"Cost of data is the only barrier for hyper growth of Hotstar & other OTT platforms:" Ajit Mohan

"Cost of data is the only barrier for hyper growth of Hotstar & other OTT platforms:" Ajit Mohan

Ajit Mohan

It’s considered as amongst the hottest of the OTT platforms in India. Star India’s Hotstar has earned that tag. Being a first mover in the space, it today boasts  about 75 million downloads from the mobile nation India – far far ahead of the 30 odd OTT platforms which have popped up.

It offers a smorgasbord of programs: right from India’s favorite sport cricket to 650 shows from its 23 channels, 36 English TV shows, 70 Hollywood movies, and oodles of Hindi cinema as well. The 85,000 hours of content it can stream is available in eight Indian languages.

Primarily a free and advertising-dependent service, the Star Network has poured in an estimated $60-70  million to bring it to the place it has so far.

Recently, it launched a premium version, branding it – what else – as Hotstar Premium. And it slapped a sticker price of Rs 199 a month onto it. On offer for subscribers who swipe their credit cards for it are sport (the Premier League and Formula 1), uncut and ad-free episodes of Hollywood shows (same day, same date) and movies, Hindi movie premieres and the latest Hindi TV show episodes at 6 pm everyday. Its trump card behind the pay wall that it has been tomtomming is the ever so popular Game of Thrones.

At the helm of the platform is its CEO Ajit Mohan who has been steering it as it makes its pioneering journey in India. Handpicked by Star India chairman Uday Shankar for the job, he has a rich and varied educational background and work experience. Which probably makes him an idle candidate to run Hotstar.

He holds a BSc from Singapore’s famed Nanyang Technological University, an MA in Economics & international relations from the John Hopkins University, and a financial MBA from the  Ivy League Wharton business school. His educational qualifications led him to consultancy jobs with Arthur D Little in Singapore where he specialized in the telecommunications practice, McKinsey & Co in New York where he focused on media & entertainment. Following that he landed up in the Mckinsey Global Institute as a fellow where he co-authored a research report on India. Which then led him to pen a column for the Wall Street Journal for a year, before finally setting up base in Star India in the corporate office. An opportunity followed to take charge of the company’s digital initiatives, which he grabbed with both hands. And he has not looked back since.

Earlier this year,  a restructuring exercise  in Star India saw him being given total charge of Hotstar as its CEO.

Indiantelevision.com had a detailed conversation with Ajit on the journey of Hotstar and where does he see it headed next. Excerpts:

What really happened at Hotstar during the Olympic Badminton finals when the entire nation waited with bated breath wondering whether PV Sindhu would win? Did the traffic on the platform go berserk?

I think it was a load of interest in the badminton finals. We saw that for some of the other events as well. We saw it for athletics where India was doing well. But to be honest, we have seen some of these huge spikes in viewership on Hotstar, when there have been big sporting events. I think we had seeing big numbers for the World Cup last year, the T20 World Cup this year, IPL and it was true for the badminton finals as well.

I think when we look at the numbers, NBC reported numbers in terms of their total viewers in the US on demand. And just to give you a sense of the scale, I think on Hotstar we have seen numbers similar to what NBC saw in the US on digital. When you think about the context of Olympics, I think it probably showcases two things, one when there is something that is big that’s happening, there is an urgency to it, all the constraints of data costs, access to data, the patchiness of data,  all kind of go away and people really want to watch that moment live.

Second it also probably points to Hotstar having become a bit of a habit for people that instinctively when something big is happening on sports, people turn to Hotstar as a screen.

What has been the journey like? The investments have been heavy. What has been the consumer response like? Let's look at installs, active users, if you could share a few numbers.

The numbers are large numbers but very often if I step back and think about it, two or three things have happened. If I dial back and see the narrative in India three years ago, the most dominant narrative was India was not ready for video streaming. I think there was a lot of conversation of how people were going to watch short form content on mobile. There was a lot of excitement around social media, may be a bit around audio streaming but there was very little belief that this country was ready for video streaming.

And what we have done in the last year and a half or so I think it really has showcased that it's been a supply issues in a country  which is very young, where increasingly people are very comfortable looking at the mobile as their primary screen. There is a lot of appetite for engaging with stories and not stories in a transactional 30 second two minutes way, I think people have a lot of willingness and appetite for engaging with real high quality stories.

