Getting new subscribers is relatively easy. Retaining them, in the long run, is what’s tricky. With even Netflix unable to figure out the Indian market and planning to introduce AVOD, is this the way forward for the industry?
In cost-sensitive markets like India, people are not yet ready to spend as much on OTTs and hence resort to illegal ways to watch content. This leads to huge losses for OTT platforms that have subscription fees as their main source of income. It’s not that people don’t want to, but can’t afford the huge fee that the platforms demand.
This is where the AVOD model comes into play. The model allows the audience to watch content for free with ads in between. Various OTTs like Disney+ Hotstar and MX Player have been doing the same for quite some time. Data shows this has allowed them to penetrate non-metropolitan markets. The success of the OTT disruptor ‘LockUpp’ hosted by Kangana Ranaut has encouraged its co-producer Alt Balaji to venture into AVOD. Alt Balaji expects AVOD to widen its current sizable rural audience.
With MSMEs flocking to such platforms to advertise, the opportunities AVOD provides are something even giants like Netflix can’t ignore. As per reports, digital advertising has surpassed TV advertising. Digital-first SMEs are now rejecting TV as a viable publicity venue since TV is expensive and ROI is unpredictable.
Does that mean SVOD will be replaced by AVOD soon?
The short answer is no. The earnings from AVOD are unstable. SVOD gives the OTTs a fixed earning that AVOD cannot guarantee. A purely AVOD platform has less scope in metropolitan cities. Hence what most OTTs use is a mix of both. While Disney was the first mover, others like MX Player, Voot, and Alt Balaji have followed suit.
For developing countries, AVOD is a good entry strategy. However, a reasonably priced SVOD plan and inventive strategies to retain the audience are what will prove to be the deal breakers for the platforms in the long run.