Eros Now, the video over-the-top (OTT) from the house of Eros International, posted a 276% increase in its paid subscriber base to 7.9 million in FY18, against just 2.1 million in 2017. During the same period, registered users grew to over 100 million. It now aims to increase the paid user base to 12-16 million by the end of FY19. Eros Now COO Ali Hussein shares with FE’s Anushree Bhattacharyya plans to further drive subscription revenue besides working with advertisers to earn extra money. Excerpts:
With a large number of paid subscribers belonging to international markets, how much does India contribute to the overall revenues?
Eros Now is predominantly a paid platform. Due to our various distribution deals with both telecom services providers and handset manufacturers such as Apple and LG, among others, the average revenue per user (ARPU) in markets such as the US and the UK are as high as $7.9 and £4.99, respectively. So net extraction from paid subscribers in those markets tend to be higher. ARPU in Indian market varies with the base pack starting at Rs 50 and a plus plan at Rs 100. Additionally we have signed revenue share deals with telecom handset manufacturers and carriers. We pay a distribution fee to these partners, which is a percentage of the overall revenue. India contributes a good percentage to the overall subscriber base as well as revenue.
In India, except Netflix which charges about Rs 650 a month and Hotstar that costs Rs 199 per month, the cost of subscription is a lot less in case of other players and ranges between Rs 50 and Rs 100. Is there a fear that an increase in price would lead to a drop in subscriber base?
The TV industry started by earning two-thirds its revenue from subscription, before increasing its dependency on money coming from advertising. But in the case of OTT platform, which started by earning more advertising revenue, it is now gradually witnessing an increase in subscription revenue. To further increase subscription revenue, we need to change the behaviour pattern of viewers. Viewers currently tend to binge more instead of being consistent. Also we need to solve issues related to payments and curb piracy. The potential for Indian subscribers paying for content is not too far from reality.
How do you plan to recover investments on content, given paid the subscriber base is still low?
The cost of content on TV varies from Rs 5 lakh to as much as Rs 50-60 lakh an episode, depending on the scale. The cost of creating content is high in our case too, as we use popular faces and celebrities, and even the scale of production is high. We are not saying that we will not work with advertisers but we will look at different ways of tying up them instead of running regular ads.
With competition expected to increase as Google may bring YouTube Red — its paid OTT platform — soon, besides Disney too launching its OTT service, where does it place a player like you?
Traditionally the ethos of YouTube is to be a distributor and a content aggregrator. Even if YouTube Red comes, it will be a distributor and they might want to strategically align with us. As for companies like Disney, which has big play in kids category, it will be interesting to see their strategy in mass categories like entertainment.