Strategy for the Indian

Market
Differentiators for OTT & TV Channel v/s OTT
Markets
 On-Demand Content Ecosystem

• Content Creators • App Stores

• Content Aggregators Distributio • Telecom Partners
• Labels & Publishers n • OEM Partners
Content Channels/
(Right holders) Providers Carrier
Networks

• App developers On- Advertisers • Direct Advertisers

Technolo Demand /
• Content Management gy • Sponsors – for specific content
Content Advertising
Partners Platforms Platforms • Ad mediation platforms / agencies
Service
• Analytics

Payment
Marketing Partners/
Channels Gateways
• Partners with interested in • Credit card, Debit Cards
similar customer segments • Net banking
• ATL • Mobile Wallet
• BTL
 OTT Business Models in India

Broadcaster OTTs : Global OTTs : Netflix, Amazon

Hotstar, ZEE5, Voot, SONY Prime, YouTube
LIV

Distributor OTTs : Tata Sky,

Telecom OTTs : JIO, Airtel, Dish TV, Hathway
Vodafone

Social Media: Independent OTTs :

Facebook, Twitter TVF, Alt Balaji
 OTT Monetization Models

Monetization Models Key Players

Advertising Video on Demand YouTube, Voot, MX-Player, TVF Play
(AVOD)

Subscription Video on Demand Netflix, Amazon Prime Video, Eros

(SVOD) Now

Freemium (AVOD + SVOD) Hotstar, Sony Liv, Zee 5

Transactional Video on Demand Veqta

(TVOD)
 5 Differentiators for an OTT Platform

Content
Understanding Customer Behavior • For OTT Platforms “Content is King”
• Varied Content – Originals, Long/Short type , Catch-up TV etc
• To understand different customer segments • Different types of content developed and syndicated by OTT
• To provide a complete consumer experience - Platforms
reduce churn rate & increase retention
• Make use of Analytics for personalization
• In India : Regional Content is in demand, Distribution, Promotion & Marketing
especially in the South
• Select the right distribution mix
Setting the right price point • To create awareness - For customer
acquisition

• To cater to various customer segments to create

value-for-money sentiment
Technology
• Differentiated Plans – free trial for Netflix, VIP V/S
• Platforms that are not sharp in addressing
Premium for Hotstar
• Will also depend upon the revenue model consumer expectation on quality of technology
and interface struggle to scale up
• Significant investment in technology and
marketing / branding to build critical mass
 TV channel proliferation (800+ channels)

Demand for Basis the rural & urban divide and other demographics, demand for content like
Varied movies, TV serials, news, sports etc. gave rise to different channels across
Content languages.

Limited time
Limited slots per channel led to an increase in the number of channels under one
slots per umbrella. E.g. Zee has over 90+ channels catering to different demographics in
channel terms of content – Zee News, Zee Marathi, Zee TV HD etc.

Viable Television moved from mass channels to mass + niche channels with pay revenue
Economic model catering to niche channels & advertisement revenue catering to
model mass/general entertainment channels.

Transition from analog to digital has been possible due to regulations.

Regulations have also been introduced basis the content. E.g. For non news and
Regulations current affairs content , The Cable Television Networks Act has been formed.
OTT Market would consolidate in the long run
Revenue Strategies of Global Players
• Ready Made product & Content Offerings
• Customer Acquisition & Customer Service Expertise
• Audience Scale & Diversity

Cost Advantages for Global Players

• Buying Content Worldwide
• Original Programming
• Delivery Costs

Customer Behavior
• Customers are largely fickle, and they switch their accounts to different platforms
• According to a BCG Report, most customers have up to three video/OTT Apps on their
smartphones – hence OTT platforms will need to compete for being in the top three positions

Local/Domestic OTT Players

• Gaining traction has been a struggle for most domestic-only players
• OTT advertising market share, while more fragmented than subscription, is nonetheless
concentrated among the big players, especially YouTube.
• Domestic players struggle to keep up with the content and marketing costs required to compete
successfully with the global giants
Decoding the Indian OTT consumer
 Development of Entertainment industry - India
A growing market Robust Demand
Advantage Rapidly growing young
Total Media and Entertainment Market Size India population with increased 4G
(US$ billion) usage
40 FY21 P; Attractive Opportunities
35 33.56 Policy Support
Indian digital media
30 FDI limit increased from
industry CAGR of 23.5%
25 FY17; 20.23 FY18; 21.18 FY19; 23.34 74% to 100%. National
20 during 2017-20
Digital Communications
15
10 Policy 2018 for
5 affordable digital
0 services Higher Investments
FY17 FY18 FY19 FY21 P
FDI inflow reached
Market Size (US$ billion) US$ 9.2 billion in 2
decades.

