The Connectere brings forward the mind’s eye and panoramic view of the young writing enthusiasts on various topics

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OTT

How do OTT Platforms make Money?

“I’ve been binge-watching a show on Netflix!” It’s not to difficult to believe that almost everyone belonging to Gen Z has heard this or, for that matter, said it themselves. But how does our binge-watching help these Over-the-top (OTT) Platforms?

With the industry expected to grow at a CAGR of 16.7% from 2018 to 2025 and the global OTT market projected to reach $332.52 billion by 2025, it is easy to conclude that all of us now have a respite from the soap operas and access to some “original content”. With our daily language being full of phrases like “Prime-time” or “Netflix and chill”, the extent to which these platforms have garnered the support of people is immeasurable.  

With the influx of desktops, laptops, mobile phones into human lives since the IT and the Jio Revolutions, as well as affordable and efficient 4G data services, something like this was not completely unpredictable. Netflix was launched in India in January 2016 and it has never looked back since then, while Hotstar already had control over Star Sports broadcasts which includes not just badminton, hockey or cricket, but also the coveted IPL. Initially gaining footfall from the sports enthusiasts since they then could watch sports on portable devices absolutely for free, the officials at Hotstar knew what they should capitalise on and hence launched a sports-subscription model.

Owned by the Sony Television Group, Sony Liv, started putting up its shows on the platform. Driven by shows like The Kapil Sharma Show, La Liga and the Champions League, the audience was a mix of demograhics, including kids, teenagers, middle-aged and the elderlies. 

Amazon joined the club in July 2016 with the launch of its Prime Membership in India. Starting with stand-up comedy, it eventually went on to produce original content just like its older rival, Netflix. Another platform, Alt Balaji, was launched around a year later with completely Indian shows. 

And the list goes on with Voot, Zee5, Eros Now, TVF, Disney Plus, Viu, even YouTube along with hundreds of others who challenged the much-pedestalized Television. With not much delay, Amazon launched its Fire Stick and brought more than 20 platforms on the television screen followed by other competitors. 

In a place where people own more smartphones than televisions, every OTT Platform has tried to reach out to people even in the remotest of places through these mobile devices, thus targeting a larger audience and higher viewership.

With the pandemic going on, a surge in the number of users is evident, and their huge popularity across the globe has led the silver screen to go online too. But unlike the cineplexes which offer the viewers to watch a movie in accordance with a fixed schedule, these platforms capitalise on Video-on-Demand (VOD) business model, which creates a divide, a divide that not only makes people watch whatever they want to but also whenever they want to, a divide that helps these platforms outweigh the cineplexes. 

The first model under the VOD is the basic Subscription Model. Platforms like Netflix, Prime and many others allow users to access all the videos available on these platforms for a regular subscription at equal intervals depending upon the company’s and the customer’s preference. Once subscribed, that is, once the viewers have paid the fee, they can watch as much as they want for the stipulated period of time. 

The other model is the Advertising VOD. It is basically the monetization of some services meant to be shown as an advertisement which is made available to the absolute end-consumer free of cost but is charged upon by the hosts or these platforms like YouTube, FilmOnX, etc. from the advertisers.  

Another model is the Transactional VOD which is, more or less, the opposite of Subscription VOD in the sense that here, the customers pay for a particular piece of content on a pay-per-view basis. There are two sub-categories; one where the customer can get a permanent access to the piece through electronic sell-through and the other is one where the customer can download to rent the piece for a relatively smaller fee but also for a certain period of time. Apple’s iTunes and Sky Box Office are some of the major companies running this model. 

But, what is better than one particular model? Two, of course! In practice, there are also models that contain multiple VOD models in themselves too. The audience can choose to watch only the free videos or pay a fixed subscription fee for a certain period of time and an additional fee too if they want to watch some brand new releases that command a fee other than the fixed subscription. The current leaders in the market are Hotstar, Amazon Video and Sky. 

The models are changed taking into consideration the preference of the consumers. While Netflix offers a shared account, Hotstar offers a sports-only version and Sony Liv capitalizes on daily or weekly subscription too.

These platforms put in a lot of time and money to acquire the rights to telecast content produced by other production houses. This could mean that some of these OTT platforms also run on an initial negative cash flow since they are able to garner funds only after these have been telecast, which are later translated into profits. 

