Ad revenues: Digital, OTT stealing the show, televisions channels losing appeal

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October 26, 2020 7:03 AM

Analysts at KPMG estimate digital ad revenues will shoot up to Rs 29,200 crore in FY22, ahead of television channels who are estimated to make Rs 25,800 crore

Barring Dil Bechara, all other direct to digital releases are behind a pay wall.Barring Dil Bechara, all other direct to digital releases are behind a pay wall.

They may enjoy an enviable reach of 830 million viewers but with streaming platforms becoming increasingly popular, the business of television channels could be under pressure. Between FY16 and FY20, advertising revenues grew at a compounded 9% but this year they will touch just about `21,700 crore. That’s a shade lower than the `22,300 crore which the digital- OTT sector is expected to earn. The storyline is unlikely to change next year; analysts at KPMG estimate digital ad revenues will shoot up to `29,200 crore in FY22, ahead of the `25,800 crore that television channels will make.

Although there are an estimated 183 million television households in India, experts point out that the original programming created by OTT platforms is varied and enormously popular and is winning them big audiences. As such, they believe it is worth acquiring new films even if these are expensive since it could help cement the relationship with audiences. On the other hand, the bulk of the programming on entertainment channels comprises soaps and serials. As Jehil Thakkar, partner at Deloitte India points out, OTTs currently are in customer acquisition mode and may not be looking for returns from various properties but TV channels will typically measure if they were able to convert a film into a profitable venture or not.

OTT players have acquired and streamed many of the new films during the lockdown. Reaching into their deep pockets, Netflix, Amazon Prime Video and Disney+Hotstar— have offered producers a good price for their films; few television broadcasters have the financial wherewithal to acquire content at these prices.

“Since the nature of TV subscription revenue is largely bouquet- led, it is not always feasible for a channel to premiere a film,” an executive with a leading broadcaster told FE on condition of anonymity.

Barring Dil Bechara, all other direct to digital releases are behind a pay wall. Rajib Basu, partner at PWC estimates digital advertising revenues will surpass those of television by CY2023. “Advertisers are shifting media budgets to digital channels in tandem with the spike in consumption since the lockdown, Basu said. Raghav Anand, segment leader, digital media at EY, believes that given the growing digital audiences, OTT platforms may also look to overshadow the broadcast window.” Bengali player Hoichoi has decided that in certain cases, it will first stream a film on its platform before it is aired on TV.

Analysts at EY had observed earlier this year that English language viewers in particular, may have been incentivised to move to OTT platforms post the NTO (new tariff order) which made them more affordable and allowed them the luxury of ‘anytime viewing’ without advertisements. Not surprisingly, paid video subscriptions increased to 21 million in 2019 from 7 million in 2018 and are expected to top 30 million in the current year. In contrast, active paid television subscriptions fell by a considerable 26 million in 2019, of which an estimated 0.3-0.4 million subscribers are understood to have shifted to OTT.

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