Mumbai: India is in the grips of seismic changes as far as video and broadband consumption is concerned. Pay TV cord-cutting is rampant even as free TV subscriptions are on the rise and OTT buy-ins are churning with the signs up for certain platforms stagnating even as others are seeing rapid increases and some are seeing cataclysmic drops. Aggregators of OTTs are popping up on the horizon promising cheap bundles along with value-added services for cable TV and DTH. There’s a rush to set up free advertising-supported TV channels by TV set manufacturers and smart TV device makers. There’s the Jio factor where it is seeking to convert most pay TV customers to free streaming of video content by offering access to consumers at no cost. The consumer continues to demand bandwidths higher than ever imagined even as prices are dropping. Margins are under pressure as every player goes one-up on each other to acquire and retain customers.
Clearly, the video and broadband distribution landscape has not been as vibrant as it is now… How long will this pot-boiling continue? What will the magic potion of video and broadband look and taste like? And what’s the end game? Indiantelevision.com held its 20th edition of Video and Broadband Summit better known as VBS at Sahara Star Hotel, Mumbai.
The very first fireside chat of the event, on the topic: ‘Evolving Content Distribution Landscape’ had Jio Platforms group CFO Saurabh Sancheti as the speaker in conversation with Indian Television.com group founder, chairman & editor-in-chief Anil NM Wanvari.
Wanvari began the chat by asking Sacheti, how he has seen the content distribution landscape evolve over the past few years.
Sacheti answered, “I think India is a very exciting market, and content distribution and media is like a market no other. Definitely, the last five years have been a big revolution on all fronts. So let me tell by seeing how the market is today and versus what it will be tomorrow. So today, yes, largely, even today, whatever people may say cable and DTH are very prominent platforms, they have the highest reach, they reach more than 100 million households and there’s a very big proportion, which they are serving directly as a pay TV. There’s a big business, which obviously, the free dish is having and the whole revolution on connectivity, which has changed not just the mobile, but the whole technology around, i.e., connected TVs, and large screens is there. There, we are just scratching the surface. So if I look, actually India had 350 million households, the last bottom 100 and 250 million don’t have a TV, and their only access is low-cost smartphones, for the content. If I look at the top tier, the top 50 million homes have connected TV, and many of them have a pay TV as well, which is where there are two products to the same segment, about 100 million pay-TV homes. So, the distribution landscape is changing very fast, because the numbers are not consumer time and attention is. That is what is leading to a lot of change in the mix of more choices, the customer time, definitely is now getting into multiple channels. So it’s an exciting time. I think the future is exciting for all the mediums of content distribution. Overall as the economy grows more prosperous, definitely the number of users and consumption is there to rise.”
Moving on to the next question, Wanvari asked, “What are some of the key factors that have driven these changes in content distribution?”
Sancheti replied, “One good thing that has happened is, definitely a lot of ecosystems are coming together. The access which was earlier very difficult is something which has been made easy. So earlier, we had it in mobility where, as a mobile subscriber, you had to pay 250 rupees a GB and therefore it was criminal to watch video on your mobile phone to now having very affordable tariffs that are less than 10 rupees a GB and everybody can afford a mobile phone with content and that opens up a huge audience. The same revolution, by the way, is also happening in phones, now almost touching 40 million internet users. It’s a very big market which is happening. What connectivity does is because it’s like the baseline infra but what it does is, it definitely changes the overall proposition. At the same time, with this opening up of the market, people are able to take exciting bets and make it really large. I mean, for example, just look at JioCinema and what has happened with digital watching on IPL, it’s like the whole model is pivoted, the whole attention has gone there. Therefore a lot of interesting experiments are happening, which is a very good thing to happen for the overall industry, because that is what maximises the consumer surplus and that really generates a lot of value for everybody in the ecosystem, not just the content producers, distributors, but the consumers as well. So it’s really exciting.”
Wanvari then asked, “In your experience, what role do the new and emerging platforms play in reaching diverse audiences? How do you identify such platforms?”
