MUMBAI: Though everyone is ravenous to take a bite out of India's rich streaming phenomenon, it's not all hunky dory for independent players. Consumer acquisition, retention and chalking out a sustainable monetisation plan are tougher than they seem. While deep-pocketed giants may survive, the road is rocky for independent platforms.
The downfall of two ambitious players
Towards the end of 2019, Hong Kong-based over-the-top (OTT) platform Viu shut down its India business. The company cited highly competitive nature and the requirement of heavy investment without a path to sustained monetisation. Viu’s downfall was followed by Singapore-based telecom company, Singtel-backed, Singapore-based HOOQ. The service, available across Singapore, the Philippines, Thailand, Indonesia and India, which was also backed by Warner and Sony, filed for liquidation last month in Singapore. HOOQ said in a statement that it had been unable to grow fast enough to keep up with global and regional rivals and also noted “significant structural changes” in the OTT video market in the five years since its launch.
The statements of both Viu and HOOQ show the inability to grow a viable business model amid stiff competition. While the wave of online content started with small independent creators in the country, it's time for them to either join hands with bigger players or exit. Especially, when players like Netflix and Disney+Hotstar are earmarking billions for this market. Homegrown players are also investing highly. The sheer amount of content library, production quality along with smart UIs speak in their favour.
What lies ahead for independent players?
“There is a global recession right now and these OTTs are vouching on a lot of these global fundings, private equity fundings. COVID-19 has a big impact and there will be a recession in many countries and lot of the funding activities will slow down. Because of the current crisis, if their mtrics like success rate, viewership, time spent etc., are not good, many OTTs will also shut down in near to medium term despite being well-funded. India is an extremely fragmented market. We have 35 plus OTTs causing all the more chances of many more shutting down,” Elara Capital VP – research analyst (Media) Karan Taurani says.
SBICap Securities institutional equity research head Rajiv Sharma brings up three aspects. He talks about customer acquisition which is becoming an expensive exercise for independent OTT platforms with more serious players coming into the picture. He also adds that Netflix can amortise content produced in India in 130 markets. Broadcasters have catch-up TV content, the movies which they had acquired for the broadcasting business as a source of basic traffic for engagement.
“Independent platforms have a small library, no access to other content or market and moreover, they are working on a small budget. Their mortality rate is high because users will watch something and delete it. So low stickiness means higher customer acquisition cost and whatever they are producing, they are not able to amortise it over a higher set of users. So per unit content cost or production cost is higher. These are the reasons we are seeing independent platforms struggling,” Sharma explains.
Is it all gloomy for smaller and independent players?
Platforms like ALTBalaji, Hoichoi are thriving without funding from any big network, broadcaster or tech giant. These two platforms have witnessed good uptake in users with an attractive content slate. Moreover, they have collaborated with existing rivals also to increase their reach and find an alternative source of revenue. While we tried to find what are the factors that help them to survive, both of the platforms cited the parent company’s long-term experience of producing content, hence understanding of consumer preference.
“I think understanding of the customers is very important and having control over content is very important. Twenty five years of understanding consumers is very important because as we make a show or acquire a movie, we exactly know what a consumer might want. We have been in the business long. It's not a question of money only. Another thing what works well for SVF is that we have made 150 plus movies till now. We have relationships with all the producers of the business. So, when we wanted to license a movie, we could do it from every person in the industry. We had production experience, key understanding of content, relation with the industry and talents,” Hoichoi co-founder Vishnu Mohta says.
“Being from the house of Balaji Telefilms, who have been catering to the audiences ever-changing preferences for over 25 years now, ALTBalaji has an advantage unlike no other of having a deep understanding and familiarity with the viewer’s consumption preferences. With content being our biggest differentiator, we have been catering to all kinds of audiences through our diverse content offerings spanning multiple languages. Moreover, Indian originals have picked up pace in the past few days as audiences are on the lookout for local relatable content and are spending more time online. With content being king, there is a growing acceptance amongst consumers to pay for unique narratives and good story telling which keeps them hooked to their screens,” Balaji Telefilms group COO and ALTBalaji CEO Nachiket Pantvaidya states.
Yupp TV, another OTT platform which is tuning its business towards ed-tech direction in India, thinks that being an early mover, consolidation has helped it.YuppTV and YuppMaster founder and CEO Uday Reddy acknowledges, “ All the players who are in space are big broadcasters. They are already in the content space. They are just evolving from linear to digital. I don’t think many independent players are left now. If they don’t invest in capital, they won’t be able to sustain.”
With the COVID-19 crisis, things are bound to change once the situation normalise.
