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Guest Column: Race to the bottom(line) - From consumption to subscription

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It’s been a quick and busy 36 months since the advent of the very first OTT services and between all of the media-owning majors, the flush-with-money global players and the battling aggregators and the ever-growing flock of Indie hot-shops, it’s a whole load of original and aggregated content that has been unloaded on the Indian consumer. Complemented by falling data costs, average consumption (data) has shot up 6 times with video being the clear driver.

One thing is for sure. 100 million+ video consumers on OTT (predominantly the phone) within the year is a certainty and a target of 200 Mn+ in the coming 24 months seems a very realistic possibility. And to get to that goal, almost everyone is working to make the consumption process from app download to sign-ups to browse and watch to recommend and return an almost frictionless experience. The question of payment and monetization is a reality for everyone with the only variable being ‘when is the right time to bring it up?’

With all the tentative attempts so far, and piecing together a lot of disparate data, and depending on how optimistic a view you would like to take, it looks like we may have anywhere between two to three million viewers paying something for their OTT video. And these payments range from Rs.500/- at the highest end (admittedly an exception) to Rs.20/- at its friendliest, and with an average possibly in the early triple figures. Now, admittedly this is small change compared to the investments in content that is being witnessed.

From the wildly astronomical figures witnessed in recent sporting acquisitions to the scarily exuberant movie acquisitions by global majors to even the more measured investments from the original content creators, it all adds up to a serious amount of investment that is all being gussied up to make these 100 million and the next 100 million users default to their connected devices for video. Everyone realizes the habit has to come before the money. And, the majors opening that tap in full force and running it mostly for free makes it pretty difficult for the others to push the monetisation button on the subscription front.

Having said that, the move towards subscription has begun in earnest over the last year with all major services. The likes of Netflix and Amazon Prime have always been pay. And, arguably while Hotstar’s conversion of free to pay was pretty low, this has to be seen in the light of the monstrous funnel of free users that they have been able to create. From hereon, one could assume that the subscription push will begin to intensify, already in evidence through the live cricket feed versus delayed cricket feed as a strategy to push conversions. Bolder new launches like ALTBalaji and SunNxt have started off with a paid model. 

So, is there still a question about whether a subscription model will work in India where content has famously been sold cheap historically? There is no data that shouts an emphatic NO to that question but emerging models are clearly making it less of an unknown. 

To my mind, among all the things happening, two aspects that pretty much decide the issue of subscription success are:

a. Distinctive content – without a doubt, this seems to be the most crucial factor in your ability to find a core audience that will evangelise your stories. Youtube is crawling with a lot of me-toos with a phone-cam, hastily pulling together half-baked stories of clichéd youth issues presented sensationally with a liberal dash of promiscuity and abuse. As a way to make people sit up and take notice, promiscuity and abuse did show promise but as a means to create a distinctive and engaging story-telling equity, they don’t take you much past the gate. And that’s where a lot of the focus will need to be, if you hope to ever get even a part of your audience to pay. A frequently asked question is how many apps/ services is a user going to have on their devices. Well, everyone cannot and will not have everything. It’s a country of a billion different people with demographic, ethnographic and psychographic variations. 

Finding a meaningful core audience will probably become the most critical skillset for survival. A case in point is the south-focussed offering of a SunNxt. 

b. Charging (payments) – for a long time since the advent of e-commerce we have bemoaned the low credit card penetration and how cash on delivery is still a reality of our market. Neither helps the small-ticket digital products business. However, the one tsunami of payment enablement rapidly bubbling up is the rise of wallets. From telcos to transporters and banks to Google, everyone will have one and a significant part of their customer base can be expected to adopt. Pricing, for almost all the Indian services, is at a very realistic level. It was charging where a bulk of the problem lay. And the wallets in this context can only be good news. This can and will change the charging and subscription scenario. Examples like the Vodafone Play service with a single gate-pass for a wide ranging content offering will showcase the difference that frictionless charging can make. Thus also making the case for more charging platforms/ wallets to offer aggregated media services. 

As this drama unfolds over the next 24 months and as the majors, minors and everyone in between tries out various strategies to bring you into their subscription net, sit back (or stand), pop the screen of your choice, choose your poison and hit Play. 

public://vamsi.jpgThe writer is the founder and CEO of Apalya Technologies. The views expressed here are of the writer's, and Indiantelevision.com may not subscribe to  them.

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