Sancheti then answered, “I’ll break the question into two parts. One is obviously as a content producer and then as a distribution channel. As a content producer, the good thing as I said, in India is there is no one India, there are many Indias, and overall, India is so big that even in the three Indias that I was discussing earlier, you have an opportunity of a global scale. Now, coming to the content producer angle, which is very interesting in India. So, D2C is the buzzword, that everybody’s trying to grapple with it, but the Indian consumer is kind of a high-touch consumer. So, existing relationships definitely prevail and across industries our learning is, that is definitely a winning point. Therefore, wherever you have a distribution channel, whether it be wire, a local cable operator, or a telco distribution, or any other distribution, where you have some touchpoint with the user, you have a lot of chance of getting him converted, and at least sample and if the content is of quality, definitely consume it. So, as a content producer and distributor, like I said, India is moving very fast, shifting fast, the market is growing, and it’s quite an exciting time to see how things are evolving. And if you have a great product, there is no dearth of consumers that clearly this market is showing.”
Wanvari then added, “These days, we don’t look at a customer, we look at the lifetime value of a customer, how is that? What kind of role is that playing in terms of customer acquisition?”
Sancheti commented saying. “I think that’s a very relevant question. The good thing is that consumers today have choices, and the bad thing is consumers ‘have’ choices. So if you are not able to take her attention at the right time with the right content, you’re lost. And that’s where I think, affordability, access, and the size of the market is a given, which everybody talks about. But content personalisation is the real secret sauce, which very few people talk about, and are working towards. I think one very important thing is unlike a lot of other categories, where the consumer is very involved in the purchase, and likes to go through the process of making the decision, entertainment is always a lean-back experience. The consumer may like to play around a bit, but the consumer doesn’t want to do a bit of big research to find the right piece of content. That’s where if you have the right content dished out at the right time, to the right consumer, the consumption obviously goes up. What I always try to remind my team is that choice is not actually a boon, it’s not certainly a gift, it’s a tax to the consumer. So the more you are making the consumer choose, you’re making them want variety. So in that sense, your variety of platforms is required but don’t expect the consumer to put a lot of effort in discovery. It should be seamless, the right content should surface and clearly, the who’s who of the world, the best people globally have this as the secret sauce. I think this is what in the whole Jio ecosystem, we have been able to do well. We have been able to segment the users, understand their needs, know what kind of content they need, and give them at the right time and price. And I think one more thing, which, I was talking to a large global techfin a couple of days back over dinner. One of the common pain points that came to them was, that digital is the sexy thing, everybody talks about it. But it’s really painful as a user because I don’t know what piece of content will appeal me where. Even if I have something in mind, I don’t know what platform it is available. It’s a lot of research. That’s I think, when we were just discussing what we have done in India, they were really blown away apart from that. So to summarise, I think the whole personalisation aspect is the aspect that is changing and which will differentiate, which will make the winners from the losers.”
After that, Wanvari asked, “How important is the lifetime value?”
To which Sancheti answered, “Let me explain it in a two-part equation. One part of the equation is the value derived from the users. But our principle in the business, and what I’ve learned through my own experiences here is that you should focus on the other part, which is what value you give to the user. If your product is valuable enough, and value is not only in monetary terms, it’s value in terms of giving the right thing, without the consumer having to put effort, giving it at the right price, giving it to the right user. What it does is, it adds a lot of value to the user. So the way businesses should look at it is to go beyond the LTV. That’s the internal control metric they should use, but focus more on giving and acquiring the right kinds of customer metrics. A lot of times what I’ve seen, a lot of people do is the whole process is more on vanity metrics of acquisition, and just trying to get the consumer in, and not figuring out what his or her needs are. So focusing more on the extracting part from the consumer, and focusing less on the giving part. And over a longer term, usually, the giving part is what makes the consumer stick around and, generate value. So focus on adding consumer surplus as I began with.”
Wanvari then asked Sancheti about the challenges they have faced so far, as they’re not just looking at one port of distribution but at multi-channel distribution.