And that was the bet that we made with Hotstar that if you create a great consumer experience on a screen relevant to this country which is the mobile and if you're able to address a lot of the issues that come with the quality and cost of access to mobile broadband or mobile data, then consumers will embrace you.

I think we have seen fairly large numbers not just in sports but across drama and movies. Over the last year and a half, we are seeing that millions of users are coming into Hotstar everyday and spending a lot of time For me, it shows to a lot of this coming together. If you have both powerful stories and if at the heart you have great product and engineering, technology, consumers here are ready in for it. I think in any case Indians are way ahead of other markets. I think embracing the mobile as a primary screen and spending so much time, India is at the forefront of it and I think I would attribute a lot of our success to getting the combination of content and product right.

What are the challenges you have been facing as a first mover OTT player? What are the challenges that is a kind of holding you back and accelerating further?

In my mind, the only challenge actually has been the cost of data. I see that as the only barrier for hyper growth of Hotstar or even other OTT platforms. The fact is that when both relative to income and relative to what people are used to paying for content, the cost of streaming on the mobile is still fairly expensive and we see that, we see that behavior.

I mean, when people have access to cheap data or WiFi or in limited circumstances free data, we are seeing massive watch time. So again, if I step and think what we have done, we have really brought together a compelling portfolio of content – whether drama, movies or live sports across languages whether Indian content or International content. We have created a user experience on the mobile where you can discover content easily and then the quality of the experiences.

All this fundamentally comes down to how many people have access to high quality broadband in this country and how cheap it is. The more people come on 4G or broadband and with cheaper data, I think you will see an explosion in watch time.

Great! So what were the key metrics which you would like to share in terms of time? Is it in engagement or watch time or active users ?

I think we adopt a 21st Century Fox sort of public reporting that we have crossed about 75 million in terms of downloads in free launch. The reality is that people are downloading the app, they are coming back to it often. The metric that we have been looking at is watch time because getting people to download and sample is obviously very important but their love for the experience, their love for the service shows up in how often they are coming back, and how much time they are spending. And on both metrics over the last 18 months we have seen quite a hockey stick.

We are focused on making sure that we are improving the experience. A lot of effort and energy in the last year and a half has really gone into thinking. Interestingly one of our challenges is we because we have a lot of stories to tell, and you can crudely put It into drama, movies or sports, we have is fairly unique challenge. There is a lot of conversation about global platforms coming to India, but in my mind we are trying to do something in India that is fairly unique. Many other OTT platforms in the world have really been able to build themselves first on the back of movies and then they move to TVV show and then they move to current TV shows. The companies that 21st Century Fox has invested in – Hulu for example, their bread and butter has been current – new TV shows.

Fairly uniquely, Hotstar is bringing together new TV shows, new movie releases and live sports, all on the same platform. And then to be able do it across eight languages, the interesting challenge we have is. With this kind of a portfolio of content that is truly unique, and for a lot of users in India for whom Hotstar may be the first streaming experience; they may not realise how radically sort of ahead of the world we are in terms of bringing that portfolio together.

The challenge that we have is how do we make sure that even though we have that wide a portfolio, we surface for a single individual user with only the content that is relevant to them. That is not something that any other platform has had to solve for when they have breadth of content that cuts across such diverse categories as drama, movies and sports and then to do it across eight languages.

Yeah! Netflix have said that they are not going to bring in live. That's something that they keep saying. I will not touch live – whether sports or news. So that is a compliment to you guys that you are trying to work with such a broad portfolio.

I have a huge admiration for Netflix as a company and imagine just like us all of them will go through a sort of a stage of learning about the Indian consumer and trying to understand what is of value. We have discovered that live sports is a compelling proposition and so are local TV shows, movies, Game of Thrones,  or a Hollywood movie. But again  it’s not enough to be able to bring that width and depth of the portfolio stories that we have. I think it's also important to kind of translate that to  every single user that we service and we put together the content package that is relevant for that particular user and the kind of things that are not relevant to them. They don’t get to see the latter at all.

So basically you are hinting to customisation of content. But is it working with the advertisers? Are they coming on board or are they  using Hotstar as an ancillary medium along with television? How is the ad sales team functioning? Is your platform selling on it’s own or is it selling along with the television?

