Year-Ender 2020: How advertising based OTT services upped the ante in increasing reach

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December 31, 2020 8:00 AM

Even as AVoD services have registered a rise in user base this year, the challenge will reside in sustaining the business

AVoD, OTT platforms, advertising based streaming platforms, advertising based OTT servicesWhile subscription based OTT platforms saw a higher growth this year in terms of revenue, AVoD services are critical from the point of view of increasing OTT penetration and driving awareness.

On one hand viewers paid to watch content online, on the other advertising based video streaming platforms otherwise known as AVoD services provided access to fresh content for free. This came handy especially at a time when theatres remain shut and the need to maintain social distancing. “We’ve seen 3x rise in user base and time spent has gone up by almost 7x this year as opposed to last year,” Karan Bedi, CEO, MX Player told BrandWagon Online.

Industry observers believe that the story for AVoD services have just begun in India. While this year saw viewers taking to these platforms, the real challenge resides sustaining the business and continuously the user base. As per the latest BCG-CII report on the media and entertainment (M&E) industry, AVoD is sustainable only at a very large scale and will require 3-5x the subscriber base to break even. Further, besides a few platforms, most of the AVoD services run TV serials and other shows as catch-up content. Hence, even as this attracts ad dollars the money spent is less, when compared to original content. “While the traffic on Voot was fantastic, the first quarter of FY21 was definitely muted in terms of ad revenue as only essential services were present in the advertising space. However, the festive season brought a ton of growth wherein we registered stronger growth in ad revenue than last year,” Gourav Rakshit, COO, Viacom18 Digital, said.

Meanwhile, MX Player, which telecasts original content, claims to have recorded a 4x month-on-month growth in advertising revenue primarily because it is one of the very few platforms which offer original content for free to its viewers. “We registered a rise in advertising revenue this year as not only viewers but also advertisers moved from linear TV to digital primarily because other AVoD services in India only have TV content available on the platform for free. Hence, a lot of the money which is moving from TV is coming to us because we are providing a wider audience base to our advertisers,” Bedi explained.

As per industry experts, while subscription based OTT platforms saw a higher growth this year in terms of revenue, AVoD services are critical from the point of view of increasing OTT penetration and driving awareness. “Overall OTT has seen a significant uptake in usage as opposed to linear TV, which has been beneficial for both AVoD and SVoD. AVoD, however, will take some time to make a dent in advertising pie despite its growth when compared to television advertising. This is primarily because it’s mostly catch-up TV, and hence acts as a second medium right now. As advertisers move digital, AVoD will benefit but the growth rate will probably be a little more muted than SVoD,” Jehil Thakkar, partner, Deloitte, stated.

Read Also: Year Ender 2020: Subscription based OTT platforms deliver a knockout; register a spike in user base

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