Monetizing content on OTT platforms

The rise of Over-The-Top (OTT) streaming services has transformed the way people consume content. With millions of users worldwide, OTT platforms have become a significant part of the media and entertainment industry. Monetising these services is crucial for their sustainability and growth. According to data from PwC’s Global Entertainment & Media Outlook 2021–2025, global revenues in the OTT sector surged to $58.4 billion in 2020, marking a remarkable increase of 26.2 per cent.

When talking about the difference between AVOD, SVOD and Freemium monetisation models of OTT, Sanjay Trehan, Advisor, PwC India, believes that all three platforms are currently deployed based on the ‘horses for courses’ strategy and they are effective depending on the quality and differentiation of the content that is being offered.

“The more exclusive and differentiated the content, the better it will be for the SVOD model. Having said that, while SVOD may extract a premium, it may also lead to the narrowing of the audience base, hence most platforms and publishers are looking at a hybrid model, except NYT, which is now closer to having 10 million paying subscribers because of the sheer quality and diversity of its content. In the streaming platforms, Netflix is a prime example of value creation through the SVOD model even in a price-sensitive market like India,” he said.

Nitin Jai Shukla, Founder and CEO, OMTV, noted, “The Indian market presents a unique landscape for streaming services, as evidenced by Netflix’s attempt to establish a profitable model. The emerging trend in India is a move towards a subscription-supported model, a topic that has garnered significant attention.”

“Netflix, for instance, recognises that a purely subscription-based approach might not thrive in India. The reason behind this lies in the Indian audience’s historical reluctance to pay for content. In the past two decades, we have transitioned from free-to-air television to cable TV, and the concept of paid subscriptions is relatively new and primarily embraced by urban audiences. The prevailing notion among Indians has long been that content should be free. This sentiment extends to ad-supported models, which, while popular, may not cultivate true audience loyalty. Once viewers have endured advertisements, they expect on-demand content to be readily available. However, users who have paid for content are more likely to return for value-added content, as they have already made an investment. The freemium model appears to be the most successful approach in India, wherein a portion of the content is accessible for free, and premium content requires payment. Hotstar started this trend, which was later adopted by SonyLIV and ZEE5, serves as a prime example of this model’s success in the Indian OTT space. Many other platforms are also adopting this strategy, offering a mix of free and premium content to cater to a broader audience,” Shukla added.

Manas Gulati, Co-founder and CEO, ARM Worldwide said, “In the Indian streaming market, subscription-based, ad-supported, and freemium models each have their own distinct effectiveness. Ad-supported platforms are successful in India because many consumers are accustomed to advertisements and are hesitant to pay for content. Subscription-based models work well for the demographic that is solely interested in quality content and does not enjoy interruptions, such as Gen Z and millennials. However, because India is a price-sensitive market with an abundance of alternatives for free content, subscription-based models continue to face challenges. This is where freemium models can serve as an initial catalyst for transitioning users to paid subscriptions and eventually targeting them to convert as paid users.”

The Jio cinema disruption
While a new player in the Indian market, JioCinema is already reshaping the OTT landscape by challenging traditional revenue models and introducing new paradigms.

Sanjay Trehan explained, “JioCinema’s strategy is truly disruptive in more ways than one. It is keen to acquire eyeballs, rapidly scaling up and looking to dominate primarily on the strength of its initially free model and the premium global content that it is acquiring through its partnerships with HBO and NBC Universal. Its aggression is its strategy. As you may know, JioCinema achieved an unprecedented 32 million concurrent viewers for the last IPL finals, a record of sorts. One sour point, however, with JioCinema, as pointed by a large number of users, is the poor quality of its app that suffers from ‘buffering’, leading to a disappointing UX, especially in bandwidth deficient environments.”

Nitin Jai Shukla noted, “JioCinema has made a significant and disruptive entry into the market. They offer both ad-supported and premium content, but to capture a substantial user base, they have strategically provided premium shows for free upon login. This move altered the landscape dramatically. Even during the IPL season, where Hotstar traditionally dominated, JioCinema shifted the paradigm. Currently, JioCinema boasts of the highest number of downloads and is poised to overtake others in terms of presence, currently holding the third or fourth position. They are making inroads into international and urban elite Indian audiences, who prefer ad-free viewing and are willing to pay for English content. They have also hinted at moving more content into the premium category in the near future.”

Adding further Shukla said, “In the streaming industry, it seems that JioCinema has been a game-changer, and they appear to be unwavering in their strategy. While there is some competition and consolidation happening, like the recent acquisition of BCCL rights by Viacom18 and JioCinema, most players continue to focus on creating compelling and relevant content for consumers. JioCinema has undoubtedly made a significant dent in Hotstar’s subscription base and disrupted its position as the market leader. This sentiment seems to be the prevailing mood in the market. However, other major players in the industry are pursuing their individual strategies and plans and, overall, are not significantly impacted by JioCinema when compared to other industry giants.”