When I talk about customisation, it is not necessarily about changing the story for Hotstar but to make sure that a Game of Thrones user gets to discover the show easily. Someone who is coming after watching a Malayalam movie is not thrown a Hindi drama. I think it is about making sure that we understand the users more and more. A lot of time it is based on not overlty telling us in terms of what they engage with, what content they see, what content they explore. So being able to surface only the content that is relevant for the user at any given point of time is important.

The second question that you are asking is what is the behaviour in terms of consumption of Hotstar vs television. In reality I think it is early enough that we are seeing all kinds of habits. For a bunch of followers of Hotstar to upgrade requires access to mobile broadband at home because we are now on Apple TV and Chromecast as well. For a lot of them, Hotstar is increasingly the primary screen. There is a bunch of people for whom  data is still a barrier either in terms of quality of data or the cost of data due to which they come in to watch catch up TV. And then there is a whole bunch of users in live sports wherein they instinctively turn to Hotstar when there is a big sporting moment.

We are not trying to bracket people into any single formula which is good or bad. I think the ambition that we have at Hotstar is that we are trying to build a product that will have followership amongst millions of users and yet in that context to treat every user in a special way. That's the balance that we're trying to strike.

How is the advertising community responding to it? Are they just packaging it together or are they buying it separately from television? What is the advertising agency, media planner and brand buying into as it is important. It also brings me to your paywall service which is Hotstar premium?

I think we should keep Hotstar premium on the side first and talk about the ad-supported model. I think the reason behind keeping a lot of content available without a subscription model was recognizing that data is still  expensive. So you know as far as users are concerned they  are already spending a lot of money to stream video and that is sort of been the core service for the last 18 months.

On the advertising front, we have been taking the advertiser proposition very distinct from television. In my opinion, just in terms of where the market is and how quickly its evolving, we know that there are agencies who  completely embracing the power of digital. There are advertisers who are open to understanding how digital can add value to them and especially mobile. But I think, we have taken that proposition and have disconnected from any TV proposition.

Yes, advertisers and advertising agencies have pretty wholeheartedly embraced Hotstar in the last year. So if you step back and think about it, what we hear from brands, is that what is tremendously different what they saw from their spends on digital in the first six or  seven years is that digital provided the power of addressability - that you could target only the audiences or users that you were interested in as a brand. You did not have to talk to a large audience and then hope that the subset that you were interested kind of got  your message.

Where they have seen the power of Hotstar which is very different from some of the digital mediums. I think, they have been familiar with us. We are getting very affluent audiences from urban India at the moment. The fact that people are coming to us to watch long form content are spending a lot of time staying on the platform which also means they are spending a lot of money on data. So the first thing advertisers  are latching onto is that they are able to speak to the most affluent Indians 50 million or 600 million from urban India at the moment  We are talking to people who actually have the ability to spend money. That's one and the second part what I think is they are finding audiences who are deeply engaged. The proposition we are offering advertisers or brands  is not do a five second pre-roll or a 10 second post roll.

Our proposition is:  you   are communicating to users who are deeply engaged in content. They come often, they stay a lot. So when you are communicating to a brand in the context of a very highly engaged audience, I think that's a dramatically different proposition from the digital mediums that they have been familiar with so far. Advertisers are embracing the combination of the two - an affluent audience who is deeply engaged and then of course the table steak is that you can address the audiences that you are interested in at any given moment.

Are you happy with what you have achieved so far on the originals front? Any regrets? What would you like to do going forward on original space? Is your VOD consisting of your linear shows going to continue?

I run the risk of being an outlier on this. First, I would assume that content creators would agree that the power ultimately is  to tell a great story. If you strip it down in terms of why mobile video is taking of, why OTT platform are doing well, fundamentally at the core of it is how powerful a story can you tell. So I don't think there is any dispute on that.

If you look at that and then you look at the point I was making in the beginning, my belief is that, the way I feel Hotstar in terms of the kind of shows that we have across the languages which is everything from a Game of Thrones to The Night Off  in English to Yeh Hai Mohabbatein in Hindi, we do have powerful stories. The depth and width of our stories whether it's been a story produced by HBO or produced by a producer for Star Plus, we have very powerful stories and on top of it we have a large movie library. We premiere a lot of movies on Hotstar and then we have live sports. So I feel comfortable that we have a portfolio of stories that is very compelling for the user.

