Large gains for OTT in 2021: With theatres likely to remain empty for longer, more producers may release films on OTT platforms

One’s sympathies are with the producers of Sooryavanshi whose release has been stalled yet again due to the surge in Covid-19 infections. Bollywood is desperate for a break after a terrible 2020, but the theatres are likely to remain near- empty for longer than anticipated. A string of recent releases — Roohi, Mumbai Saga, Sandeep Aur Pinky Faraar and Saina — haven’t done too well at the box office and, much like in 2020, many more filmmakers are now likely to release their films on streaming platforms. They have little to lose given they are making good money—digital revenues doubled to Rs 3,500 crore in 2020 — and OTT audiences are growing larger. For the platforms, the good news is that Indians seem to be willing to pay for content. Digital subscription revenues jumped nearly 50% last year on the back of 53 million subscriptions bought, analysis by EY shows.

The absolute numbers might appear to be small, at just 28 million, and the subscriptions are driven, to a big extent, by the craze for cricket and by sachet pricing. But there is a contingent, ten times as large, that devoured the content which came bundled with their mobile data plans. EY estimates this catchment of 284 million also watched content dished out by OTT players — Amazon, Netflix and Disney+ Hotstar, Sony Liv, Zee5 and others. Even if a small fraction of this universe buys full-fledged subscription every year, the numbers could soon be sizeable.

It is possible that viewers would be prompted to buy stand-alone subscriptions if the telcos don’t give them access to all the content they wish to watch; experts believe that some telcos may not be willing to pick up the tab for content for too long, unless they get a share of the advertising revenues. One is not sure how the partnerships between telcos and OTT players will play out, but for their part, consumers may be choosy and be willing to pay only for original content. That would keep the pressure on OTT players to continuously churn out content both in Hindi and other Indian languages. But, with the number of smartphones now nudging 700 million, higher speeds under the new fibre plans, and data-costs having plunged, the potential for OTT players to move into new households is huge; ComScore data for December 2020 showed the reach of online video viewers at 468 million and online entertainment at 450 million. One should also not miss the universe of 32 million Indians living outside the country as also the fairly large dubbed-viewing market within.

That may be much smaller than the 900 million strong television viewership, but given the pace at which online viewership is growing, it may catch up with TV viewership sooner than one might think. Global players seem to have understood the local consumers and used pricing techniques to hook them; Netflix, for instance, has a ‘mobile only’ subscription that is affordable and caters for consumers who probably watch only on their smartphones; sachet-pricing is also helping. On the other hand, prices of cinema tickets are already high and have been rising by about 5% annually while TRAI rules have upset pricing for television channels. The average ticket price for PVR is over Rs 200 whereas a Netflix package can be had for `199. With the window between the time that a film is released in the theatres and shown on an OTT platform now much smaller, at 4-5 weeks, many may be willing to wait rather than shell out Rs 200 for a movie-ticket, unless it is a blockbuster.

The bigger question, however, is how soon advertisers will be convinced enough to move some of their campaigns to OTT platforms. For one, they would want to be reassured about the reach of OTT, calling for some scientifically-measured data. But, more importantly, they would need to assess the purchasing power or pesky power of OTT subscribers. Television can be an extremely cost-effective medium given its reach and when assessed on a per thousand views basis. Moreover, advertisements apparently have a bigger impact when shown on TV screens than on phone screens, which is understandable. Nonetheless, if it turns out the universe of viewers viewing content on mobile phones has, in general, more or even equal purchasing power, advertisers would need to relook their strategies.

News channels and sports channels are least likely to be affected, and big events such as IPL will continue to corner big chunks of advertising. However, the entertainment channels will surely feel the pressure if OTT players continue to spend on content as they are doing now and are able to wean away viewers. As of now OTT players, it would appear, are better placed to spend on content than television broadcasters. And, while they may be spending disproportionately on Hindi content—films and shows—they are not exactly being stingy on regional content. For perspective, the top five OTT players in the US are estimated to have spent approximately $25 billion to create content in the last one year; Netflix has talked about investing Rs 3,000 crore to develop India content. Given production costs are lower in India, experts point out this would allow global players to create content for the digital channel alone and yet be viable. Money talks.