The pandemic period and the phase that followed saw the mushrooming of several OTT players in regional languages. Apart from blockbuster movies and web series, regional OTT players provided platforms to small and medium budget movies which couldn’t find space in the content list of global and national OTT giants. But several smaller, regional OTT platforms couldn’t stand the test of time. NeeStream, Heeroz, Cityshor.Tv, Prime Reels – to name a few – are not in business anymore. What explains this?
Jyoti Malladi, Managing Director – Research, Ipsos India points out the reasons behind it. She says, “In the wake of the stiff competition from national and international players who are seeing great opportunity in regional content, retaining subscribers/ viewers is becoming hugely challenging for the regional OTT players. Beyond original new content, tech, pricing and the need to limit OTT subscriptions could be reasons for some smaller regional OTT players shutting down.”
“Low prices may attract a larger audience initially, but if the revenue generated is not sufficient to cover licensing costs, platform maintenance, and content production, it could lead to financial difficulties, which is why a lot of OTT platforms couldn’t sustain in the long run,” observes Siva S, CEO of Malayalam OTT platform- Mainstream.
“Additionally, it might be challenging to compete with larger, established OTT platforms that can afford to invest in premium content and marketing,” he adds.
As per PwC’s report titled ‘Global Entertainment & Media Outlook 2023–2027: India perspective’, OTT revenue has surged in recent years, expanding a further 25.1 pc in 2022 to reach $1.8bn. The report suggests that the OTT market will continue to grow at a CAGR to produce revenue of $3.5 bn in 2027, which will be driven by the competitive SVOD sector. In the current scenario, it is unclear if regional OTT platforms, not including regional language offerings from national players, will have a significant share of this growth.
Some of the regional OTT platforms’ pricing starts as low as Rs.300 annually. Understandably, it is to draw in viewers and grow the advertising revenue. But is running a regional OTT platform viable at their current prices?
“If you look at the regional platforms per se, I think the price points are viable because the content cost in regional OTT is phenomenally low. In terms of broader cost, it will be 1/4th or 1/5th of what the larger Hindi web series would be,” observes Karan Taurani, SVP, Elara Capital.
Elaborating on stagnancy in platform scale up, he says, “One big problem of regional OTT platforms is they cannot scale up. Their paid subscription growth is restricted to one particular geography. It is a matter of time that the content cost moves up for the regional players also because many large global OTT giants are also chasing the regional market in a very big way, in terms of penetration and opportunity. The competitive intensity is very high in this market. If you look at the market, we’ve got 40 OTT platforms that chase subscribers, get customers, retain them, and spend big on advertising. These are the reasons why the regional OTT platforms are not able to make money. Apart from these, there is a large amount of technology cost that’s involved in the functioning of the platforms which is directly proportional to user experience. It is a chicken-and-egg story wherein because they are not able to scale up the subscriber base, they are not able to spend aggressively around the user experience of the platform.”
“Regional content has a wide appeal across the lower town classes and rural regions and this has proved successful for some of the regional OTT players. Original , quality language content is a big draw for consumers and regional OTT players are using this to get new subscribers and retain them too. However national and international players are also investing in regional language content and hence can prove to be stiff competition, more so with a stronger tech and audiences,” says Malladi.
Affordable Plans, Differentiated Content: An Oxymoron?
According to Siva, to make a regional OTT platform viable at low prices, it is crucial to strike a balance between offering affordable subscription plans and providing compelling, region-specific content that differentiates the platform from competitors. Leveraging advertising revenue and strategic partnerships can also play a role in generating additional revenue which will help sustain the platform, he adds.
Anup Chandrasekharan, COO – Regional Content, IN10 Media Network, opines that the current model is unviable.
He explains, “OTT platforms in India are operating in a market where the cable distribution amount is subsidised. It’s a market where supply exceeds the demand. When smaller players come in, it is extremely difficult for them to survive or to bring traction in terms of revenue and viewership. If you look at the cost at which the bigger OTT players are buying big budget movies – close to Rs. 200 crore, which is exorbitant.”
Chandrasekharan suggests a way out for the survival of these platforms. “The way out is consolidation of these smaller platforms. If they are going to chase the generic narrative, then the players will get lost in the crowd. The only possibility of survival is if the platform has a niche offering; then the platform will become a subset of a set. YouTube provides free and dubbed content. The cable operators are providing around 800 channels for almost Rs 200. It is an unviable model, it will be viable if these standalone small players find a character of their own in terms of genres or define the category where they want to operate in. There are so many standalone platforms entering into the market with an aim to raise VC funds. It’s a business where you need to have a content plan for 52 weeks and a broader plan on how to run the platform for not less than 10 years,” he adds.
From a subscriber standpoint, is the content on offer worth the money?
“As far as the subscription pricing goes, it’s entirely dependent on the kind of original quality regional content that will bring in subscriptions. However pricing would need to be competitive for subscribers to stick,” says Malladi.
“The question of ‘worth the money’ depends on what the subscribers are looking for. If you have got a particular set of subscribers who watch that regional content very aggressively, for them it makes more sense to hook onto these platforms. But that niche subscriber base is very small as it is limited to one particular state or geography and the player might not be able to expand that. And within that geography also there will be competitors. Too much content is available on YouTube especially the dubbed content, TV content. Regional that way hasn’t seen strong adoption of digital as compared to Hindi and English which is moving towards digital at a rapid pace,” explains Taurani.
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