Size of Major Industry Segments FY19 Size of Major Industry Segments FY21P
(US$ billion) (US$ billion) Shift of entertainment industry from
Television
Print
Television
Print
TV and Print media to Digital
1%
2%
4%2% 1%
2%
5%2%
5% Filmed 5% Filmed Entertainment Media will pick pace with the
11 Entertainment 5% 41 Digital Entertainment
%
44 Digital Entertainment Digital
Entertainment – % Animation & VFX advent of 5G deployment, with
11 % Animation & VFX 15 Live Events
Online Gaming
A rising trend % Online Gaming
data consumption set to grow from
%
Out of Home media
10
Out of Home Media 3.5GB per user to 17.5GB per user
20 Radio 14 Radio
% Music % % Music by 2022.
 Who is the Indian OTT consumer? (1/2)
Median Age
Segment About (years)
Location Platform preferences Content preferences

Young Global Younger subscribers with 25 Metro cities

Citizens marked preference for
(16%) binge-watching
foreign shows

Trying through Traditionally linear TV 29 10L+ cities

thrillers consumers getting
(13%) into crime thrillers,
action web series

Lust, swears Males preferring content 27 Hindi speaking

& daring with voyeuristic markets
(12%) elements such as bold
scenes and abusive
language
Price- conscious Older audience not into 30 Pan-India
casuals OTT content yet due to
(11%) price points & data
costs

Anytime anywhere Heaviest viewers; 25 Metro cities

addicts subscribers consuming
(11%) content in every
possible window
Source: Ormax OTT audience report, 2019
 Who is the Indian OTT consumer? (2/2)
Median Age
Segment About (years)
Location Platform preferences Content preferences

The Catch-up crowd Older, traditional TV 33 Non-metros,

(11%) viewers using AVOD to small towns
watch catch-up
television

Merely for Light OTT viewers 31 Non-metros,

movies stream predominantly small towns
(9%) to watch movies in
leisure

Laugh out Light OTT viewers 29 Non-metros,

locals primarily limited to long small towns
(9%) and short-format
comedy content

Youthful urban Younger viewers preferring 24 Hindi-speaking

psyche youthful content markets
(8%)

Source: Ormax OTT audience report, 2019

 How much are they watching?

Consumers in Tier-2 cities are close to the overall average,

pointing to the deep penetration of online videos in these cities

Source: KPMG, Unravelling the digital video consumer, 2019

 How many platforms do they use?

Consumers from Tier-2 cities show an equally

Most consumers who pay for OTT high penchant for OTTs and don’t mind paying
platforms have settled on a single for these, pointing to the democratization of
platform the medium across the masses

Source: KPMG, Unravelling the digital video consumer, 2019

 What do they like to watch?
Most preferred content category Preference for originals

Consumers
with a strict
preference
10%
for originals

Supply of
originals 1%
Movies are the preferred category with comedy,
drama, and action being preferred genres

Source: KPMG, Unravelling the digital video consumer, 2019

 What languages do they prefer to watch in?

Language preference

South Indian market is fiercely loyal to their native

language while Hindi remains relevant in east and
west India

Source: KPMG, Unravelling the digital video consumer, 2019

 Is there a “prime time” in OTT?

OTT TV

19%
28% 28%

37%

44% 43%

Morning Prime time Others Morning Prime time Others

With OTT, consumers can watch content in a non-linear fashion,

yet most desired time for content remains the same as TV.

Source: KPMG, Unravelling the digital video consumer, 2019, BARC, 2017
 How happy are Indians with OTT rates?

Would you accept ads to pay less or nothing

for a service? Willingness to pay

7% 6% 4%
16% 10% ₹0 - 50 7%
20% 20%
23%
24% ₹50-200 22%
34%
₹201- 400 30%

70% 74% 76% ₹401-600 22%

65%
49%
₹601-800 12%

₹800+ 7%
Australia India Philippines Singapore Thailand
Yes No Don't Know
Average monthly OTT rental ₹ 306
Indian consumers, just like those in other
developing nations, don’t mind ads if it % consumers unwilling to pay 59%
reduces their bill

Source: Ovum, OTT Media Services Consumer Survey, 2019

 What drives subscription behavior?
To meet the needs of different
56%
household members