Replying to this, Sancheti said, “I think the challenge, as I said, is that there is a large set of users today who have access to multiple channels. So it’s because a lot of things are in motion, like I explained. So it’s not like there’s only one channel, there’s only one way in which the consumer was. So if I zoom or go past 10 years back, life was very simple, because most of the consumers are either or. It’s either this kind of consumer or that kind of consumer, and when the choices are limited, it’s easier to get and retain the attention of the consumer to make him or her happy. But when there are too many choices, it’s important to first get the attention of the user and then make him or her happy. So I think what we have been trying to do is, figuring out what consumers need and at the same time, enable multiple products across the value chain for each of them. That is something that is working well for us because we have realised that rather than trying to compartmentalise the user that ‘okay, she is X kind of person, and they would need only Y kind of thing’. We are trying to give them a combination and figure out how to just serve what they want. So their attention is our currency, which we deeply track across businesses.”
Wanvari then asked the next question “The consumer is more used to using mobile internet rather than internet at home. Is that true? Also, the fact that connected TVs are growing. Then apart from that, there’s a lot of competition amongst cable and DTH right now. There’s also free-to-air television. So what does this all mean for you? What kind of challenges do these factors pose to you?”
Sacheti answered, “As I said, the part where we focus most on is delivering value to the user. And value is definitely dependent a lot on figuring out what the consumer wants. So at the end of the day, what you want is, the basic currency is attention of the consumer. Is the consumer spending more time with you, more attention to you, or staying with you longer, that’s all. That is the basic currency, everything else is the resultant. Therefore that is the lead indicator that we work on and analytics plays a very big part in it. So what analytics does is, in all our businesses, it plays a very important role. It helps us identify the right content for the right consumer and hypothesis testing and combine it with our tech capabilities. A lot of personalization and the whole consumer cohort strategy and dynamic cohorts are being created all by AI now. There are no longer a product manager who is standing up and saying, ‘Hey, I have five ideas, let’s test it out’, it’s the machines who are driving it, and which is helping us understand the customer better and serve it better. So if I go back to the previous one when I was talking about a multi-channel distribution strategy, a consumer has many choices. Getting their attention today is not easy. We are adapting for the new world by deeper analytics and serving them better.”
Sancheti added, “I’ll tell you the fundamentals of business, which I have learnt. I think only one part in which people realise how to increase demand. So demand is what consumers demand. There is one part that people are overly fixated on, which is that if you make something cheaper, it increases the demand. But one thing, which is very rarely appreciated, is if you make something easier, that also increases demand. It’s not only the price thing, it’s easier and what is easier, personalised content, personalised product, something which understands me, I’ll be happy to lap it up. So that second part of the equation is often underappreciated. I’ve seen that by multiple people. That is what we focus a lot on.”
Wanvari then asked, “In terms of content, what trends have you found that have been particularly effective in the current landscape?”
Sachetio replied, “I’ll start with a global trend, and that is not unique to India. But what I realised is that people call some extrapolate two points and try to call it a trend. A trend is an underlying phenomenon, everything else is a resultant. So if I look at, just the underlying phenomena, for example, one thing which is given is what social media has done over the past 20 years is people’s attention spans are becoming shorter. There’s a whole boom of content and choices available. Therefore the need for gripping storytelling, something that captures attention is there. Now everything is just vying for attention. So attention span is smaller and the important or a different storyline is important. If I just extrapolate that to India, how I see things happening, I think, 10 years, if you talk about a concept, which was in the US, but you talk about in India, i.e., one season 24 or 30 episodes, the story ends and something else begins, was unheard of, and unthinkable, and it’s working very well. Or, say I think there’s a big digital audience, let me do a movie premiere on OTT people would laugh, it was not even thinkable. So all those kinds of things are definitely bringing new types of products, varieties to bring people in. I also think that, all the new formats, that have come in, and some of them are global formats, and all the new content formats, in a gripping storytelling way, which just captures the attention and imagination is there. This generates a lot of consumer surplus, because the whole consumer, which was posed to only a limited genre of content today has at least 100x more choices, if you just explore by types of subcategories. So the whole choice has exploded, the format has become shorter, and the storytelling is better and more gripping. So these are the trends and these are going to continue for the next 10 years as well.”
