In January this year, the online space witnessed the launch of what it claims to be Indias first internet HD broadcasting network, Ping Digital Broadcast. Founded by Govindraj Ethiraj, the former editor-in-chief of Bloomberg TV India and Prashanto Das, former network head for creative services for UTV, the digital start-up aims to produce and distribute original content through a network of channels. Within a span of 10 months, Ping has grown from one channel in food to 25 channels spanning across music, lifestyle, beauty, fitness, technology and photography amongst others. It gets approximately one million views across all channels in a month. Views have grown by an average 50% month-on-month while the subscriber base of the network is over 23,000.
In August came Smartube Entertainment, another player in the digital space, which launched Trendspotters.TVa digital channel network which intends to comprehend trends from fashion and lifestyle to business, politics, sports, music and even gadgets.
Again, showmethecurry.com is achannel created by two busy mothersHetal Jannu and Anuja Balasubramanianwho have learned some quick and handy techniques to save time and energy in the kitchen. The duo shows how to avoid the mistakes they have made. With a goal to provide a well-tried, tested and liked version of different recipes, the channel has garnered 1,02,247 subscribers and 61,119,468 views. Then there is India's best selling cookery author Tarla Dalal's internet site tarladalal.comwith over 2.8 million visits per month. Her channel on YouTube has got over 26,992 subscribers and 5,770,438 views.
And if these examples are not big enough, here is a bigger one. Bollywood actor Akshay Kumar too decided to venture into the digital TV space with Fashion On My Own FOMO in August. He launched the channel under his production banner Grazing Goat Pictures along with co-founder Ashvini Yardi. Depending on the topic, a Fomo video can get 5,000-20,000 views.
Evidently, most of these channels are being launched in partnership with YouTube, a platform which exhibits a growing trend of online channels that are specific to one content typefashion, travel, food, do-it-yourself, etc. The reason is not too difficult to see. Today, YouTube has more than 55 million unique users a month in India. Users in India spend an aggregate 50 million hours a month on YouTube, says a comScore report. Also, because as Raghav Anand, managermedia and entertainment, Ernst and Young, says, India has the third largest viewership base on YouTube.
Kunal Kishore Sinha, founder and director, Trendspotters.TV, notes that with the youth consistently and increasingly getting hooked on to their smartphones and tablets, the maximum amount of content consumption (news, gaming, entertainment) today is taking place on YouTube as compared to Facebook and Twitter amongst others.
Production house Balaji has over 10 different YouTube channels, now consolidated under the two main channels of Balaji Motion Pictures (BMPL) and Balaji Telefilms (BTL). Together, the channels have over 60,000 subscribers and 50 million views across its network of Youtube channels. The BMPL channel hosts trailers, behind-the-scenes, the making of films and songs, exclusive footage (shot only for YouTube), deleted scenes, stars interviews and also full films in HD. The YouTube channels provide our viewers convenience to watch all our content, in high quality, at one place, informs Tanuj Garg, CEO, Balaji Motion Pictures. Meanwhile, the BTL channel hosts full episodes of popular Balaji TV shows such as Khwaish and Kabhi Sautan Kabhi Saheli in addition to devotional content. The channels were launched this year.
Sudden burst of online channels
Interestingly, in this growing world of niche, the goal now is to identify a community that demands content that the creators are passionate about; and then turn this community into a creed of followers who are regularly seeking new and fresh content. Tushar Vyas, managing partner, GroupM says, Digital channels make content distribution a very democratised process and accessible to a larger set of content creators. As a result theres significant movement on original content for digital. These contents are specific to genres, people, personalities/artists or brand created / curated contents.
For instance, Sonal Sagaraya on YouTube is a video channel created by one of the youngest indigenous video entrepreneurs, two 21-year-olds Sonal Sagaraya and Rishabh Shah. The duo has produced over 30 make-up tutorials for their YouTube channel that boasts of 819 subscribers, over 91,000 views and revenues that amount to slightly over $50 per month. They are also being courted by popular make-up brands in the country including Maybelline and Lakme.
Says David McDonald, head of YouTube Content Operations, APAC, We are seeing a steady increase in advertiser interest in online video and that is fueling the growth of YouTube partners in becoming sustainable businesses. Today we have hundreds and thousands of channels that make more than six figures annually. It is pertinent to note here that it takes 10-18 months to establish a sizeable presence on YouTube.
