OTT is not an easy market to get to scale: Karan Bedi
MX Player has launched over 16 MX Original Series since they first announced their pivot as a video utility service to the OTT business on February 2019. Many of those shows have become widely successful such as ‘Thinkistaan’, ‘Thinkistaan 2’, and ‘Love Ok Please’.
Boasting of a much wider reach than incumbents, MX Player stands at 280 MAUs globally and 175 million MAUs in India. In a short period, they have forged exclusive and nonexclusive partnerships with creators and distributors such as The Viral Fever (TVF), Shemaroo Entertainment, hoichoi, Sun NXT, and broadcasters like Viacom18 and Sony Pictures Networks India.
As an AVOD platform, over 100 brands advertise on MX Player spanning across sectors like FMCG, e-commerce, gaming, Internet companies, etc.
On October 30th, the company received funding of $110 million by heavyweight investors Tencent and Times Internet. The company has already announced its ambitious plans to launch 20 new original shows by March next year.
Karan Bedi, CEO, MX Player, said, “When we decided to take this video utility service and convert it into an OTT business, we didn’t anticipate this degree of success. We are really excited that our thesis has proved right. Everyone in the OTT ecosystem will need to focus on monetisation, but the OTT market is growing hand over fist.”
In an exclusive interaction with Adgully, Karan Bedi spoke about the company’s plans, their growth strategy, and the current state of the OTT environment.
What is the audience segment that is consuming MX Player content?
MX Player has traditionally had a young male audience. That mix has improved a little since we’ve launched our OTT product. We’ve got slightly more female audiences onboard, but we primarily still cater to the young male audience, which is a good zone to be in because this is an underserved audience in the country. If you look at TV today, very few shows cater to young men. Primetime is certainly more focused on the female audience and the older audience, and other shows are mostly for family entertainment.
In terms of reach, Tier 1 markets are important for us as well as any Internet company in India. Interestingly, more than half of our usage comes from Tier 2 and beyond. That’s something we are excited about as these markets are very underserved in terms of content, entertainment and categories.
Do you believe the OTT ecosystem will become a race for content? What are the implications?
If you look at an OTT business of any kind, there are four pillars so to speak – content, distribution, technology and monetisation. Obviously, content is a very important part of that. Content is a huge part of our business and will continue to be a huge part of our business. In terms of race for content, our belief is that demand for entertainment in India is unlimited.
We are finally seeing the population come on to a device where they can consume content. If you look at TV, we only have 200 million TV screens in India. There are nearly 500 million 4G smartphones in India. The sheer number of screens available to consume means that the number of people available to consume has gone up so much. Content will be created for lots of newer audiences, which was never done before. It took some time for the engine to start running in the country in terms of content creation, but now it is running quite effectively and supply for it is becoming streamlined.
You’ve raised $110 million in funding from Tencent and Times Internet. What kind of investments are going into content, technology, and talent?
In terms of investment, it is going in those four pillars I mentioned. I would say in our case, distribution has always been an advantage for MX Player; we already have a very large user base. That’s something we are going to continue to bolster. As you can imagine, a lot of the money is going into content, content acquisition and of course into upgrading and building better technology. By technology, I don’t mean just the app but also improving video compression, personalisation and recommendation systems, user interaction metrics and lots of other things. While it will be spent across all the four pillars, it will be primarily content and technology.
How are you driving the value proposition of MX Player through your various partnerships?
We have a massive distribution base, top notch video compression technology, a sophisticated personalisation technology, and the ability to aggregate demand from the users. We offer our distribution and technology, so it is a win-win deal for our partners.
Any partnership that we enter into has value that is driven both ways. We gain value from their content and our partners gain a huge distribution base for their content which is delivered seamlessly.
How has focusing on the tech front strengthened the value proposition of the platform?
We have the ability to deliver high quality video at a very low data rate. We can deliver almost 9 hours of video in 1 GB worth of data. Our teams have been working actively to re-engineer the compression algorithms and codex. In a manner, of course data has expanded massively all across the country, but because of the nature of mobile data and spectrum, you still have patchy data, latency issues which all of us need to build for.
Secondly, we’ve invested in our recommendation and personalisation algorithms and are able to create a far better experience for the user. I will not say we are perfect yet, but again that’s an area of expertise and investment we are looking at. We have our entire technology stack in house, from our apps to our backend, compression to delivery, it is all built by our teams.
What has been the audience response to MX Player content? What are some of your most successful shows?