Consumers subscribed to one or more paid OTT There is no single service that provides all
the content I want
42%
Reasons One or more of my video services is bundled
Australia 44% 10% 46%
for having or sold as a package together with other 36%
more than services

one paid I have yet to decide which service/s to keep

30%
India 28% 56% 16% and which one/s to cancel
OTT
I signed up to a free trial and forgot to
Philippines 55% 24% 21% cancel
19%

Plurality of tastes within households foremost reason for

Singapore 46% 10% 43% accessing more than one service
My current TV service is good enough 43%
Thailand 47% 24% 28%
I can't afford it 26%

25% 31% I don’t 'binge'/watch enough TV to warrant buying

19%
Regional Average 44% online service/adding another service

My internet connection is too poor/unreliable I'm 12%

Subscribed to just one service Not

Subscribed to more than one service Reasons uncomfortable with giving away my credit card 11%

subscribed to any service

for not or bank details online

subscribing Online video is only for young people 8%

TV being “good
to any I don’t understand online video 8%
Indian consumers show more propensity enough” and
OTT
to subscribe to more than one service, I don’t have the right payment mechanism unaffordability, two
than those in developed countries 4% 3% topmost reasons for
The online video service that I'm interested in is not not subscribing to
available 2%

Source: Ovum, OTT Media Services Consumer Survey, 2019 video OTTs
Online video service has poor content library
Other 12%
 Can OTTs drive behavior of pay?
% whose entertainment needs are Active television subscriptions Migration from DTH to OTT
being met online (millions)

2
36 5
38
↓17%
161
50% 21%
133

Pay TV Free TV Connected TV

Active paid subscriptions reduced by A YouGov study shows that
• ~50% users moved to online content
OTT platforms have the potential 17% in 2019. Industry experts
post TRAI’s order
to meet entertainment needs believe this might be due to NTO • ~21% unsubscribed from a DTH
traditionally met using television and migration to OTT, particularly in connection and moved entirely online
the English viewer segment for content

Average monthly OTT rental ₹ 306 Average monthly DTH rental ₹ 467

As traditional TVC content becomes increasingly accessible on OTT platforms and internet connectivity
improves, consumers willingness to pay for OTT would increase and users will migrate to OTT.

Source: Ovum, OTT Media Services Consumer Survey, 2019, EY, The era of consumer ART, 2020, YouGov, 2020
IPL v/s Original Content – What should an
OTT choose?
 HOW OTT is affecting SPORTS

Global distributors of Operators that invest in Over two-thirds of

sports content (or functionality that consumers pay up to $39
‘operators’) currently maximizes fan per month on sports
commit 15% of total engagement will see a content – with the
budget to develop the 24% uplift in subscriber remaining one-third willing
OTT technology stack – acquisition. to pay more.
worth over $6.8 billion by
2021 in the US.
Investments in ORIGINAL Content BY OTT’s

• Platforms like Hotstar and Zee5 live stream

3000 crores all of their channels on the digital platform as
well. This has helped them capture the bulk
of TV consumers that lie above and beyond
the millennials.

500 crores • Despite investing a lot of money to create

original Indian content, Netflix hasn’t found a
lot of success in impressing the Indian
consumers. This showcases the inherent risk
that is present in a content heavy strategy.
356 crores
• With low subscription costs and larger library
of movies and TV series, local incumbents
are ramping up faster than Netflix in the
Indian landscape.
120 crores
Recommendation: IPL Over ORIGINAL Content

IPL is a time tested product. The risk is

very low for a cricket loving country like
India.

Viewers have increased consistently

for IPL from 680 million in 2018 to
760million in 2019. Ad revenues have
also increased significantly.

IPL can reach a larger number of

people due to streaming in multiple
languages at the same time. Hotstar’s
strategy seems to be ‘come for IPL,
stay for other things’
 INCREASE ENGAGEMENT WITH IPL

Increasing consumer
engagement by improving 1
upon features like VR feed,
live chat, score predictions, 2 Putting out highlights and
contests etc. original content as
freemium to bring people
into the product with
something that can be
enjoyed year-round, 24/7.