Short crisp formats
Storytelling in short formats is key to digital online channels wherein the typical duration is not more than 10 minutes. For instance, MTV, the youth entertainment channel from the Viacom18 stable, has launched its first web fiction show called Saturday Night, Alright. The show will have nine-to-ten-minute episodes and will be available on the channels website as well as on the YouTube channel of MTV. McDowells No. 1 Soda is the presenting sponsor of the show. The show talks about four friends and their friendly banter on a Saturday night.
Nevertheless, there are quite a few who believe that content creation is clearly based on the owners point of view. For instance, when IPL6 streamed for the first time on mobile, the tourney witnessed as much as 17-18 minutes of average viewing time by the time the game reached its fag end; on television that average stood at 35-40 minutes.
When there is an uninterrupted 12-18 hours of live feed of Bigg Boss online or on the app compared to just one-two hours of that on television, why would the viewer not watch it, asks Preetesh Chouhan, vice-president - Asia Pacific, Vdopia.
In fact, it is the genre rather than the length of the format that Chouhan is more worried about. Chouhan believes that news and entertainment will rule the roost even on online videos. Cricket and sports is the third genre but shall remain seasonal. Interestingly, this is quite unlike the US or European markets, where fashion, do-it-yourself and travel play very strong roles in the segmentation of online video genres.
Indian consumers have to move beyond news and entertainment. Only then will we see more and more verticals and genres coming up. As of now, it is very small and nascent. But there are brands and companies which are already investing and looking at more destinations and better connectivity through digital videos, says Chouhan. Experts note that fast moving consumer goods brands, telcos, consumer goods, auto, education, banking, financial services and insurance, online, retail and small and medium enterprises are aggressively eying advertising on digital video channels showcasing original content.
But the revenues
Currently, revenues for online digital channel networks is chiefly driven by advertising. Nevertheless, subscription-led revenue model can be witnessed in the mobile environment to a large extent. In the ad driven world, the content owner gets paid only when the ad is played out to the consumer. Hence, without the viewer invoking that video or that ad, a YouTube channel will not be paid by the advertiser. Here, a normal video ad on an online channel will cost around R1-5 per view. According to Internet and Mobile Association Of India (IAMAI), video advertising is divided into three main types of video adsin-video ads (expandables and overlays), standard in-stream ads - pre, mid and post rolls and TrueView ads by Google. TrueView video ads give viewers choice and control over which ad they watch so advertisers are charged only when a viewer has chosen to watch their ad. The overall video ad spend in India in financial year 2012-2013 was about R150 crore, of which 64% went to in-stream ads while 24% went into in-video overlays. The share of TrueView ads by Google is expected to increase owing to the dominant position of YouTube in the video space.
In financial year 2012-2013, search advertising constituted about 38% of the total online advertising spend, translating to about R850 crore while display advertising at R662 crore accounted for 29%. Advertisements on mobile phones and tablets grew from a 7% share in financial year 2011-2012 to 10% of the Indian online ad market in 2012-2013, totaling to spends of R230 crore. Social media, email and video advertising constitute 13% (R300 crore), 3% (R68 crore) and 7% (R150 crore) of the online advertising market, respectively.
Monetization is almost entirely on the ad supported model where Google places ads against content through its advertising platform AdWords and shares the majority of the money with the content creators. Recently, we have started experimenting with a subscription based model but thats still a pilot with a handful of channels globally, says YouTubes McDonald. As per market estimates, content partners get 50-55% of the ad revenue from videos on YouTube.
Well, the numbers may appear to be small but when a video goes to to add millions of views to its list, the earnings also go up. Consider this: Nisha Madhullika is a 54-year-old housewife in Noida, a suburb of Delhi, who became an avid user of the Internet after her passion for cooking led her to launch nishamadhulika.comin 2007 to share some of her recipes. Her readers repeatedly demanded video tutorials, so she launched her YouTube channel in mid-2011.Her channel is a cooking guide featuring her own recipes as well as those suggested by her audience of 60,692 subscribers which leads to significant revenues.
Meanwhile, the current inventory crunch and the 10+2 ad cap on television have surely boosted the optimism of all who are looking at investing in online videos. They firmly believe that the crunch will lead to a situation where slots for advertising will reduce, making advertising more expensive and unaffordable for small-time and regional players. In turn, they will switch to online channels to advertise their brands.
TV versus online television
So the obvious question is why launch an online digital channel rather than a television channel Well, the initial investment needed to launch a news or a movie channel is R70-100 crore; for a general entertainment channel (GEC), this can shoot up to as much as R200 crore. Now, compare this to the initial investment of around R5 crore required for an online channel featuring original content. The latest players in the domain, Ping Digital and Trendspotters.TV, have put in an initial investment of R6 crore and R13 crore respectively to launch their online digital channel networks. For the latter, the investment is for a period of two years.