Adding on to what Sancheti’s response, Wanvari said, “The audience has started participating a lot more and they’ve almost become a part of the content themselves. A lot more, as compared to if I watch what you do on JioCinema during the cricket tournament during the cricket tournaments that are going on, if I’ve watched what’s going on on Shark Tank, if I watch that the audience can actually also invest in, in those in the startup or whatever offerings they have.”
After which, Sancheti said, “If you look at the overall piece, today audience is much more connected much more wanting to identify themselves personally with the content. And they are also very conscious about what they are about. So therefore, again, a larger variety of audience and more important, therefore to serve the right content to the right person, otherwise you end up taking away the attention or at least upsetting the consumer.”
Wanvari then asked, “How is the entire Reliance Jio Group making sure that it stays ahead of the trends and it also stays relevant?”
Sancheti replied, “This is something like we always remind ourselves, every day in the morning when we walk in. It’s not about what we have accomplished, but what is yet to be done. It’s still day zero. There’s a good saying which which we have in our team, that the best teacher in the universe is consumer, because especially when we are product managers, business folks, we think that we know the consumer, but consumer is the one who teaches us. Usually, those teachings come very late because we don’t realise it. So one thing which we do very rigorously is take the feedback and listen to consumer very, very intently, and look for signals where we are wrong. It’s important to know that consumer is right, and you will be wrong in multiple places. That is what we always look as a signal. We humbly accept it wherever it’s not working and we change our strategy and go ahead with that learning. So learning is is an integral part, it has always been important, but never as much as now, given the pace at which the whole industry is shifting. If you don’t learn, if you rest on your laurels, this is such a fast changing world, it will soon become mainstream. So we just keep reminding this to ourselves, and keep on putting ourselves the promise that consumer is right, maybe we are not getting it right and look for signs where we can improve.”
Wanvari further asked, “Do we see pay TV and cable TV as well as DTH having legs because of the disruption that you’ll have been putting forth in the industry as a whole.”
Sancheti answered, “Typically what happens is, a lot of times, people are quite pessimistic about things, but don’t see the overall opportunity and the size. So like I said, let me again, zoom into 10 years later, how do I see the market and what is going to happen in the market. 10 years later, India would have 400 million households and India would reach a per capita income of average of $5,000. That kind of per capita income, there would be a 90% penetration of TV, that’s like globally proven macroeconomic fact, which means that about 360 million households should own a TV at that point of time. Now, where are these people today? Today, those homes in contrast, are close to 350 million and 200 million only on TV. This means the overall homes which can be serviced by entertainment is going to expand significantly. I think there will be a top tier which is significantly large, which will be like about 120-150 million range, which will be fully digital, because at the end of the day, the choice and the personalisation, which can be delivered on digital will be unmatched. However, I still believe that out of the bottom 250 million left after that, or 210 million to be precise, left after that, pay TV universe would still be 100 million. The only challenge that pay TV will have will be the users who don’t have any touchpoint with the consumer. I think cable has a fantastic opportunity because you have a guy who has known the consumer for not just years, but decades. And therefore the kind of personalisation, adaptation, listening to consumer that you can do, is like nothing else. So cable definitely has a very bright future. DTH will have to reinvent itself a bit. At the end, obviously, there’s a big bottom tier about 50 to 100 million at least which will be on free dish or pay TV kind of offering. The beauty about Indian market is, it’s so big that any fun business you pick up, it’s still 100 million kind of scale, which is what you don’t even get in large countries. So the relevance definitely I see. The need for reinvention is also there. What I keep on reminding, across businesses to all our teams that, our past laurels are past laurels, but the way in which industry is changing, we need to reinvent ourselves. But I’m sure Indian organisations, our competition, or lot of people, especially Indian businesses are very smart. They will move and adapt quite quickly and we see a big market in it.”