These platforms are still mushrooming and would continue to mushroom for quite some time since the market is growing exponentially but only if the content is good enough. As it goes, “Caveat Venditor”!

Retail

Retail Apocalypse

When well-known retailers close large numbers of stores, we take notice. Parents couldn’t miss it when “Toys R Us” went bankrupt. Whether or not you’ve shopped at a “GAP” lately, you certainly know it has shrunk massively, and that “Victoria’s Secret”, “Barney’s”, “Macy’s”, “Shopko”, and other stalwart brands have shuttered many of their locations. Some chains are flirting with total closures. Others (farewell, “Radio Shack” and “Bon-Ton”) have already disappeared. Some of the United States’ most prominent retailers are shuttering stores or declaring bankruptcy in recent months amid sagging sales in the troubled sector.

DONG

Stories of Transformation – ØRSTED: Fossils to Renewables

DONG (Danish Oil and Natural Gas), a Danish firm, was one of the most coal-intensive energy companies in Europe. It was well-recognised and was considered as one of the eminent developers of coal-fired power plants in Europe. With such feathers on its cap, it decided to take a major turn by undergoing one of the most radical transformations the business world has ever seen. A firm that started off as an oil and gas producer rebuilt itself strategically into an offshore wind farm and got itself a new name “Ørsted”. This article takes you through a firm’s dramatic transformation from being a disruptor in the global ecosystems to a pure play renewable energy company; from fossils to renewables. 

Philips

Stories of Transformation – Philips: Lighting to Healthcare

The company Philips reminds us of lighting and electronic products immediately, and that is because they were known for these categories of their products for more than a century, but not many of us are aware of the change from lighting to healthcare in Philips’ business model. Today, if you visit Philips’ website, the first thing you would see is Philips highlighting their role in making the world healthier, their involvement in healthcare solutions and technologies for medical treatments. So, how exactly did this change from lighting to healthcare go about and why? Let’s know a little about their history first to understand their recent change in focus.

Ecolab

Stories of Transformation – Ecolab: Cleaning solutions to Environmental solutions

We’ve all heard that it’s never too late to do things differently; never too late to do the right thing. Although true, I feel this is also the reason that it is easier for us to procrastinate and not undertake challenges in the present. It is the same in the business world as well. However, the fact is, it might soon become too late to make certain changes; for instance combating climate change. Now, there are a few companies out there who saw an opportunity for making a difference, and took the leap. One such company is Ecolab. Almost a century old company, Ecolab transformed itself and went from providing cleaning solutions to environmental solutions. It successfully created a new-growth business model in renewable energy and water resources, outside of its traditional business of industrial cleansers. This secured Ecolab a place on the Transformation 20, a study by Innosight of the world’s most transformative companies. Let’s take a deeper look into their story of transformation. 

vodafone

The Vodafone triumph is a deplorable setback for India

The Permanent Court of Arbitration (PCA) at The Hague has ruled in the favour of the Vodafone Group in its decade-long battle against the Indian income tax department’s tax liability demand for Rs 22,100 crore that brings us to the transaction in 2007. The case begins with Hutchison Telecommunications International Limited (HTIL), a mammoth telecommunication service provider in countries like Indonesia, Sri Lanka and India, based in Cayman Island. CGP Investments (Holdings) Ltd, a subsidiary of HTIL,owned 67 % stake in Hutchison Essar Limited which is an amalgamation of Hutch and Essar. One day, HTIL decided to sell the Indian shares and say goodbye to India. In its search, HTIL found Dutch-based   Vodafone International Holdings and insofar Vodafone agreed to pay $11.1 billion to HTIL, Hutch Essar became Vodafone Essar.

In September 2007, the Indian tax authorities termed the structure of this  multi-billion dollar transaction as a tax avoidance scheme and slapped a demand notice on Vodafone seeking capital gains tax of $2.1 billion on  the sale of Indian assets and the profits earned in India. But this wasn’t approbated to Vodafone as the transaction took place between  CGP Investments and Vodafone International Holdings. Is this legit to tax a transaction between two foreign companies?