“The advent of platforms like Jio Cinema has ushered in a significant transformation in how Indian audiences consume content. Jio Cinema’s strategic move to offer free sports content in the years 2022 and 2023 has not only attracted viewers from various other OTT platforms but has also reshaped user habits. Even those who were initially hesitant to pay for OTT content are now showing increasing interest, indicating a rising demand for OTT services from all over the nation. In terms of monetization, this shift is redirecting revenue towards major players in the country’s streaming industry. Simultaneously, it’s creating opportunities for regional and local platforms to flourish in the future. Moreover, partnerships with international giants like HBO and local players like Voot are enriching the content landscape. This fusion of global and local content offerings is deepening the audience’s reliance on OTT platforms, promising an exciting future for the industry.” said Manas Gulati.

Factors driving the success of particular monetisation models in India
Currently, the driving force behind the Indian audience’s preferences is primarily content, and market dynamics are rapidly evolving. With the increasing adoption of smartphones and growing penetration in rural and Tier 2 and 3 cities, the focus of content creators and platforms has shifted to cater to these demographics. In the past, platforms like Netflix primarily targeted the urban elite and saturated that market, reaching nearly 70% of its consumers. To expand their reach further, they are now targeting a larger audience in Tier 2 and 3 cities.

“India is a very price sensitive market. Having said that, Indians are increasingly being open to paying for quality content and a seamless UX, and are not willing to put up with poor UX. From being resistant to subscription models, Indian consumers are now paying for good quality content, more so once they begin to see value in terms of the content bouquet and the seamlessness of the streaming experience,” pointed out Trehan.

He conjectured, “OTT platforms in India would ultimately move to a predominantly SVOD model while retaining AVOD model for not-so-premium content. The hybrid model will remain for a long time as OTT play will continue to attract new viewers.”

Nitin Jai Shukla added here, “Amazon’s shows like ‘The Family Man’, ‘Mirzapur’, and ‘Guns N Gulab’ are primarily aimed at Tier 2 and 3 cities to tap into the monetisation potential of these areas. Urban India has already been well-penetrated, so the emphasis now lies in reaching and engaging the masses. The key factor driving this change is the content itself, especially content that viewers couldn’t easily access on traditional television. Recent examples like ‘Gadar 2’ and ‘The Kerala Story’ have become massive hits in Indian cinema, and many significant productions are now focused on the drama genre. The rest of the content is readily available on OTT platforms, and monetisation is expected to come from advertising support in Tier 2 and 3 cities. Considering that not everyone in these areas can afford a subscription model, platforms are aware of the importance of ad-supported content to reach a broader audience. In essence, a combination of ad-supported and premium content models will continue to shape the Indian streaming market, allowing platforms to cater to diverse audiences and monetise effectively.”

According to Manas Gulati, “Numerous factors influence the success of particular monetization schemes in the Indian market, and User behaviour and Interests are key among them. Younger demographics like Gen Z and millennials, as well as popular sports like cricket, are more likely to contribute to overall revenue. Additionally, market dynamics are quite important too, with higher income strata more inclined towards paid content than others. With a diverse population in India, Ethnicity-specific regional content and collaborations with local content producers and creators are fostering the creation of culturally relevant content that has become pivotal in shaping the popularity of OTT platforms. Furthermore, the advent of affordable mobile data and widespread smartphone adoption has also contributed to access to digital content, which eventually leads to driving monetisation.”

The hybrid model
The concept that anything given for free lacks value holds relevance, especially when considering the changing landscape of OTT streaming in India. Traditional television relied on free-to-air content funded by advertisements, while consumers paid for cable services. However, the shift towards free content on OTT platforms is a relatively recent development, and its long-term sustainability remains an evolving topic. OTT platforms are increasingly adopting a strategy centered on acquiring a broad and diverse user base by offering free content. This approach enables them to establish a substantial viewership, which can later be monetized through advertising.

“The Indian Premier League (IPL) serves as a prominent example, drawing a massive audience to the platform. By incorporating advertisements during IPL broadcasts in the digital space, these platforms can generate substantial traction and revenue. Live events, including spiritual content, darshans (religious events), concerts, and pageants, represent another avenue for OTT platforms to attract viewers and monetise their offerings. These events command dedicated and engaged audiences, making them attractive for advertising and sponsorship opportunities. Many OTT platforms are leveraging such live events to diversify their revenue streams. This strategy of monetising through advertising and live events is consistent across various OTT platforms. Sports, in particular, plays a central role because it has the potential to draw a large and passionate audience. Whether it is sports like Kabaddi, cricket, football, or other popular events, OTT platforms recognise the potential to generate revenue through these properties. Additionally, cultural and entertainment events, such as religious gatherings, travel shows, and special productions like Annie, Bubba GR, and Guru Ji’s programs, are being explored as monetisation opportunities,” Shukla noted.

He pointed out that the strategy of using free content, advertising, and live events for monetisation is gaining traction in the Indian OTT market. Sports and live events are at the forefront of this strategy due to their ability to attract and engage audiences effectively, making them valuable assets for revenue generation. This approach represents a shift in the OTT landscape as platforms adapt to the unique dynamics of the Indian market.

