OTT platforms tap into growing hunger for local content among Indian audiences

The success of the first season of the series, an adaptation of the Vikram Chandra novel, tells us two things.

One, viewers in India are hungry for strong, differentiated content. Two, while the bouquet of licensed TV catch-up shows —from 'Game of Thrones' to 'Narcos' to 'Breaking Bad' —is a big draw for India's English-speaking urban youth, the universe of non-English users in search of good content is much larger.

This is the opportunity Over-The-Top (OTT) platforms such as Netflix, Amazon Prime Video, ALTBalaji and Voot are looking to cash in. Their game plan: create quality, local original content.

About Rs 2,500-3,300 crore has been committed to creating original content over 3-5 years across the 30-odd OTTs in India, according to Deloitte’s Technology, Media and Telecommunications Predictions 2018 report.

Amazon Prime Video has committed the largest stake through an investment of Rs 2,000 crore to acquire the rights of Bollywood films and produce local original content.

“What we've learned from customers is that it’s very important to reflect their tastes and preferences for stories. We understand the importance of being locally relevant. And to do that, we have not just stepped our local content, but local originals as well. The high concept stories, gritty dramas, character based thrillers, are also stories consumers are not only waiting to consume, but also comment and share,” said Vijay Subramaniam, director and content head, Amazon Prime Video India.

Amazon Prime Video will end the year with six originals including ‘Breathe’, ‘Inside Edge’, and its comedy reality series ‘Comicstaan’. In 2019, the company will produce ten new originals.

After Sacred Games, Netflix will bring three new Indian originals with its horror series 'Ghoul' starring Radhika Apte releasing on August 24.

Netflix has outlined around $8 billion for content worldwide for 2018 and India, its fastest growing market will receive a lion’s share of that. Unlike other OTTs, Netflix’s local originals are produced to cater to global audiences.

Which brings us to the question: what is the size of the opportunity OTTs are chasing? The answer: Rs 5,600 crore.

According to PwC India’s Global Entertainment and Media Outlook 2018-2022 report, the OTT segment is currently worth $400 million (Rs 2,760 crore) and is growing at a CAGR (Compound annual growth rate) of 22.6 percent.

Aided largely by local original content, India will be among the 10th largest OTT markets by revenues by 2022, accounting for revenues of $823 million (Rs 5,680 crore).

Regional content, which presently accounts for 40 percent of the viewership on OTTs, will provide a huge push as the base of vernacular users grows 2.5 times that of English users by 2021, according to Deloitte’s TMT report.

“India is not an urban speaking English market, it is largely a Hindi and non-English speaking language market. We quite believe in this wide chasm between Naagin and Narcos. Narcos, which caters to urban India is niche and will have a potential of 100 mn viewers. Hindi and other languages, which are the mainstays, will have a potential of 900 million viewers and which is where our focus will be,” said Manav Sethi, chief marketing officer, ALTBalaji, referring to Colors’ popular supernatural show ‘Naagin’.

ALTBalaji, owned by Balaji Telefilms, is set to invest Rs 500 crore over three years to add 50 originals, including those in Marathi, Bhojpuri and Tamil.

Currently, they have 22 shows including two in Tamil and Bengali.

Monika Shergill, executive vice president and content head, Viacom18 Digital Ventures (Voot) said India’s local content market is very underserved right now, “This can only mean good things because it means there’s that much space to create for them. We are working overtime to create a slew of big scale long format originals, both in Hindi and languages across the network.”

Voot, which presently has 10 Hindi and English original shows, will be adding shows in Kannada, Marathi and Tamil.

Viu, which launched 9 originals this year, is launching 20 more by the year, with 6 in Tamil. SonyLiv, which has Marathi and Gujarati web-series, now plans to enter into regional short films.

Zee Enterprises-owned ZEE5 presently offers seven original web-series, 3 Hindi short films and regional web series in Telugu, Tamil and Malayalam. By March 2019, ZEE5 aims to host over 90+ original shows.

This flush of local original content on OTTs is expected to significantly drive up subscriber numbers in a market that is seeing 100 percent jump annually.