We’ve launched 16 original shows on the platform. We’ve got very good feedback and numbers on a few of them. I would say all our content has done well; obviously some have done better than others, that’s the nature of content. A particular one that I can talk about is ‘Hello Mini’, which has done very well for us. One of our first shows, ‘Hey Prabhu’, did very well for us, ‘I’m Mature’ did very well for us. These are three shows in completely different categories and all of them have done well. Similarly, we’ve got ‘Queen’ lined up, which is coming out in two weeks. We are very excited and have high expectations from that one.
Has VOD changed the kind of content that is created?
Absolutely, you have so many different audiences, right? The beauty of video on demand is that you can now watch content anytime, anywhere. The types of content genres, length, number of episodes and tonality in storytelling open unlimited combinations. When we create a show, we view which audience it is primarily aimed towards and try to make sure there is some appeal for it beyond its primary audience as well.
Are you exploring international content for MX Player?
We are doing originals in 7-8 Indian languages. In general, we have content in over 10 languages on the platform, including our original and acquired content. We are looking at international content in a very interesting way. Some of our best performing international content is Turkish and Korean content, which is dubbed in Indian languages. Now we are looking at many countries in the Middle East and Latin America for content. We’ve got International English content as well but we are seeing that our usage in happening in dubbed versions of that content.
There is a large section of India that is not English first. They may be English speaking, but not English first in terms of their content preferences. If you look at any other media in the country, Hindi and regional consumption is much higher than English. Obviously, we will continue to explore content in English and see what the right move is.
While smartphones are growth drivers for OTT, what is your strategy for Smart TV?
Smart TVs are something we are looking at along with everyone else in the market. We are present on Amazon Firestick and Android TV. We will be present on every other platform; it is just a matter of time and priority. We will be present on every Smart TV platform because it is a big growth platform, especially in the Tier 1 and 2 cities. Pretty much any TV you buy today has some Smart capability. As the base of these things grows, we will be present on them.
What is your global strategy?
In our global user base, more than 100 million active users are actually outside of India. We have not started streaming in any of those markets. There are a few beta markets. We certainly aim to be in many different countries and because we have an existing distribution base in many of those countries, we can get there very fast.
Today, we are already live in the US and Bangladesh. Whenever we enter a market, we look at it like a local market. It’s early days, but international will certainly be an area of focus.
Why do you believe a pureplay AVOD strategy will be a winner for MX Player?
The first thing you need for AVOD is scale. In our case, since we have scale, AVOD is a good model for us. We believe that as a market we are not fully attuned to paying for content at scale. That day will come, no one is denying that. We believe that there is huge potential for growth in the AVOD model. Today, if you look at digital video advertising accounts for 50-60 per cent of Internet advertising spends. Since that money is coming into it, we believe it is a good place to be.
What is the growth potential of AVOD?
Today, even the biggest OTT players are not more than half the Internet market in India, us included. Today, we have 175 million active users on our platform, whereas Indian Internet users are probably around 500 million and growing every year. I don’t see why India’s Internet population is not 800-900 million by 2-3 years’ time and why OTT video is not at least 80-90 per cent of that base.
With new players entering the OTT space, how will it affect the ecosystem? Do you envision a TV like scenario in the future?
While there are a number of players in the market today, I don’t think it is an easy market to get to scale. If you look at the number of players who have scale, there are not many. What will end up happening over time is that you’ll see some consolidation. You will see some people go out of business, some M&A (merger and acquisitions) activity happening and some will change their business. We had thousands of TV channels at one point in time, but over time it consolidated into 3-4 large networks. In general, we have observed in any big media market in the world, 4-5 big players emerge after surviving the thriving.
Data prices are going to go up. How do you think this is going to impact the OTT ecosystem?
The news has come out recently, so it is too early to comment. I don’t think there’s going to be a huge impact. Data is now well entrenched into the habit of the user, so we all believe, the telcos and OTT players, that viewership will not come down too much.
What consumption trends that emerged in 2019 as per your data?
A large audience base has emerged, which never had content made for them. Now the systems are all geared to create content for that audience, which is largely young and male. While the content is being adopted by every age group and gender, that audience was largely underserved. Today, a show like ‘I’m Mature’, which is about your school days, didn’t exist earlier.
The movie industry used to cater to this audience. But a big problem in the movie industry is the number of screens available. At any point in time, you can have one big release in India. If you have multiple medium to big size films releasing, you can’t do it over one weekend. OTT has changed that dynamic.
What trends do you observe, going into 2020?
It is difficult to predict. Growth will continue unabated. As we get more distinct content out into the market and with ease of convenience, we will see increased adoption in the lower SEC (socio-economic classification) ecosystem. Growth and diversity of content are going to be the two big things.