Buyers aren’t worrying too much about how much it will cost to buy or create content since that’s what will attract more viewers. As Sameer Batra, CEO, Wynk, says, this is a big investment phase with everyone creating and buying content.
Digital platforms are attracting more advertising revenues each year. Last year, they attracted 27% more advertising than they did in 2016, and at Rs 9,303 crore, the amount was just short of 18% of total ad spends. As Pitch Madison pointed out in its study, the television segment, which has for years commanded the lion’s share of advertising notched up a growth in ad revenues of just 4.3% growth. To be sure experts had been correct in their forecasts the rise in ad spends on digital platforms would be swift; the pace of the change in viewing patterns, with a shift away from television to smaller screens, is taking everyone by surprise. Bank of America Merrill Lynch analysts had forecast that digital’s share of ad revenues will hit 26% by end 2019. At the end of 2017, the share was shy of18%.
India now has a total number of data users of 500 million compared with 254 million a year ago. Powered by its cricket content, Hotstar now counts 100 million users compared with 63.4 million a year ago. Hotstar reported a revenues of Rs 186 crore in FY16 — its first full year of operation — a filing with the registrar of companies (RoC) showed. The biggest beneficiaries of the consumers increasing preference for OTT (Over The Top) platforms are the content creators.
Buyers aren’t worrying too much about how much it will cost to buy or create content since that’s what will attract more viewers. As Sameer Batra, CEO, Wynk, says, this is a big investment phase with everyone creating and buying content. “Creating compelling content is the only way to create stickiness. Hence, the cost of acquiring or creating content currently isn’t so important because the idea it to build substantial scale,” Batra explained.
Gopa Kumar, EVP, Isobar India — a digital agency says as the volume of content increases on these platforms so does the number of users leading to an increase in advertising revenue. Archana Anand, digital head, ZEE5, says the platform was launched with 6 original programmes including three web series and three short films. “We plan to launch one web series every month across languages. Additionally we are reconstructing the existing library of shows by turning them into web series with episodes of 20 minutes. We will also break them down into editions and seasons instead of putting up the old shows taken from the TV network,” Anand says.
The cost of producing a 24 minute-episode for a Hindi fiction series is around Rs 5-6 crore. The cost is not very different if a similar episode is being produced for a video OTT platform. However, on television a GEC show runs for as long as three-four years, whereas on an OTT platform these shows are broken up into seasons, with 9-10 episodes per season. ZEE Entertainment Enterprises (ZEEL), which shut down its two old OTT platforms — Ditto TV and Ozee and replaced it with ZEE5 in mid-February, is looking to turn profitable in two years from now. Sony Liv claims it turned profitable in FY17. Uday Sodhi, head – digital business, Sony Pictures Networks (SPN), said the business turned profitable in the fifth year of operations. “This was possible because our user base grew and we were able to monetise the content,” Sodhi said. On average, the cost of a 10 second advertising slot on platforms like Hotstar and Voot, ranges between Rs 400-Rs 600 CPM (cost per thousand impression) while a similar slot on YouTube costs between Rs 200-250 CPM. The Pitch Madison report points out that Facebook and YouTube continue to dominate the video advertising space, along with OTT platforms such as Hotstar, Voot and SonyLiv.