Wanvari then asked a question on forecasting the future, “How do we see the world of media and entertainment being aligned? Do we see three or four large players who are integrated like they are in the US, but the US has a lot more players now, because the tech giants are really driving the agenda. So what do we see happening in the marketplace as far as media and entertainment is concerned? We see a similar kind of play happening are we see telcos or do we see a software giant tech solution providers like like in the US?”
Sacheti replied, “Out of 400 million households, 360 owning TV, I see three large markets. One is the digital-first market, which will be connected largely by telcos, who are obviously putting in a lot of money in fixed investments as well. That revolution is about to happen because even at 120 million out of 400 million, we’re at barely at 30 per cent penetration. Today, any country, of $5,000 per capita income goes higher, so that is bound to happen. Telcos will lead the distribution and digital companies, both the OTTs as well as the Internet giants, would be the media engines to them. I think the media engines of pay TV and free TV will serve the other 200 that will be there. The opportunity is so big, I do see a lot of space for everybody. That’s the beauty about India. Even if you pick up a niche, it’s 10s of millions. So the addressable market is large. The market is up for grabs and I’m extremely bullish on the future.”
Adding on to Sancheti, Wanveri added, “India is this kind of a market, which is leapfrog a lot of things now. It’s very fertile, it’s very virginal. It’s very fertile for companies like Amazon, Microsoft, and Google to come in and make up a strong play and with the larger market that we have to come in, try to read up on acquisition strategy going forward. Do you see that happening?”
Sancheti said, “All the global Internet giants will definitely make a mark. They have already made a mark. So it’s nothing like that. But having said that, isn’t there enough and more for Indian companies? I think the opportunity is so big that no one player, no one set of industry can take it over. It’s so big that everybody has a huge opportunity. Everybody has an opportunity to grow multi-fold from where we are.”
Wanvari then asked, “Do you have anything to tell the cable TV or the pay TV fraternity as well as operators? Should they focus on broadband? Should they deliver video?”
Sancheti answered, “What has been happening is, there has been a lot of pessimism and that happens in any inflection point. Anytime when things are not going as well as things are getting shaken up. A lot of self-confidence loss happens, whether it be cable fraternity or the pay TV. I think this is short-lived. This is an inflection point, this is where we can really build on our strengths. So the only thing which I’m working towards myself and my advice would be to reinvent ourselves be closer to the consumer, because there is a very big opportunity.”
Wanvari commented saying, “But do we see the pipe or do we see wireless?”
Sancheti said, “Everything will coexist. Look at the kind of consumption levels in India, you still are talking about a very little penetration even in wireless, the penetration levels are not the level that similar countries per capita will have when when we reach $5,000. So even wireless consumption, wired and I’ll even say the one-way medium also has a lot of flex because India has all the tiers available. When you think of yourself as a consumer, you also try to think that you are the only archetype. We are only one small portion of the archetype, there are many multiple archetypes. I have traveled to households in 75 villages and their outlook on how they consume media. That is what has opened my eyes. I found all sorts of contrast, people who move from one medium to the other. So yeah, it’s quite exciting.”
Wanvari then wrapped up the conversation with his final question, “I think hyper localisation of content is what’s going to keep cable TV very relevant going forward apart from the bundle offerings and also even OTT is relevant at the same time. Whoever delivers more hyper localisation will also benefit apart from offering a wide diverse content offering.”
Sancheti answered, “I couldn’t agree with you more. At the end of the day, the trend is that human beings are social animals and anything you get to them, which can correlate with their communities is going to help you. Communities are smaller, communities communities are local, they will be able to relate more they will be able to know more. I think what has not been cracked so far is a kind of economic model in which low-cost production can happen and be also telecasted or broadcasted locally, and regionally. But local and regional events is one of the key things which which will happen because that is where technology is going. It’s again a trend that is going to happen. So that suddenly will change the fortunes of cable.
