Digital media: What is the right revenue model?

Despite India being a price-sensitive market, consumers demand quality content. There is a lot of debate on the right revenue model for OTTs – one that aligns with their target audience while balancing business goals.

Day 1 of FICCI Frames 2023 saw panellists deliberate on the viability of existing business models available for OTTs – AVOD, SVOD, hybrid, and aggregation – and the prospects of new ones, in a panel discussion on ‘Digital Media: What is the right revenue model?’.

Moderated by Pankaj Krishna, Founder & CEO, Chrome Data Analytics and Media, the panellists included:

Ambesh Tiwari, Business Head, Audio & Studio, Pratilipi

Aamir Mulani, Founder & CEO, Playbox TV

Praveen Chaudhary, Director, Retention Engagement & Growth Strategy, DTC Marketing, Warner Bros Discovery, APAC

Amit Dhanuka, Executive VP, Lions Gate

Nachiket Pantvaidya, Ex Group CEO, Balaji Telefilms

Ajay Chacko, Co-Founder, Arré

Nitin Burman, Vice President & Head- Non Subscription Revenue

The panel discussion commenced with Pankaj Krishna discussing the customer acquisition costs for OTT and asking the panellists what works – AVOD, SVOD, or hybrid?

Ajay Chacko responded by saying, “If you look at the last several years, since the boom in OTT in India and the digital media, the business models have changed at least two or three times, it started with the whole SVOD. Then Jio and Amazon bundled a larger offering. If you ask a traditional broadcaster what his revenue is, he will have a different answer from someone who is from the Google tech side or someone who is a creator/ influencer.”

Adding further, Chacko said, “Players at the tech end like Meta and Google and the influencers have their business model sorted – there is value at both ends.”

Aamir Mulani noted, “With a rise in the number of players, the cost of advertising online to acquire customers has gone up, but the model is unsustainable because one is not able to charge for the content to make up.” He made the case for aggregation and bundling instead of selling offerings separately.”

Talking about the challenges, Praveen Chaudhary said, “We are quite convinced of the opportunity. Yes, there are some short term challenges that all OTT players face. In the last two to three years things have improved dramatically with some industry-level improvements.”

Speaking about the big OTT players, Chaudhary said, “Things are evolving. Not all of us need to be at the scale of a Disney+ Hotstar. Each has their place. We need to reinvent only if people are moving away from the content.”

While stating that the current market is a hybrid with VOD, freemium, subscription, Amit Dhanuka noted, “There isn’t one (single) model that is going to be there. Your content investment dictates how your revenue model shapes up.”

The discussion then turned towards JioCinema offering IPL Live streaming on its platform for free. Nachiket Pantvaidya observed, “If you want to be big in India, you need advertising. Post the IPL going free, the Indian consumer is going to say, why pay for anything?”

“The way brands are reaching consumers has changed. Meta’s and Google’s shares have been eaten into by Amazon. Jio has eliminated the intermediaries and acquired the customers by giving IPL for free,” said Ambesh Tiwari.