The Indian Premier League (IPL), the biggest cricketing event in a country crazy about the game, began last week. The bets are that not just Sony, which owns the TV broadcast rights, but also hotstar, rival Star India's video app, will rake in the moolah. Star owns the digital rights to the IPL. Sports, especially cricket, remain the biggest traffic driver for video apps such as hotstar.
This dependence on sports along with monetisation is the biggest challenge that the deluge of video apps face.
Voot from Viacom18, Sony LIV from Sony and Viu from PCCW are among the dozens of apps already out. ALT Balaji from Balaji Telefilms and Arre from UDigital among others are in the pipeline. Some of the world's largest telecom, technology and media firms are spending anywhere between Rs 100 crore and Rs 500 crore to find viewers in one of the world's fastest growing video markets. Of the 319 million internet users in India (according to the Telecom Regulatory Authority of India figures last year) , about 170 million are estimated to have smartphones that allow them to watch video. In 2015, online video got over one-fourth, or Rs 1,500 crore, of the digital ad pie.
As India hurtles towards the inevitable cycle of glut and consolidation, content and business models will determine the few players that could rule this business in the future.
Take content. Without enough sports or compelling live content, keeping people from deleting an app remains a huge challenge. Many of the apps claim 10 million, 20 million or even 50 million "download" numbers. But only a fraction of the downloads become active users. The rest either delete the app or don't bother with it. The active users watch short videos, news and sports, not long-from content. Without a rise in the viewership of long-form content (films, full-length shows), time spent and, therefore, revenues won't go up substantially.
You could argue this is a matter of evolution. As 4G rolls out, speeds will improve and long-form content will take off. That, however, is not how it works out. "As signal quality goes up, the large-screen experience matters more and more," says Anurag Dahiya, head, content and advertising sales, Singtel. More than 90 per cent of Netflix's viewership in the US comes from big screens accessed via home broadband, which is dominated by cable TV firms. In India too, many of these apps will need to ride on existing broadband pipes - whether cable or telecom networks - if they want serious traction. As a device, the mobile will continue to lead in sports and live events, though.
The business model challenge depends to a huge extent on the kind of players entering the arena.
The first set is broadcasters such as Viacom18 and Star, who have a captive audience. A video app is a low-cost initiative for them in terms of marketing and content costs. Whether audiences will come to these brands beyond catch-up TV or live events is moot. Also, the whole point of video-on-demand is aggregation from across the spectrum of choices available a la iTunes. Why would viewers come to a brand that offers them content, largely, from one source?
The other set is pure aggregators such as Spuul or Viu. They are tech-savvy firms that understand video technology and how to package and tag it best. But their marketing and content costs are higher because unlike broadcasters they do not have a ready audience to reach out to.
The third set is firms such as Balaji, Eros, Netflix and Amazon. These are focused on creating content. Some such as Netflix start with an existing base, others don't.
The dynamic between these three sets of players and their ability to rise above their industries is critical. More than five years back telecom operators were serious media players, with ringtones and music bringing in profitable slices of revenues. But their cussedness on keeping 70 to 80 per cent of content revenues pushed creators to look for and find ways - such as apps and off-deck services - to bypass them. Technology players, on the other hand, are more global and collaborative in their approach.
Then again, media players have what look like natural advantages. But one look at history and you know that doesn't matter. Every new media format has had a new leader. The leaders in radio did not come from print and neither did those in TV. Digital is now dominated by Google and Facebook, who were rank outsiders when the internet took off. For all you know online video might end up creating an entirely new set of winners we haven't even thought of.
Twitter: @vanitakohlik
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