OTTs wary as RBI auto-debit rules may hit business

The pandemic has already stressed people’s finances and now a more onerous customer experience may make them forgo their entertainment expenses.

Video streaming services are worried as the September 30 deadline to implement Reserve Bank of India’s new rules on auto debit payments nears. Over-the-top (OTT) platforms fear they will lose customers who may henceforth find it more tedious to make payments.

Typically, OTT services’ monthly plans are cheap but the platforms are still anxious as all automatic payments will require customer approvals when an alert is generated.(Aniruddha Chowdhury/Mint File Photo))

Under the new rules, all recurring transactions will need additional authentication. For payments exceeding ₹5,000, a one-time password (OTP) will have to be validated by a customer each time a payment is due.

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Typically, OTT services’ monthly plans are cheap but the platforms are still anxious as all automatic payments will require customer approvals when an alert is generated. This would make the process cumbersome, affecting consumer experience, especially if they have subscribed to multiple services, executives at streaming platforms and media analysts said.

Streaming services feel that at least 10-15% customers, who directly subscribe to streaming services and do not receive them as part of a bundle package with a telecom operator, may either not have the time to renew their subscriptions or choose not to do so.

“We’re anticipating a fall in subscription renewals and payments, and there is a lot of concern internally at all OTT platforms,” a senior executive at a streaming service said, declining to be named.

The pandemic has already stressed people’s finances and now a more onerous customer experience may make them forgo their entertainment expenses. Smaller, regional language platforms may be hit more than the bigger foreign video-on-demand (VoD) services, the executive said.

Karan Taurani, senior vice-president, Elara Capital Ltd, however, expects the impact to be significant for players such as Netflix, 25-30% of whose overall subscriptions are paid for directly, and not as part of telco bundles that services with lower brand recall prefer. “The other result could be in terms of customers becoming more selective with platforms that offer big-ticket content seasonally,” Taurani said.

Netflix, Disney+ Hotstar, ZEE5 and ALTBalaji declined to comment on the impact of RBI’s move.