So you think brands are coming and helping in this space? Whether it be free of cost or with making a story out of the brand you work with something like The Viral Fever has been doing? Are you going in that direction ?

If I step back and think about it, I think we are all of us  trying to get our hands over this monster which is on mobile - on demand, high quality video. We are trying to solve it from a consumer's point of you, from a platform point of view.  I think brands and advertisers are also trying to figure out what is the best mechanism for them to reach out to the audiences to tell a great story. It could be through a 30 second advertisement or could be through content that they want to  engage with in a different fashion than that they have done in the past. There is a lot of scope for experimentation and its quite exciting to see loads of brands and advertisers experimenting to see what works.

One key point that your entire success hinges upon is data but is there anything else?

I think we have been pretty militant about defining where the quality is right from day one.  I think recognizing that this is a country that still has fairly patchy access to broadband. So we have done loads to make sure that the quality of the streaming is very high. We understood that there was a huge gap in terms of people having access to stories on demand. Hence, one thing that we have militant about whether from the content point of view or from a product point of view or from an engineering point of view is to make sure about what we are building. It is not just a replica of what something else but it's truly a world-class of consumer experience that make sense for the users in India.

What will Hotstar look like in 18 months down the line?

I think some of the same things that we have been talking about. Given that we have a pretty compelling portfolio of stories, I would want to make it easier and easier for users to discover what we have and stay engaged. What we have done with both Chromecast and on Apple TV is that we have made it easier for people to watch it on a large screen for the set of users that would prefer that.

We do see that there is a differentiated service that we can offer with Hotstar Premium for people who have affinity  to American drama and movies as well as for us to have the opportunity to bring live sports to that audience. I think we are scaling up the premium proposition.

You and Netflix had a spat on Twitter? What was all that about?

They were trying to do something that in India which we had done in the past. I think we have tried a few original marketing ideas and when we saw one of our competitors doing the same thing, we just wanted to point out to them that you are a year too late.

I don't think we look at it in terms of what is the mentions. I mean it's a company that has done tremendous work in shaping on demand and we kind of look up and learn from them. We have set a template in India that will allow a lot of the other OTT players to  replicate as well.

So how many players  this ecosystem can support? What about regional services?

I don't know. I think it is a large country and it seems like there is tremendous growth in terms of people coming onto mobile and having access to broadband. So I would not measure in terms of certain number. I would say if people create a great experience for a mobile user and make it easier to discover and above all have powerful stories to tell, I would imagine that consumers would embrace that  like they have embraced Hotstar.

I don't know. I don’t suspect that there is a formula to it about how many players will be profitable.

On the regional front, I do know one thing. The fact that we have shows and movies in Tamil and Malayalam and Telugu and  Bengali. It does mean that that’s not a constraint anymore. I think it's just about your people having access to high quality broadband that is cheap and someone like Hotstar making it very easier for them to discover what they are looking for. If you can get that right I think there's a huge opportunity for exclusive growth.

How are you addressing the bitrate issues here? Will the advent of 4G give you a big boost? Are your bit rates responsive and adaptive in the current environment?

We do have adaptive bit rates on Hotstar. Few months back, we introduces the users to choose the bit rate that they want to stream on because with a lot of people told us I don't necessarily want to stream at the highest quality that you have because it's very expensive. People make choices in terms of what they want to use the data for. So we allow the users to choose the bit rate as well. We have been very conscious of the huge variations in bandwidth.

And from a technology point of view, we have invested a lot to ensure that you can stream at the highest quality possible for the kind of data that you have access to. This has been a huge focus area for us.

But there’s a limit as  to how much you can do. At some point it goes again the laws of Physics. You  you know when the bitrate falls to zero, it is  is very unlikely that we can still stream at 1 Mbps.

We will keep tuning it to make it easier  for people to stream high quality at lower data cost. At the same time I think there is a bit of an onus on the telcos to kinda make sure that they are raising the bar in terms of improving the quality of broadband. And to be fair to them it has been a huge focus for them as well. So I think the combination of people like us tuning our service, the telcos offering better access to mobile broadband that should should make the quality even better and more more widely available.