Why TV distribution firms have taken the OTT plunge

Apart from providing TV channels to OTT players, distribution operators are also acquiring and launching their own digital platforms

by Sonam Saini
Published - Nov 11, 2019 8:45 AM Updated: Nov 11, 2019 8:45 AM

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The rise of digital consumption has led to fierce competition in the media industry in the bid to acquire new customers and retain existing ones. Apart from broadcasters getting into content generation, TV distribution companies have taken the plunge into acquisition of new content, launching of new digital platforms along with distribution of TV and OTT content.

For instance, Tata Sky's DTH (Direct-To-Home) service provider partnered with OTT platforms like Hotstar, Sun NXT and Eros Now to launch its digital content service - Tata Binge - and the service was priced at Rs 249 per month. The viewers can watch thousands of movies, TV shows, curated short videos and missed episodes of TV shows aired in the last seven days. In 2018, Tata Sky signed a deal with London-based TV channel Shorts TV and made its content available on the Tata Sky app. Dish TV, too, has forged partnerships with OTT platforms and launched its own OTT app Watcho this April. The platform offers 1,000 hours of library content, including movies and short films.

Cable operators too have joined the space of providing OTT content to consumers. For instance, Hathway has partnered with Netflix and offers free subscription to Play Box (OTT set top box) users. Users can avail 12 months’ subscription of Sun NXT.

According to Sukhpreet Singh, Corporate Head-Marketing, Dish TV, “The consumption behaviour of consumers is changing. Distributors believe their main job is to provide the best of content and entertainment to subscribers. We all want to consume online entertainment, whether it is from free or paid sources or from various apps.”

In partnership with Amazon Fire TV, Tata Sky aims to redefine the future of entertainment for millions of Indians by extending the ‘Tata Sky experience’ to the world of apps with Tata Sky Binge.

Pallavi Puri, Chief Commercial Officer, Tata Sky, says: “Through this partnership we are giving customers the Amazon Fire TV - Tata Sky edition without any additional cost to enjoy Tata Sky Binge.”

Bringing a variety of content on one platform, distributors are not only keeping up with the changing audience but also competition from telecom companies, which have started to become a major provider of content through data streams.

There has been an increase in the number of consumers watching video online, and the infrastructure too has evolved in terms of affordable Smart TVs bringing digital videos to people’s living rooms. This has led to DTH operators too trying to evolve to stay relevant in the future.

Girish Menon, Partner and Head, Media & Entertainment, KPMG in India, said: “Traditional television distribution in India is definitely likely to face headwinds from digital distributors such as telecom operators and ISPs.”

Currently, most DTH operators are tying up with OTT platforms and providing access to online content on Smart TVs through hardware enablers such as Set up Boxes or Smart Sticks. DTH players are also trying to tap the currently underserved wired broadband market and bundling both access and content in one package, helping them acquire new customers. “Access to online content as a strategic initiative will help control churn for DTH operators and act as an important customer retention tool,” Menon explained.

Post implementation of New Tariff Order (NTO), there was a disruption in the broadcast industry. “The disruption happened because of a change in pricing and packages. Life has been very tough for the consumer. The disruption has had some effect on the consumers and that is what has led to consumers to opt for OTT, especially when OTT provides linear channels at a much lower rate or no cost at all,” said industry expert Shaji Mathews, former CEO of Kerala MSO KCCL.

But are these profitable for distribution operators? “If you monetise well, it could be profitable,” says Mathews. “Regulation is also needed in such circumstances as you cannot continue giving free content,” he added.

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