Allow consumers to buy 4

short content PPV – like 3
‘Knockout’ or ‘selected Offering a look behind the
team games’. scenes will always be an
engagement driver. Original
content like player
interviews etc. keeps fans
on the hook during the off-
season.
OTT & Telcos
 OTTs in India have grown on the back of the rise of
telcos

No. of Paid Subscribers (in Has achieved 100x growth by

M) signing 5-9 year deals with
Partnerships
10.1 with

0.1
2017 2020
Telco
Organic Total
partnerships

Source: TheKen
 Growth through partnerships is driven by strong
mutual benefits
Benefits for OTTs Benefits for Telcos

Large share of costs subsidised by telco Customers more likely to stay longer & pay more due to OTT
bundles

All customer
60% More likely to stick
$6 acquisition costs
Increased customer with their current
subsidised 43%
retention telecom provider

Complete ARPU
100% $5 through telco
Spend more on their
Higher willingness to pay 42% carrier plan due to
bundles
Large chunk of
60% ₹15 ARPU subsidised

Source: TheKen; EconomicTimes; Ovum market study

 Therefore, the amount of partnerships are not
surprising

Live TV content OTT Platforms

Two of the fastest growing OTTs

have partnerships with all 3
Source: TheKen
 OTT viewership currently heavily bent towards
mobile viewing due to higher penetration

Increasing smartphone penetration & data % of daily online video watching time
consumption
33

58%
Mobile phone 87%

46% Smart TV
21 5%
38%
Laptop 4%
30%
23% PC 2%
17%
13% 1%
Tablet
6

Other 1%
2014 2015 2016 2017 2018 2019 2020
0% 20% 40% 60% 80% 100%
Column1
Smartphone penetration (% of popn)

Source: Statista, EconomicTimes, KPMG

 However, smart TV prices are undergoing a similar
trend leading to a spike in ownership

Smart TV prices (in Rs.) have fallen 30-50% in just 2 yrs Smart TV penetration has thus grown exponentially

75%
-31%
-40%
-53%
14
80,000
29,000 50,000

55,000 8
30,000
13,500 5

2016 2018 2016 2018 2016 2018 2014 2016 2018

32 inch 43 inch 55 inch No. of households with smart TVs (in M)

Source: Economic Times, BCG

 Global trends also show India’s move towards smart
TVs is imminent

Globally, people prefer watching on TVs after signing up on laptop & mobile

TV
Viewing preferences
+ rise in family
oriented content
Laptop
will drive OTT
viewership towards
smart TVs
Mobile

Tab

Source: Netflix Annual Report

 OTTs must capitalise on this growth through a mix of
hardware & software partnerships

Hardware: Providing real estate on the remote Software: Get priority access on TV homescreen &
incentivises the view to subscribe recommendation push

Netflix initiated the idea in 2011

by partnering with device cos.

Push content
recommendations on
homescreen + before
beginning viewing

OTT buttons are now Push app installation

commonplace on smart TV on homescreen
remotes

Source: News reports

 Content owners & distributors tussling for larger
share in the profit pools

Creator/Owner Distributor Exhibitor

Conventional TV
viewing
Content studios Cable/DTH companies TV companies

Balance of power & division of Operates in a different profit pool

profits depends on popularity of
shows & reach of distributor
 OTT players have the power in a fluid value chain
owing to data supremacy

Creator/Owner Distributor Exhibitor

OTT viewing Content studios OTT cos. Telcos Device cos.

Own the power in the value

Currently struggling
Are now moving towards chain due to
to maintain
distributorship • Data on consumers
customer base
• Ability to create targeted
content
 How will the balance of power shift in the future? How
can OTTs continue to hold power in the value chain?

Creator/Owner Distributor Exhibitor

OTT viewing Content studios OTT cos. Telcos Device cos.

on

? ? ? ?
OTT Business Models
 Business Model Canvas
• Key Partners
•  Key Activities • Value Propositions • Customer Relationships • Customer Segments

Production Licensing
Self service

GenZ
Producers & Actors Wide variety of content
Data Analytics Marketing (Family & Kids)

• Key Resources UI (online)

• Channels
Broadcasters & Stream anywhere
Millennials
Cable companies (All you can
watch)
Talent Brand

Online

AWS
Data capabilities
(Recommendations)
• Cost Structure • Revenue Streams

Production
costs Maintenance Marketing Infrastructure Subscription model Product placement
(AWS)
 Business Model Canvas
• Key Partners
•  Key Activities • Value Propositions • Customer Relationships • Customer Segments

Production Operations
Actors Producers Experience oriented

Wide variety of content

(Family & Kids) Mass Market
Marketing (emphasis on family content)
UI (online)
• Key Resources
• Channels
Subsidiaries Merchandise
(McD &
Subway)
Talent IP
Creative high quality
content TV Theatres Kids

Game designers
(Microsoft & Sony) Brand Theme parks Theme parks
Online

• Cost Structure • Revenue Streams

Publishing
Advertising
Licensing
Production
Royalties Maintenance Marketing Infrastructure Theme park revenue
costs
Thank You!