Streaming platforms worried that RBI’s new auto payment rules could affect biz

With the 30 September deadline for Reserve Bank of India’s (RBI’s) latest guidelines on auto debit payments approaching, video streaming services are worried about losing customers who may find the new payment procedure tedious. Under the rule, all recurring transactions will require additional authentication. For payments above ₹5,000 a one-time password (OTP) will have to be validated by the customer each time a payment is due. Typically, monthly plans of OTT services are much cheaper but they are still anxious as all automatic payments will need customer approvals once an alert has been sent.

This, analysts said, makes the process cumbersome and affects consumer experience, especially if they have subscribed to multiple services, streaming platforms and media.

Streaming companies feel that at least 10-15% customers, who directly subscribe to streaming services and not receive them as part of telecom company bundles, are a cause for concern as they may not have the time to or choose not to renew subscriptions. This may pose a challenge particularly for niche, language-specific platforms that are only beginning to find their feet.

“We’re anticipating a fall in subscription renewals and payments and there is a lot of concern internally at all OTT platforms,” said a senior executive at a streaming service declining to be named.

The pandemic has already stressed people’s finances and now a broken customer experience may make them forgo their entertainment expenses. Smaller, regional language platforms may be hit more than the bigger foreign video-on-demand (VoD) services, the person added.

Karan Taurani, senior vice-president, Elara Capital Ltd, on the other hand, said the impact could be significant for players such as Netflix, 25-30% of whose overall subscriptions are paid for directly, and not as part of telco bundles that services with lower brand recall prefer. “The other result could be in terms of customers becoming more selective with platforms that offer big-ticket content seasonally, such as Hotstar with the IPL,” Taurani pointed out.

Netflix, Disney+ Hotstar, ZEE5 and ALTBalaji declined to comment on the impact of RBI’s move. Amazon Prime Video, Hungama and Eros Now did not respond to Mint’s queries. DTH (direct-to-home) service providers such as Tata Sky and Dish TV, whose renewals may also be impacted, didn’t respond either.

Calling the new rule regressive, a regional OTT platform owner said the move “would be extremely cumbersome for the consumer, and more so for the businesses which will now need to follow up with users every time a recurring payment is due, adding to the already frustrated consumers’ list of to-dos”.

“With a plethora of subscription plans and a whole bunch of apps, it is difficult for consumers to keep track of their plans and payments, I think something like a consolidated subscription app or renewal system or one gateway would really help,” Abhishek Jain, co-founder of video streaming service OHO Gujarati said, and added that the platform clearly asks customers for consent to the auto renewal feature.

To be sure, RBI had earlier said the move is aimed at safety and security of digital payments and prevention of fraudulent transactions.

While resulting in enhanced security, more transparency, control and involvement of the customer on one hand, the move will affect subscribers who are paying post-paid phone bills (that bundle other services) through auto-debit feature, said Ramesh Narasimhan, head, digital commerce, Worldline India, a company offering payment solutions for physical and online businesses.

While media industry analysts expect OTT renewal rates to decline, the platform owners are expected to introduce more long-term packages instead of monthly ones which may demand higher commitment from users, they said. Other innovations in pricing including offering free bundled subscriptions to retain customers may happen. Live Mint