“We’re all gamblers, we’re all soothsayers”’
Zulfiqar Khan, MD, HOOQ
The burgeoning popularity of Over-The-Top (OTT) content platforms such as Netflix and Hotstar has redefined entertainment for millions of Indians, leading many to wonder if such services will sound the death knell for the traditional TV broadcasting sector. Current trends, however, foretell a different future. TV continues to be big – with 14 and 11 percent growth in advertising and TV subscriptions respectively in 2018. This state of affairs was discussed by leading industry figures hailing from both sides of the broadcast-OTT divide on the second day of FICCI Frames 2019. The panel discussion, titled Dual Screen Addition - Disruptive or Additive: Will Broadcast and VOD Co-Exist? was moderated by Mr. Sunil Lulla, Group CEO, Balaji Telefilms.
With a billion screens across different devices, India presents a massive market-opportunity for the content industry at large – irrespective of the mode of dissemination. Raj Nayak, an eminent media personality, emphatically pronounced that TV was here to stay as large segments of the Indian population, particularly in smaller towns, were accustomed to appointment-based TV viewing as a family. Online streaming, on the other hand, continues to feed personal consumption of content on mobile devices. Fears of a collapse of the broadcasting industry were also dismissed by Gaurav Banerjee, President and Head, Hindi GEC at Star India. Mr. Banerjee cited the example of now disproved claims first made in the 1980s, that the advent of VCRs would lead to the death of movie theatres. Such a perspective is backed by the numbers – audience measurement data proves that the number of homes with TV sets grew by 7.5 percent in the 2016-18 period to reach a total of 197 million.
Moreover, while many believe that youth (aged 15-30) are moving away from TV to consuming content online, viewership data shows that they continue to be the largest contributors to TV consumption (accounting for approximately 32 percent of total viewers). Further, as pointed out by Mr. Banerjee, a large number of households in India continue to remain without TV, representing a massive untapped market, especially in the northern part of the country. Mr. Banerjee also expressed the belief that TV was uniquely poised to cater to families and stimulate conversations in living rooms ‘on values, society, and relationships, as a family’.
TV continues to dominate within certain categories of content. Live content, such as news and sporting events, is consumed overwhelmingly on linear broadcasts. Avinash Kaul, COO of Network18 also drew attention to the rise in the number of news channels, predicting that soon every district in the country will have its own news channel due to the falling costs of delivery, leading to a need for regulation to deal with explosion of news outlets. Regional content is another area where TV networks dominate with multiple channels and a variety of programming available in several vernaculars. OTT services have just begun to create regional content, their penetration amongst regional audiences is far less than that of TV.
According to Zulfiqar Khan, MD of HOOQ, streaming provides much demanded ‘edgy’ content that broadcasters must seek to emulate. However, this view was countered by other panellists. Mr. Nayak pointed out that a large number of people consumed the same soap operas that aired on TV, on OTT platforms. Mr. Banerjee cited the example of one of the most successful shows on Hotstar, Ye Rishta Kya Kehlata Hai, to prove his point. However, he also pointed out that sports viewing was also undergoing changes, with the Indian Premier League being watched in large numbers on Hotstar in addition to TV.
TV Must Adapt to Thrive
At the same time, there is no doubt that the disruption caused by the entry of OTT has led to a reconsideration of the future of the market for television. As advertisers flock to digital media, there are several lessons for broadcasters to learn, to improve their competitiveness as an advertising destination. Despite the fact that TV ad spends are projected to grow substantively in the medium-term, digital advertising will see a much higher rate of growth. Mr. Kaul attributed the attractiveness of digital as an advertising destination to the personal connection OTT platforms develop with their subscribers. Mr. Khan captured the drawbacks of TV broadcasters, saying “they are consumer-facing brands, but not consumer-facing businesses”, referring to the indirect nature of content sales on TV. Conversely, OTT platforms harvest a considerable amount of data about individual customers’ preferences, allowing for insights that are invaluable both for targeted advertising and for content development. Mr. Kaul pointed out that the current system of data analysis within the broadcasting industry, where players use a sample size of 30,000 to generate insights, is inadequate in the modern-era. As such, he stated that broadcasters must take a leaf out of the OTT playbook in this regard to draw more specific and informative insights.
Evolving Business Models
OTT has also had the luxury to experiment with various business models, such as the ad-supported free content, the ‘freemium’ model where some content is available freely while premium content is behind a paywall, and the wholly subscription-based model. Mr. Kaul noted that with the Telecom Regulatory Authority of India’s (TRAI) new tariff order, consumers have greater choice over the channels they consume through TV than ever before. This, he believes, will lead to an evolution in business models as well as the type of content created for TV. Tarun Katial, CEO of ZEE5 suggested that other developments such as the espousal of digital payment applications such as PayTM enhances the feasibility of subscription-based models in India. To illustrate his point he cited the success of ZEE5’s regional packs which allow consumers to access to TV content before it was available on linear broadcasts. Abhishek Nag, Director of Partnerships at Netflix, spoke about Indian consumers becoming more comfortable with the subscription model across services. Further, he emphasised the potential of partnerships between OTT platfoms and telecom operators. Specifically, the trusted system of monthly billing in telecom would make bundling services an attractive proposition for both parties as it would allow them to bolster their subscriber bases and give telecom operators an additional hook to retain customers.
To summarise, while TV continues to enjoy impressive growth rates, it must also find ways to innovate and reinvent itself to effectively harness India’s screen dividend. This can perhaps be best captured in the words of Mr. Vishal Maheshwari, Country Head, VuClip – “TV, as we know it, will die”. Clearly, the future rebirths of TV in India will be premised on sustained innovation.