Early last week, Shahrukh Khan teased his followers with a development related to the world of OTT. He shared an image unveiling SRK+ but did not reveal any further details. Social media and his fans went into overdrive speculating about the launch of a new app or OTT platform from Shahrukh Khan. The confusion was cleared a couple of days later when it was announced that it was a commercial for Disney+Hotstar and not a new OTT platform.
This promotional campaign however got us thinking. Do we need another OTT platform? Will it mean additional exciting content on offer? Or will it mean higher costs? Do we already have more platforms than we can handle or afford?
As per a CII-BCG report titled ‘Blockbuster Script for a New Decade’, there are around 70-80 mn subscribers of OTT platform at the end of 2021. This is expected to increase to 90-100 mn representing a growth of 54% in 4 years. With such strong demand and growth, we have seen various OTT platforms come up over the last 4 years. There are at least 40+ streaming services available in the country today. There are a few more launches expected over the next 2 years. Anushka Sharma production house’s Clean Slate Filmz recently announced the launch of an over-the-top (OTT) video streaming platform in the first quarter of 2023 called Clean OTT focusing on women-driven content.
The choices on offer today are a mix of both Advertising supported services and Subscription based platforms. About half of the revenue generated by OTT providers is from an Ad-based model. However, this is expected to reduce over the coming years with around 55-60% revenue to be generated from subscriptions.
But as a consumer there is only a limited number of subscriptions one household can have or afford. A few studies indicate an average household will have 2 to 3 subscriptions. Given the prices for each streaming service, if a household were to subscribe to only the top 5 streaming platforms (Netflix, Disney+HS, Amazon Prime, Sony Liv, Zee5), it would cost them ~Rs. 600 per month. And even this would not be enough to ensure availability of all content. Also, a lot of these global streaming services are offering plans at a discount of 70-80% as compared to the US. This is being done to drive adoption but will not be sustainable. Eventually, prices would have to be increased or companies would have to look at other revenue generating options. Either way, consumers would have to shell out more from their pockets.
Rising prices of OTT and content fragmented across various platforms forcing consumers to subscribe to multiple platforms may mean that growth of the OTT industry gets hampered. Viewers could be encouraged to go back to accessing illegal pirated content for free. Some users may also look at switching subscriptions across platform increasing churn rates for these streaming services. However, it will be difficult to manage multiple subscriptions at different points for a user. Consumers may also be encouraged to go back to traditional linear TV where they had access to bundle of channels for a reasonable cost.
Although highly unlikely at this stage, it would be disappointing if we witness these trends. Investment in new content on OTT platforms would get restricted. Growth in OTT in India has led to growth in Indian original content (across regional languages). We may see pricing innovations by OTT providers to ensure prices remain in control. Apart from traditional advertisements, we may see sponsored content and interactive advertisements to generate revenue and subsidize subscriptions.
At this point, it would be in the interest of the OTT industry to consolidate to fewer service providers than expanding to new platforms. Tie-ups and collaboration of content will ensure that subscription to 4-5 services provides access to most content. This would encourage consumers to stick to OTT and increase revenues in the long run.
Industry experts would have, thus, heaved a sigh of relief on learning that SRK+ was not a new platform. It was in the industries and consumers best interest that it turned out to be an advertising campaign. As the campaign suggested – Thoda Ruk Shah Rukh. We would like to extend this suggestion to all prospective OTT launches.
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