Cautious optimism: OTT players adapt to changing trends

India’s over-the-top video streaming platforms, which began scaling back investments in 2022 following rising global pressure on their parent companies, and sluggish subscriber growth, remained cautious in 2023.

While commissioning of original content has slowed, with the pending Zee-Sony merger and uncertainties surrounding the sale of Disney’s India assets, many platforms are playing it safe by securing big star films to ensure returns, and experimenting with shows that release episodes regularly, similar to traditional television, to keep audiences engaged for longer durations while cutting costs due to subscription and advertising pressures.

Services are also diversifying offerings with free content, and recognizing that relying solely on subscription may not be sufficient.

JioCinema led the way by making IPL and local language programming, such as new movies, available for free, Disney+ Hotstar offered premium sports events at no cost to mobile users, while Amazon operates a separate free service, called miniTV.

Besides, in response to rising content creation costs and increased competition, Netflix and Disney+ Hotstar are taking steps to curb password sharing while others such as Prime Video raised fees earlier this year in pursuit of improved monetization. “As far as spends on digital go, which remains the next frontier of growth, better long-term picture has emerged post covid on consumption trends,” said Gaurav Banerjee, head of content for Disney+ Hotstar, and Hindi-speaking markets, entertainment network, Disney Star.

The audience for OTT platforms rose by 13.5%, reaching 481.1 million in 2023, up from 423.8 million in 2022, according to a recent report by media consulting firm Ormax. While this growth rate is significant, it falls short of the 20% surge seen in 2022. Ormax underscored the significance of this growth, especially in light of the fact that the penetration in rural areas and small towns, constituting a substantial portion of the population, is at a modest 23%, compared with the nationwide figure of 34%. Yet, the challenge for OTTs lies in determining if consumption can grow beyond top 20 cities.

Operation over the past five years provided enough data and insights on what is working with audiences and what isn’t, giving them a clear picture on where to spend more and where pullback was required, said Banerjee.

Disney+ Hotstar’s big focus will be on regional content sitting alongside Hindi programming and reality TV which mirrors SonyLIV’s strategy. Saugata Mukherjee, content head, of SonyLIV acknowledged an impending spending correction for most players, though SonyLIV has maintained fiscal prudence. “A lot of people were working on a lot of things, and even the focus on storytelling was getting diluted. But days of throwing money at shows are over. We don’t want to do too many shows, but the ones we do, we want to do well.”

To be sure, the going is tough for several entities in the OTT ecosystem currently. Many small-time producers who had created independent web series for streaming services are struggling to find buyers as subscriptions plateau and platforms spend less on content, preferring to work with more mainstream production houses. Amid the uncertainty around Zee-Sony merger and lack of clarity around the sale of Disney’s assets in India, the focus on content commissioning has slowed and several producers are simply holding on to projects in the hope of things easing out next year. Moreover, advertising isn’t really turning out to be the golden goose it was meant to be.

“AVoD is a huge game but cannot match current costs. Government policies have killed nearly 25-30% of advertising revenue, such as that coming from gaming. Start-up funding too has dried up. All of this in a year when monetization has anyway suffered with sports rights going free. It’s not a particularly good story,” Anuj Gandhi, media analyst and founder of Plug and Play Entertainment, a media tech startup, said.

The other challenge with AVoD models is to figure out how much to put behind paywall, and while initial users can be acquired via free models, profitability can only be achieved via subscriptions, said Sourjya Mohanty, chief operating officer of EPIC ON, the OTT platform owned by IN10 Media Network, said. “Going forward, platforms will have to invest in AI to personalize and customize recommendations better for users. Content, too, will have to become more customer-centric, and cater to all taste clusters instead of only few stories finding relevance out of overall libraries that money is spent on,” Mohanty said. Live Mint