Indian consumers would ask why should I pay for content when I was getting IPL for free and that's the biggest thing going on people will get you free contact looking forward.  We have to prepare ourselves for two things one is big investment play because if you invest you will have small development. The second thing is you have to give it for free and convince your stakeholders that for some time the money is not going to flow. If you are not doing these two things, you can go small."

According to the panellists that there has to be a larger disruption which is required as the consumer would want bundle services.