Underneath the microscope: OTTs, Business of Content

Authored by Divya Dixit, Business Strategy & Growth Consultant

Numerous facets of life have undergone a significant transformation in recent years, including the digitization of entertainment, education, and even healthcare. ‘The New Normal’, as we call it, is the era of convenience, digital and my time that has resulted in the unprecedented growth of OTT apps, making it the mainstay entertainment platform.

Let’s take a closer look into what’s so enticing about the reigning monarch of entertainment.

AVOD vs SVOD Revolution

The two most basic formats followed are AVOD and SVOD. Both formats are fairly debated in the nature of their working and revenue strategy. As we all know, AVOD or ad-supported video on demand allows viewers to consume free content in exchange for viewing the advertisements, enabling platforms to have a simple methodology to monetise their work. While there is a chance of user churn, advertisers are getting creative to create commercials that are more personable, intriguing, and amusing. Additionally, the concept enables stakeholders like marketers and content producers to reach a larger audience base.

SVOD or subscription video on demand allows OTT consumers to have an entire content library at their disposal for a fee, a range of high-quality, ad-free content for fair pricing. It is actually the SVOD-based platforms that heralded the era of great Original content to lure the audience on their platforms and pay subscription fees. Furthermore, it is the exclusivity of the content, the ad free user friendly experience and the great UI with personalized messaging that allows a deeper relationship between the platform and the viewers. The SVOD model also enables content producers to demonstrate the unique narratives to viewers for which digital content was launched in the first place.

How OTT Platforms Create Revenue

Along with the AVOD and SVOD business models discussed above, I have found that the third model which is freemium and is fairly capturing the fancy of platform owners, now with Netflix and Amazon prime video also toying with the idea of launching ads on their lower subscription models. This is a hybrid model where OTT platforms put a certain library of content composing of Catch Up TV, Old classics from the globe etc for free (AVOD Business) and the premium content which is largely Commissioned originals, Movies that are new from Hollywood/ Bollywood/ Tollywood and Dubbed International shows o SVOD, of late even real time reality shows have debuted on hybrid models, namely ‘Lockupp’ at ALTBalaji and ‘Bigg Boss’ on Voot.

The fourth format that yet has to gain clear traction in India, however, fairly rampant globally is TVOD that refers to Transactional Video-On-Demand. In such a format, customers make a one-time purchase to access only specific premium content time based available as rental on certain OTT apps. Terms such as PPV (pay-per-view) or PPD (pay-per-download) are often used for such models. This is mainly to entice the fence sitting customers as he/she only pays a fraction of the amount for the content that they watch, instead of paying subscription for the entire library and avoids long term commitment.

And then there is a vanity badge model, where you pay a small extra sum as part of subscription fee to watch it ahead of masses, which is done largely by network led OTT platforms. But let’s remember the value of the business is best understood when the Customer is willing to pay for your product/ offering. To me, that is the real acid test.

Content that works for OTT

OTTs are heavily dependent and driven by content, it is impossible to keep an OTT space standing without excellent, premium quality content backing it up. Simply put, as cliched as it sounds, Content Rules. With the revolution of the entertainment sector and OTT emerging as the giants in the business, governments across the world have started putting a lens to the guidelines monitoring the content consumed by the masses. Variety, premium conception, good quality and execution is perhaps a definite mantra for a successful OTT journey. Users tend to flock to the channel which produces premium quality, exclusive content.

Since there is a massive variety of age groups and interests, an OTT creator can go unique with their concepts and usually find an audience for their work.

Not being repetitive with the kind of stories that make its way to an OTT platform can help tremendously in retaining users; but more than that stories that are relatable are welcomed by viewers. Of course, there is a whole strategy that also falls in while launching an original content work, whether its defining AVOD/ SVOD/ Hybrid route, defining the audience, budgets, Performance targeting, binge watch or episodic drops, influencers strategy to macro or microblast, creating FOMO, Social media hashtag situations, etc. The idea is to make Content work maximum to enhance brand value of the platform, monetise the product and enhance library value.

OTT trends for 2023

Keeping a close eye on the upcoming trends is essential for it gives the players and surrounding economy an understanding of what they can expect out of the forthcoming year. As the year progresses, the OTT sector will prioritize user experience over all with the great competition rearing its head. Content wise, unique originals from OTT platforms will rule the roost, along with short format snackables emerging on the side keeping in mind the little time people have nowadays. Connected devices TV will grow in content consumption and thereby guideline the content pipeline for OTT ecosystem.

If the OTT platforms wish to deep root themselves within Indian masses, they will need to pay attention to hinterland audiences and their content mindsets as the rural market will claim the growth curve in the upcoming year. As the influencer marketing & micro influencers become a Rs 2,200 crore industry by 2025, OTT platforms will have to integrate live social commerce via influencers to monetise their content further. OTT platforms shall see a deeper integration of AI and ML technologies, as data produced will be superior guiding hyper personalisation.

Audio OTT platforms will also see a tremendous growth from their presently existing Rs 8,000 crore industry figure, making it a good option for fund investments and audience stickiness. There shall be a more focused emerging curve towards organic retention in terms of marketing, with CRM, surveys, retention tools, recommendation cycles, SEO, UI/UX as major browser giants such as Google turn to a cookieless future.

Gaming and Metaverve will continue on their steady growth curve, using their Web3 model to redefine sports via OTT, however, will need more support on infrastructure and brands trust, immersive, high quality content for all sectors and ages.