The Indian broadcast industry has several entry barriers with the channel distribution cost itself amounting to almost 50% of the total initial investment.Explains Dhruvank Vaidya, headbusiness development and finance, Four Cross Media and business headFameBox, Launching a new TV channel is extremely expensive and even difficult if you are a new entrant. In addition to the high content cost, there are steep carriage fees that channels have to pay. Initially, advertising revenue is small and subscription revenue non-existent. In comparison, it is much easier to launch a digital video channel. Content costs are low and payments to the platform are based on the viewership figures attained.
For the record, FameBox, a multi-channel talent platform for digital media, has launched a new video blog in collaboration with cricket commentator and public speaker Harsha Bhogle. Bhogle will share his views and insights on cricket and its legends on the blog titled Out of the Box with Harsha. The video blog will be hosted on the FameBox cricket channel on YouTube. Harsha will post a new video every week and will also regularly interact with his fans over social media to create conversations around the blog.
Says Anand from Ernst and Young, Online channels are cost-effective as the platforms bear the technology and distribution cost. In the absence of technology, distribution and customer acquisition costs, online channels work well for the content producer. Now, if the content scales to large audiences, it works well for platforms like YouTube.
Again, if a video ad on an online channel costs around R1-5 per view, a 10-second spot on television could range between R 2,000 on a kids channel to R12-15 lakh during an IPL match. Also, unlike on television, there are no commercial-telecast rules online. An ad could be shown at the beginning of the content, in between or in the end. The placement of the ad is completely flexible and not controlled; rather, it depends on how the owner puts the business model for the channel forward. Not to forget, today every bit of digital can be measured real time. So, if the online channel is being watched by only female viewers at a particular time, only women-targeted brands can be placed when the content plays. As a result, each communication becomes more effective.
Window into the future
Online digital channels with focused original content will only continue to grow in the future. With the advent of cheaper smartphones, the cost of experiencing the internet today has slipped to the level of Rs6,000-7,000 from an average Rs25,000-30,000 which is the minimum cost of a PC or a laptop. Consequently, a lot of first-time consumers are accessing the net via mobiles, tablets and iPadswhich are ready for on-the-go consumption. According to industry estimates, currently, smartphone penetration stands at about 30% of the total mobile reach and is growing at a rate of 35-40% year-on-year. India has over 36 million smartphone users as against 60 million PC users. Out of 160 million Indian internet users, 86 million go online on their mobile devices. It is expected that there will be more than 100 million smartphone users in India by 2015.
As a result, there are many content creators who are closely watching the consumption pattern of these smartphone users and working on creating the right content to tap them. Industry insiders note that Optimystix Entertainment-promoted O4 Digital Media is planning to launch 50 fresh online digital channels in the next few months wherein original content will be the nucleus. Optimystix Entertainment, however, was unavailable for comment at the time of filing this report. Meanwhile, Akshay Kumar promoted Grazing Goats Pictures is planning to launch a few more YouTube channels by the end of next year. Earlier, in an interview with BrandWagon, Ashvini Yardi, co-founder, Grazing Goat Pictures had said, Because of the response we got for FOMO, we are looking at starting a couple of more channels on YouTube.
Says Rajeshree Naik, co-founder and director at Ping Digital Broadcast,The latest comScore report observes that the strong swell in mobile audiences, devices and consumption habits suggests that consumers happily switch devices throughout the day and into the night to stay up-to-date on emails, news and social media. This behaviour has to be acknowledged and the hint has to be taken up. Content is content and it will be platform and device neutral.
Today, smart TVs launched by leading consumer electronics brands in India allow users to access several features including viewing movies, opening web browsers for surfing or launching apps that can be downloaded on the TV. This means that online digital channels can be easily viewed on offline platforms as well which bodes well for the future of online digital TV. The boundaries are blurring. People are living in the multi-screen world. There is already a growing base of smart TV owners who are enjoying their favourite content from YouTube on their TV, desktop, mobile and tablets. Content distribution over IP (internet protocol) is the future for all video content and compelling content delivered over IP will find takers across platforms and devices, says YouTubes McDonald.
We are also looking forward to DTH services streaming online content, adds an optimistic Kunal Kishore Sinha.
Today, content has to be device and platform agnostic. As Oscar winning actor Kevin Spacey put it at the Edinburgh International Television Festival earlier this year, Todays new generation of viewers dont see a difference between watching YouTube on a TV, Game of Thrones on a computer or Avatar on an iPad.