Falling data rates will usher in OTT revolution, say experts
The heads of digital content studios and distribution platforms met at a panel discussion at the recently held FICCI Frames 2016 to discuss how policy and business practices help each other to make the OTT sector a vibrant platform
The heads of digital content studios and distribution platforms met at a panel discussion at the recently held FICCI Frames 2016 to discuss how policy and business practices help each other to make the OTT sector a vibrant platform.
The session was moderated by Vikram Oza, Consulting Editor at Bloomberg TV India. The panel consisted of Uday Sodhi, Executive Vice President & Head, Digital Business at Sony Pictures Networks India, Gaurav Gandhi, COO at Viacom18 Digital Ventures, Krishnan Rajagopalan, Co-founder and Content Head at HOOQ, Ajay Chako, COO or Arre and Daniel Marshall, SVP (Worldwide Sales) at Elemental Technologies.
One of the key questions put before the panelists was about the opportunities and challenges due to the ongoing digital disruption. Chako was of the opinion that unshackled new content will drive change in the ecosystem. Sodhi pointed out that improvement in bandwidth (with 4G) and increase in adoption of smartphones would help to increase usage of OTT services. "It is a long journey which involves payments ecosystem, devices, bandwidth, technology, etc. All players are taking the right steps," he said.
Oza asked the panelists whether the current OTT system is in danger of becoming too standard in terms of the offerings. "Is it important to differentiate right now?" was the question he put to the panel members.
Gandhi did not agree that OTT players were offering the same service. However, he agreed that as content is in the hands of a few players, it could seem to be the case. "85 per cent of content is owned by the top 5 networks and perhaps 2 production houses," he informed. Talking about Viacom18, he said, "We have 2.5 billion views for Colors and MTV shows, not including ones like Bigg Boss, from YouTube." According to him, the industry, which is currently Rs 14-15 crore, had the potential to be about $1 billion market in 5 years.
"In 2-3 years, the formula will change as more households stream rather than watch TV. All of us are sitting on a lot of content so the first thing will be to put out our IP first. It is still early days for original content," he further stated on the topic of similar offerings by most OTT players.
The next question put to the panel by the moderator was on the topic of monetization models and whether subscription or ad supported models work better.
"OTT is a convenient tool; it is disruption, even in content. Lot of disruption needs to come to individual and not demographic groups. Original content will be different from that shown on TV. India to a large extent will be ad-supported," said Chako.
Sodhi pointed out that even in the US there are a number of freemium models that run on a very large scale. According to him, the debate over what can be free and what cannot, is not easily resolved. "Each player will have its own model. A lot of people will experiment, for example, we put 'Dilwale' available before cinema as a pay-per-view (transactional) model," said Sodhi.
Gandhi was of the opinion that people are paying for data services, which is still expensive in the country. According to him, once 4G rolls out, people will not be afraid of paying for data. "Data price will be the big change and it is going to happen very, very soon," he said.
Marshall opined that to reach the "Digital Nirvana", which is content availability anytime, anywhere and on any screen, what was needed to have more bandwidth, monetization models and infrastructure as the technology was already available.
Adding to this, Oza queried that as uniformity and availability of content still remains a pipe dream, our OTT players and the ecosystem doing enough in the mean time.
Speaking about the opportunities, Sodhi said, "If there are 100 million people consuming digital video, there will be an increase of 40-50 million every year. Multiply this with better bandwidth, lesser data rates and better devices; it will not be a linear equation."
Pointing out that digital advertising is a Rs 7,000 crore business right now and with 80-90 million gigabytes of data being consumed by telcos per month, the digital ecosystem is very much a reality. "The problem is that it is a very expensive business so the question is how many will be able to sustain themselves," he said.
Rajagopalan agreed that for premium and hyper premium segments the economics do not support just the ad supported model. The challenge, according to all panelists, is to have enough compelling content that people will want to pay for.
On being asked about how OTT players can provide innovative solutions to the advertiser, Gandhi said that most of the big media agencies are already aware of the potential of digital content and are just waiting for an increase in the audience numbers on OTT platforms.
Chako also agreed that advertisers are looking for more original content and there was a need to go beyond pre-rolls and mid-rolls. Adding to this, Marshall said, "Advertisers want more eyeballs, more content, but they want it cheap. We could see some of the premium content being provided on multiple channels and in different ways."
Gandhi further informed that in some cases CPM, CPT, etc. rates for digital content are higher than TV. "There is a huge challenge to retain viewers. We all face it but it could be a transitional challenge. A lot of consumption will happen on the mobile web and once you hook a viewer, he might download your app," added Sodhi. Gandhi further stated that the watchword for OTT players is watch time and users and not downloads.
Adding to this, Chako stated that 70-75 per cent consumption takes place on social media so the metric of number of downloads does not feature.
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