By Pankaj Lamba
According to PwC’s Global Entertainment and Media Outlook 2019-23, the over the top (OTT) media services market in India is slated to grow at 21.8 % CAGR, from Rs. 4,464 crores in 2018 to Rs. 11,976 crores in 2023. Meanwhile, FICCI-EY Report 2019 suggests the market will reach Rs 24 billion by 2021.
The prospect of such staggering growth is a strong indicator as to why so many new OTT players have emerged over the last few years. Every other day, we read about a new player launching OTT video on demand services. And this is despite the stiff market competition, primarily dominated by Netflix, Amazon Prime, Disney+ Hotstar, Zee5 and Eros Now. India alone currently has more than 40 OTT media services players.
For any new OTT media services provider – or for that matter, any OTT player – to win customers, retain them and grow their audience base, they must focus on three key goals: quickly increasing reach; rapidly adding content; and introducing innovative business/pricing models that can attract customers from all segments. Notably, these are all key aspects of customer experience at which Netflix and Amazon Prime excel.
Increase reach, quickly
The fastest way for any new OTT to enter a new market is to partner with a mobile or fixed-line telecom operator (carriers). Indeed, according to a recent survey conducted by Ovum, all OTT media service providers that Ovum spoke to said that “partnership with telecom operators is the quickest and most cost-effective way of penetrating new markets.” The survey also highlighted that OTT players can significantly reduce marketing and advertising spend by piggybacking on the marketing capabilities of carriers.
Most OTTs today pursue two main routes to market: direct-to-consumer (D2C) and business-to-business-to-consumer (B2B2C). Consistent with the survey, OTTs in India view carriers as the best partners for the B2B2C business model. Whereas the cost of acquiring a user in the D2C model is very high, partnering allows them to freely showcase content to hundreds of millions of carrier subscribers. It also adds to content discoverability, making it a lot easier for a new player find their audience. Indeed, Ovum found that many new players didn’t have to spend anything on marketing during the first one to two years of launching services. It was simply enough to ride on the success of their partners. For some OTTs, such partnerships are also a way of benefitting from the brand equity enjoyed by each carrier in their own home market. Specifically, a carrier’s endorsement portrays an OTT as more trustworthy and therefore, worth spending money on.
Tapping into a carrier’s direct billing relationship with millions of users is also an important driver – especially in markets with low credit card penetration.
Rapidly update your content repository
To win an audience, you need content. So, when an OTT launches a service or enters a new market, they need to build an exclusive repository of compelling content. The key however, lies in keeping that content fresh. Rapidly updating their repository is one of an OTT’s most daunting challenges. Content creation requires significant investment, and it comes with the risk of audience rejection. The best solution to overcome this challenge is to partner with a third-party content aggregator and distributor. Such players allow OTTs to circumvent the risk of having to source and update a content library on their own. Aggregator-distributors’ core competencies lie in aggregating and licensing thousands of movies and TV shows from all major production houses, studios and networks in multiple formats and languages, and then delivering them across screens, devices and platforms – enabling OTTs to continually add new content based on audience preferences.
Make content accessible and affordable
For any new player, content discovery plays the most important role in winning viewership. A user who does not find good content on their provider’s app is unlikely to return unless exposed to compelling content via advertisements.
AI-based intelligent systems play a crucial role in enabling OTTs to understand their audience’s likes and dislikes. While the platform might have some great content, users may rarely discover it. Yet when made accessible via an intuitive interface, faster navigation and intelligent searches, content discovery becomes easier and customizable based on each users’ preferences. It also allows the provider to offer a wide variety of recommendations, including synopses and trailers that can help a user decide.
Finally, wide reach and great content won’t make a dent in a highly competitive market unless you innovate with your subscription and pricing models. The Ovum study revealed that 60% of Indian respondents cannot afford OTT paid media subscriptions. With the average monthly subscription costing Rs 306, this is beyond reach for most families. Yet the good news is that 69% of the respondents expressed a preference for the pay-per-use model over monthly or yearly subscriptions. The benefit of such a model is that it is much more affordable, allowing families to access preferred content (even only once-off) across OTT platforms without purchasing a subscription. To reduce costs further, providers can also experiment with personalized ads. Here too, the Ovum survey found that Indian viewers don’t mind sharing personal data or viewing ads in return for reduced OTT cost, with 70% having no issue with watching ads if it would make OTT content affordable.
The author is regional vice president and customer business executive of Amdocs.