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Subscription and advertising might be the answer to OTT's monetisation problem

23-May-2017
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Subscription and advertising might be the answer to OTT's monetisation problem

Seemingly, a mix of advertisement and subscription is the tentative solution when it comes to cracking the code of monetisation in the OTT space. At the recently concluded OTTv summit, Mayank Gandotra, Head- Business Alliance and Development at Times Internet (Gaana OTT), said that relying alone on the subscription model won’t solve anything. “If we can reach up to one million paid subscribers then you can reach up to 50 million subscribers with the help of an advertiser. One needs to have a mix of both subscription and advertisement,” he said.  

At the same panel, which discussed the challenges of monetisation in this space, Shabir Momin, MD & CTO at ZengaTV.com, talked about the reluctance of a consumer to pay for content. He also mentioned that he doesn’t believe in the rationale of paid content being better than free content. “On YouTube you get a lot of high quality content for free. It’s good content versus bad content. Given a choice, no consumer will pay for it,” he said. Viral Jani, Head of Entertainment & TV Partnerships - India at Twitter, also agreed to that as he said, “People are spoilt for choice with good content available for no cost. It’s a huge challenge to make them pay on internet.”  Viraj Malik, MD & CEO, PK Online, also echoed a similar thought from a demand-supply perspective. He said, “Demand and supply of the market also determines what consumers are willing to pay for and not. In today’s scenario, the consumer is not willing to pay, as of now.”

Sandeep Naug, National Sales Head - Culture Machine, also suggested at reviewing the system, especially when it comes to piracy. He insisted on a freemium model. “Content like ‘Narcos’ and ‘Game of Thrones’ are available on pirated sites.  As long as that exists, getting the consumer to pay will be very difficult. There has to be better legislation so that such content is protected. Freemium model is needed because currently, we are disrupting the market,” he said.

Gandotra also emphasised on price point and informed that they sold 10 million subscriptions in the last six years in the country. “The sweet point is Rs. 30 per month. The other problem is that the customer is not loyal. Amazon Prime available at Rs. 499 a year can fix the benchmark of what a consumer is willing to pay,” he said.

Jani focused on packaging, adding that one has to package to sell content and drive subscription revenue.

All the panellists stressed on piracy being the real challenge for the OTT space and users not being the only source of making content. Momin said, “It takes the 95 per cent space. We are trying to fit into 5 per cent. You have no choice but to stay free and find alternate sources of revenue. If one billion people start watching content in a legitimate manner without going to any unwanted site, then your average cost per content will be few paisas.”

He also emphasised that content creators need to tap their customers at all platforms to bring in revenue. “From the content creators’ point of view, democratisation of content is the way to make money. If you really want to make money out of your engaging content, you need to be present at multiple platforms,” he said. Momin pointed out that exclusive content is not the code to crack the revenue model at least for creators. “It has to be mass distribution. You will find your own way to make money out of it,” he said.

Naug on the other hand insisted on earning the audience space. “If we have the right distribution system and appropriate audience space, monetisation becomes easy,” he said.

Jani mentioned that in this case, Twitter is in a ‘unique position’ as they have launched multiple products that have enabled their content partners to monetise. Case in point is their partnership with NFL and Oscars where they broadcast both the properties live with users live tweeting about the same.  The strategy worked as Twitter announced 16 deals with partners in entertainment, sport and news.  “We believe that there is demand from advertisers to participate in this kind of conversation. It gives them the right place to reach out to an audience,” he said.

Malik stressed on format saying that short format brings in more opportunities for monetisation. “In short format you can show more ads and the user doesn’t binge watch. The latter is a loss making endeavour for OTT in India from a broadband perspective,” he said.

Momin focussed on how brands are open to new formats of advertising in the digital space, especially in the last six months. “Advertisers want to engage with content at the concept level and work with you. They are saying ‘don’t talk about my product but integrate it.’ Silent integration is becoming much more effective. The 30 seconds are getting squeezed. Lot of brands have managed to convey their message in five seconds ads. It’s all about engaging the audience and projecting the message in a right way rather than screening their brand names,” he said.

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