Streaming services adopt TV strategies for growth
Amazon's Prime Video will introduce ads in India by 2025, targeting family-friendly content to boost ad revenue amid stagnant subscriptions.
From dropping weekly episodes of web shows and increasing content suited to family viewing on their platforms to introducing paid subscription plans which will also carry advertisements, the TVisation of over-the-top (OTT) streaming services seems complete.
In a blogpost last week, Amazon said that starting 2025, Prime Video shows and movies will include limited advertisements in India. “We aim to have meaningfully fewer ads than linear TV and other streaming TV providers. We will also offer a new ad-free option and will share the price of that option at a later date,” it said. Amazon runs a paid service Prime Video and had launched free, ad supported video-on-demand service miniTV in 2021 which was recently rebranded Amazon MX Player after it acquired MX Player from Times Internet. Prime Video declined comment on HT queries on its plans and the challenges facing streaming in India.
Keerat Grewal, head of business development (streaming, TV & brands) at Ormax Media said, so far, streaming has either been SVoD (subscription video-on-demand) or AVoD (advertising video-on-demand). “The new category being launched by Amazon (paid service with ads) is yet to be defined,” Grewal said.
But Amazon’s rationale is understandable. Majority of Indian viewers are not inclined to pay to watch content, Ormax had asserted in its August report on OTT audience universe. Amazon’s announcement validates the Ormax study which said India has 547 million OTT users but active paid subscriptions have remained stagnant at 100 million for the last two years. The growth in the OTT audience universe is driven entirely by the AVoD audience watching free content in small towns and rural India. “Since subscription revenue is not growing, OTT platforms will increasingly rely on advertising,” said Grewal.
However, streaming may not totally mimic TV since platforms will be cautious about how they play out the ads keeping user experience in mind. “Their ad breaks will not be disruptive like TV since digital media has learnings from YouTube,” Grewal added.
Streaming content has seen a subtle shift, too, said Anuj Gandhi, former TV industry executive who is ready to launch his start up in the streaming space. “If you look beyond the political controversies around content, you notice the edginess is off. It is cleaner entertainment keeping family audiences in mind who may be watching the shows on internet-enabled smart TVs (or connected TVs) at home,” he said.
India is adding a million CTV households every quarter to the existing 30-40 million smart TV homes, said Jai Lala, CEO at media agency Zenith India. “The growth is coming both at the top end and in the lower income groups as CTVs become cheaper,” he said.
The content shift is also aimed at expanding the viewer base to get more advertising. “OTTs need ad revenue to become viable. Subscription revenue isn’t enough to cover their content costs given the fierce competition to get the right movies and shows,” Lala said.
Indian media has traditionally been advertising-driven compared to other global markets so the consumers are used to watching ads. Though TV makes money from cable and DTH subscriptions, 70% of its revenue comes from advertising, Lala said. Besides, the advertising cost to reach consumers is among the lowest in the world, he added.
Since digital ad growth rate of 25% is greater than TV’s growth (8%), it is obvious that more brands are looking at digital media for advertising. “It makes sense for OTT brands to tap into this revenue,” Lala said.
However, OTTs face stiff competition from YouTube and Meta that draw bulk of digital advertising. They will also fight against traditional e-commerce marketplaces like Amazon, Flipkart and Myntra and quick-commerce players like Zepto and Blinkit who are attracting more advertisers.
Experts said OTTs will probably pitch themselves as appointment viewing platforms unlike YouTube which is more for surfing. Or probably cite better engagement and stickiness for their content to draw advertisers.
Yet the bigger roadblock is the absence of a common measurement for digital media like BARC for TV. “Honestly, in digital media, the entire universe is the sample size as platforms know exactly who is watching what and for how long. But they usually share only that which suits them,” said Gandhi. For developing a common measurement, platforms will have to give out a lot more information than they are willing to share, Grewal added.