Data by Counterpoint’s December 2017 Research report shows Hotstar has the highest number of monthly active users at 75 million, followed by Voot at 22 million, Amazon Prime Video at 11 million and SonyLIV and Netflix at 5 million each.

ALTBalaji has a total subscriber base of 18 million, which includes 4 million paid users.

While OTT video viewers in India are expected to grow to 355 million by 2020, considering the rate at which the broadband connectivity is growing currently, this number may grow at a faster pace, said Deloitte’s report.

This brings us to OTT revenue models. Revenue models vary greatly. For Netflix and ALTBalaji paid subscribers are the sole revenue stream, while for Voot, advertising drives its revenues.

Hotstar and SonyLiv follow hybrid models. While ad-free platforms may be a feature today, experts say the dependence on advertising for revenues will only grow in the future.

“I don't think too much subscriptions will go to all platforms, some may like Netflix, but in India the consumer is not used to paying for content. So their reliance on advertising will increase as time goes by,” said Ashish Bhasin, chairman and chief executive officer-South Asia, Dentsu Aegis Network.

Deloitte's report says the digital advertisement market size is currently pegged at Rs 18,400 crore. This is expected to nearly double to Rs 35,400 crore by 2020, cannibalising revenues from TV, radio and print.

While advertising may not be on the cards yet for some OTTs, brand integrations as a way to monetise the platform have begun.

“(Brand) opportunities can get created looking at the content OTTs bring on board. They could be full-fledged, i.e. content devised like a full show or series based on what a brand requires. Or it could be subtle or actual placements based on the opportunity a show has,” said Deepak Netram, senior vice president, Lodestar Universal

“The amount of data being churned will allow brands to really figure out who is consuming an advertisement at what time at which place, and in what context. That has never happened before. So you will increasingly see lot of seamless brand integrations,” said Sethi of ALTBalaji.

“We are in fact evaluating a technology which is called dynamic ad insertions where you don't have to pre-ingest an ad. While we’ve continuously said we would like to be ad free till the foreseeable future, subscription remains the mainstay to drive revenues, there are technologies available or emerging in the ecosystem which is helping both brands and OTT platforms,” he adds.

While brand integrations are coming to the fore, OTTs realise that force-fitting a brand into a storyline, or integrating too many brands, can be a recipe for disaster.

Sethi of ALTBalaji said, "We’ve never don’t brand integrations in the past. Now that we are getting interest, our shows have acquired the scale, there is a lot of brand interest."

"So far as these brands are not conflicting in the narrative, it fits perfectly in the storytelling the way Ekta (Kapoor) wants it to happen, we can consider. The brand can’t be a superlative to the storytelling. At the end of the day the story has to go to the consumer, in a way that it is not force-fitted for a brand.”

That said, for OTTs, creating rich local original content it is not free from challenges. The first challenge is to find and target the right audience.

Without the right audience, the best of content will fail to garner a response.

The second challenge is to create stories that will compel viewers to come back to the platform episode after episode. A third big challenge? - Surprising as it may sound, it is finding the right talent.

Shergill of Voot said, "The biggest challenge is talent. As a market we are not ready to feed the demand. It’s almost like it’s a hungry beast. And you've got to feed the beast. When I talk about talent, I'm talking about writing talent, editorial talent, performing talent. The money is there (to attract talent), but to service the demand you need a certain level of talent.”

Talent management agencies feel it's a matter of time before the mismatch between the demand and supply of talent is bridged.

Vijay Subramaniam, co-chief executive officer of Kwan Entertainment and Marketing Solutions, a talent management firm, feels the number of OTTs will eventually consolidate with traffic flowing to the top 5 OTTs.

As top-rated OTTs grow stronger in content, quality talent will gravitate towards these platforms.

Another area that is also assuming importance is censorship and litigation.

At present, internet content in India enjoys great freedom as it is outside the grasp of India’s censor board.

However, a scene in Sacred Games where former Prime Minister Rajiv Gandhi is referred to as a 'Fattu' (a Hindi slang word for a coward) saw Netflix being dragged to court, stirring up a debate on the freedom of expression.

Should court cases become commonplace, experts feel the overhang of internet censorship could be a big spanner in a wheel that has only just caught speed.