On the other hand, Sanjay Trehan opined that the hybrid model is the way to go in the fast-growing Indian market. “The seasoned viewers, having tested the waters, will be open to paying for premium content while the new users will get to assess the bouquet of content t being offered by the ad-supported model. So, it works well for both the parties with some limitations on content for the new users,” he added.

“Within the Indian OTT landscape, a hybrid approach that combines subscription-based and ad-supported revenue models emerges as the most sustainable strategy. Subscription-based models provide premium experiences, along with exclusive content, appealing to users willing to invest in these offerings. Simultaneously, the ad-supported content segment thrives by capitalising on India’s diverse economic strata and the necessity to serve a broad spectrum of viewers. A larger audience has also been attracted to creative pricing methods that some platforms offer in collaboration with telecom providers. These creative pricing methods offer affordable subscription tiers that can further bridge the gap between paid and free content, ensuring long-term sustainability in the Indian streaming industry.”Noted Manas Gulati.

Cultural & economic diversity and monetisation
OTT platforms are strategically shifting their focus towards regional markets, continually expanding their content offerings to attract and retain dedicated regional audiences. This approach not only enhances their monetisation potential, but also contributes to the rich tapestry of cultural content available to viewers across India.

“Hoichoi, a Bengali OTT platform, and Aha, a Telugu OTT platform, have successfully attracted paying subscribers who seek content tailored to their regions. These platforms recognise the importance of providing content that reflects the unique tastes and sensibilities of their audience. Furthermore, major OTT players like ZEE5 and Amazon Prime Video have also recognised the significance of regional content and have integrated it into their platforms. They understand that it is not just about offering a vast library of content; it is about catering to the diverse cultural preferences across India. For instance, Amazon Prime Video has emphasised its commitment to providing content in multiple Indian languages, such as Telugu and Tamil.

Technology plays a pivotal role in facilitating this regional diversity. Advanced streaming technology enables platforms to curate and deliver content that is specific to different regions, said Nitin Jai Shukla.

He further added, “Monetisation in the context of regional audiences is primarily driven by subscription models, as viewers in specific regions are more inclined to pay for premium content that aligns with their cultural and linguistic preferences. While ad-supported models also play a role, subscriptions remain a significant revenue source. Overall, these OTT platforms are strategically focusing on regional markets and continually expanding their offerings to attract and retain a dedicated regional audience. By doing so, they not only enhance their monetisation potential, but also contribute to the rich tapestry of cultural content available to viewers across India.”

Sanjay Trehan noted, “Given the cultural and economic diversity in India and the heterogeneity of its marketplaces, streaming platforms are adopting a dynamic approach in Indian markets. Hence, they are deploying premium, ad-supported, and freemium models to address viewers at all levels of the content consumption pyramid.”

Emerging trends or technological advancements
The future of monetisation models for streaming platforms in India is likely to be influenced by several emerging trends and technological advancements. Nitin Jai Shukla listed some of these:

Interactive Features: Apps like Astro Talk, with live interactive features, allow users to engage with astrologers or other experts in real time. This interaction can include chatting with astrologers and making payments via UPI, making the process seamless. Charging nominal fees for such services has led to millions of downloads and a substantial user base.

Exclusive Content: Some OTT platforms offer exclusive live darshan experiences or specialized content that users can access for a fee. This caters to a niche audience interested in spiritual or exclusive content.

AI-Driven Interactions: AI-powered chatbots, like the ones you mentioned (Chat GPT, Yogita GPT), enable users to seek advice and information. Monetization plans might involve transitioning from free to paid services once a substantial user base is established.

Gaming Integration: Some platforms have ventured into gaming, incorporating ads and rewards within games to monetize. Users may watch ads to revive themselves in games, creating additional revenue streams.

User Feedback Rewards: Platforms are exploring models where users can provide feedback on content in exchange for rewards. These rewards can be converted into real money or used to offset subscription costs, incentivising user engagement and interaction.

Branded Content: In-place branding within content, such as product placements and brand integration, is gaining popularity. Brands collaborate with content creators to seamlessly integrate their products into the storyline, providing an indirect form of advertising that feels organic to the viewer.

Ad-Supported Platforms: Ad-supported platforms continue to be a reliable way to monetize content. Brands pay for advertising slots within the content, and this revenue helps cover content production costs while providing free access to viewers.

“Looking ahead, I can see a growth in Connected TV consumption, where they will need to figure out cogent monetisation models that go beyond YouTube ads, a spurt in subscription largely fuelled by the quality and premiumness of the content offering, a seamless viewing experience aided by 5G, and an overall growth of the streaming market, both in terms of viewers and moolah. So, the future augurs very well for the monetisation models in the wireless streaming industry in India, because it largely frees the country from the last-mile connectivity limitations and will help unleash the true power of Bharat,” concluded Sanjay Trehan.

OTT monetisation models are at the heart of the streaming industry’s success, but they come with complex dilemmas that require careful consideration. Service providers must navigate these dilemmas to find the right balance between profitability, user satisfaction, and sustainable growth. Ultimately, the choice of monetisation model and strategy should align with a service’s unique goals, target audience, and content offerings. Adapting to changing market dynamics and user preferences will remain essential as the OTT landscape continues to evolve. Adgully