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FICCI 2015: Can profit sharing work between OTT & cable?

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FICCI 2015: Can profit sharing work between OTT & cable?

On the first day of FICCI-Frames 2015, the very last topic under discussion came under the dramatic nomenclature of "Clash of The Video Walled Gardens: OTT & Video Apps versus Cable & Satellite". The idea was simple; the solution, anything but.

The panel included people from all facets of the industry; namely, Shabbir Momin, Founder-CEO of Zenga TV, GD Singh, Director & CEO, DGlive, Gaurav Gandhi, COO, IndiaCast, Anil Khera, CEO , Videocon d2H, Karan Bedi, COO, Eros Digital, Salil Kapoor, COO, Dish TV, Siddhartha Roy, COO (Consumer Business & Allied Services) of Hungama and Richard Cusick, GM for Tribune Media Services. The discussion was moderated by Atul Phadnis, Chief Executive, What’s-ON and General Manager (APAC) Gracenote.

To the very first question; on the long term prospect of OTT, Gandhi pointed out that, in India, what we see, is a broadcast-specific model, to give an example, Hotstar (by Star Network) and not a channel-specific model; on the lines of what HBO does in the US. "These are still very early days (for OTT in India)," he said.

The OTT contingent; Singh and Momin, gave a good account of their active user base; for example, Singh said that DGlive had 25 million downloads to date since its launch in 2011, while Momin also said that Zenga saw 20-22 million active users on a monthly basis. " We were struggling with monetization," accepted Singh. According to him, they follow a philosophy; "If you are paying for content, you cannot give it for free". "You have to go either the Netflix way or the YouTube way; we decided to take the Netflix model," he said.

Similarly, Momin said that on starting off they knew that advertising would be big in the future but they were cognizant of the fact that it was not so right then. Bedi, who claim that Eros is the biggest content owner and distributing platform said, " One of the biggest things that is shaping the industry is that we are going to take the leap, which India does very well and so the models will evolve." He gave the example of India moving directly to 2G and taking the jump to 3G to substantiate this.

Roy opined that India would be a single device country and the fact that cable operators were getting into triple play was very important. "One point to ponder is an alternate payment model needs to come in," he said.

Phadnis put forward the question whether the fact that OTT operators have no legacy or regulation works in their advantage and whether this threatens cable operators. To this, Khera replied that in the US, OTT has been prevalent for years but "cord cutting" has not taken place. "In the US, a consumer has to move from $65 ARPU (for cable) to $4 ARPU (for OTT) and so he will happily take up the option," he said. Cusick also agreed that there was no clear indication about which direction the US was moving towards. "There have been some statistics which actually show that the coming of OTT has resulted in more people watching TV," he stated.

Mansukhani, while opining that TV was not dying out any time soon, said that most Indians are able to straddle all platforms without worrying about who is the winner. "Just because you are old does not mean that you are outdated. The lesson here is not OTT vs cable but understanding the customer and what he wants," he said. Momin also agreed that the gap between TV and other devices was narrowing and would soon disappear. He opined that the challenge was that 70 per cent of the content was being created by individuals, which did not fit any existing framework and which needed to be brought into one.

"What I am worried about is about providing content for free and depending on ads for revenue, given the high content costs, especially once the consumer is used to free content. By doing this you are cannibalizing cross platform revenue," said Khera. He also said that it was unfair on cable operators to be charged by content creators if others were not. "If you are charging me premium and not charging OTT, then I will stop providing that content," he said.

Gandhi opined that one of the major pieces not being tapped right now was that no one was providing US content. "The moment you create pieces different from vanilla TV content then opportunities are amazing. These will change the game for OTT," he said. Roy also agreed that consumers are happy paying for premium content. The thing to look for is whether operators have microcharging available.

To sum up the discussion, Mansukhani proposed that OTT and cable operators and content creators need to work together. "The broadcast and MSO/cable industry has been at war for 25 years. If the entire industry goes together to the customer and figures out what they want and provides it in a profit sharing model, then everyone wins," he said.


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