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Can OTT players leverage market opportunities & rationalize rising content costs?

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MUMBAI: In a bid to grab eyeballs, spending on digital advertising is on the increase, but this increase also comes with challenges, if KPMG is to be believed.

KPMG director Girish Menon said that digital advertisement is likely to cross Rs 25,500 crore in 2020, but digital ads do not come without challenges with major concerns being inability to track mobile activity, ad fraud, ad blocking and measurement.

Making a presentation at an event organised by FICCI here yesterday, Fast Track India: Bolstering Growth in the Digital Content, Menon added, “OTT video is likely to become the holy grail in digital media. The advent of OTT services and on-the-go content, aided with competitive tariffs and falling average retail price of smartphones, has helped to drive video consumption in India.”

According to him, approximately 40 per cent of mobile data traffic is being driven by video and audio consumption.

The Indian market is highly price sensitive and broadcast services are well accepted, making the growth and profitability of OTT video players an uphill task. As digital media consumption grows in the country, content owners and delivery platforms need to reflect on innovative ways of monetizing digital content. OTT players need to leverage market opportunities while rationalizing rising costs of acquiring or producing digital content.

“Profitability still continues to be a major challenge coupled with infrastructure and affordability of data tariffs and payments models. It is imperative for the OTT players to address these concerns through innovative means to achieve the medium’s full potential,” added Menon.

Discussing future trends to grow this market, through effective monetization of content, while delivering consumer value, in addition to evaluating various payment models at FICCI Knowledge Series 2016 were Film Producer Vishesh Bhatt, DittoTV business head Archana Anand, Arre co-founder and CEO AJay Chacko and Eros Digital COO Karan Bedi.

Sparking the discussion was Bhatt who observed how this conversation flagged off last year with everyone talking about content that has come to a point where it's annoying. He is of the opinion that serious content makers fuelling the various platforms have to first understand the ecosystem. “In my opinion, even the platforms have not taken initiatives to educate the content makers. The ecosystem currently is extremely poor. The content makers have to understand the economics first or open my own platform to air content and then make money out of it.”

Various content monetization options are being explored with the rapid adoption of digital platforms. Ad remains the major source of advertising. Short format made-for-digital content is being leveraged for immediate monetization opportunity. Existing content is being repackaged and delivered across digital platforms owned and 3rd party (YouTube, Mobile Apps, etc.). Existing content infrastructure is being leveraged to create purpose built content (interactive shows, online polls, etc.).

The focus has now shifted to original/exclusive content for digital media, to drive subscription revenues

Enlightening the audience further, Chacko pointed out how the content consumption medium has evolved from print to broadcast and now to digital. While there is 70 per cent investment in content creation for digital, the showdown does not stop there. “Investing more on content is the rule.”

Citing the example of Pokemon Go, Bedi asserted how the game is earning roughly 1.6 million per day which is just 10 per cent of what they can make if monetised properly. “The cost of data, infrastructure, etc, remains an issue for us. We are definitely not there yet with the subscription model, but it's not far.”

Anand though strongly surmises that platforms need to set their strategies right. “You have to establish with masses first to get subscribers. We followed the consumer behaviour trend on mobile and made it affordable for them. Like anyone else, we never told them to download our app, rather gave them the option to give a miss call to download it. To solve bandwidth constraints, we tied up with Telcos and payment wallets and the usage has been phenomenal.”

dittoTV has a clear road map set wherein it has first focused on getting eyeballs to its platform. Anand also opined that the platform does not have to necessarily follow a linear model in future.

But how will the value change make money? Answering that, Bedi said that the three levers- revenue generation, content creation and marketing acquisitions. “Netflix does not invest on marketing acquisitions. In the end, it depends on the platform to decide what model it wants to follow and it has to make it work right.”

“SVOD also allows multiple things to be done. There is an inherent ability to share piece of profit with partners by tying up with various partners”, added Anand.

With various global players like Netflix, Amazon Prime Video, etc, entering India, the players will have to focus on producing original quality content to drive viewers. But is it beneficial to the creators here to put their content on the different platforms. Bhatt strongly affirmed that the West has made its content makers worth. It's no more only about money but about environment.

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