Indian tax authorities and Vodafone dissent over this fact. The latter approached the Bombay High Court, presided then by Justice D.Y. Chandrachud, which ruled in favour of the IT department. Vodafone was miffed and proceeded to challenge the High Court judgment in the Supreme Court, in 2012. The Supreme Court in 2012 set aside the high court judgment, considered the transaction a share sale rather than asset sale and ruled that Vodafone did not have to pay any taxes for the stake purchase as its understanding of the Income Tax Act of 1961 was veracious. The same year, then Finance Minister, the late Pranab Mukherji , thwarted the Supreme Court’s ruling by proposing an amendment to the Finance Act in March 2012: income arising from the sale of shares or units shall be deemed to accrue or arise in India even if the transaction had taken place outside India, and its value depended primarily on assets in India, thereby giving the Income Tax Department the power to retrospectively tax such deals.This means that the tax department has the authority to reassess transactions dating back to 1962. The Act was passed by Parliament and the setback fell over Vodafone which seemed to many as Tax Terroism. Globally, the investors considered the change in law to be “perverse in nature” and criticized the amendment. On account of the international criticism, India endeavoured to resolve the squabbles amicably with Vodafone,but failed. In 2014, the Vodafone Group initiated arbitration against India at the Permanent Court of Arbitration(PCA) at Hague, it had done so under Article 9 of the Bilateral Investment Treaties(BIT) between India and the Netherlands. Article 9 of the BIT says that “Any dispute related to the investment activity arising between the countries under the contractual agreement will be resolved cordially through negotiations.”

On 25th September 2020, the PCA ruled in favour of Vodafone arguing that India is guilty of breaching the guarantee of fair and equitable treatment (FET) laid down in Article 4(1) of the agreement between Netherlands and India for the promotion and protection of investments (1995) and it must stop further efforts to recover the said taxes from the company.Does this mean Vodafone is no longer liable for any tax penalties?

 From the sources it is known that the government of India has been asked to pay compensation of about Rs. 40 crore rupees to Vodafone which is 60% of the tribunal’s administrative cost while the rest 40% of the cost would be borne by Vodafone and to refund the tax collected so far ( from Vodafone), which is about Rs. 45 crore.Therefore, the total onus would be around Rs. 85 crore only. India’s Finance Ministry said that “It would carefully study the award, together with its lawyers. After such consultations, the government will consider all options and take decisions on further course of action including legal remedies,”

 

Will India prima facie accept the obligations? Or will it fight back to proof itself infallible?

 

The options left with India now are either to appeal the decision in one of Singapore’s appeal courts or simply choose to not honour the verdict at all. After all, India has always contested that a tax demand such as this cannot be dodged by a foreign court i.e. if the legislators pass any law, then all entities within the state are bound to honour it. Foreign courts have little jurisdiction here. The only pitfall is that if the government disregards the ruling entirely it will lead to violation of India’s international law obligations. Hence, India’s reputation of being an attractive  investment destination will be at stake.

 

Can we consider this controversial dispute to be the end of all the future arbitration claims? Not really. India is involved in dozens of such engagements like these including a 10,000 crores demand from Cairn Energy over retrospective tax claims and cancellation of contracts. If India fails to foist its claim on legal grounds, it would ostensibly end up paying billions of dollars in the damages. India has already ended such agreements with over 50 countries to reduce the arbitration claims.The country should rationalise the laws by offering reliefs to foreign investors and  restore the right to tax them. It is the Indian government’s responsibility to ensure that the foreign investors respect the rule of law and peace and harmony prevails in its relation with the foreign countries. It’s high time for India to bring transparency in its laws so that in future no investor gets obfuscated by the provisions stated in Income Tax laws.

This article has been written by Pranjal Ritolia studying B.Com. Honours from Shri Ram College of Commerce.

online event

ONLINE EVENT MANAGEMENT

Today, events prove to be an inborn segment of the entertainment industry as well as the corporate culture. It is valued at billions of dollars. The mayhem caused by the novel Coronavirus made the economy face the brunt of this menace and obviously the event industry couldn’t be a stranger to this trend. As the lockdown was announced, outdoor gatherings came to an absolute standstill. Though organizing events on the ground required a different skillset altogether, going online also has its own perks. There are ideas that are costly to implement outdoors but are cheaper online with the help of animation. It has become essential for everyone working in event industry to brush up their skills and acquire new expertise to keep up with the ever changing world. This article completely revolves around online event management and how successful it has become today.

digital fitness

DIGITAL FITNESS

INTRODUCTION

Formation of Multi-National Corporations (MNCs) is constantly examined to assess and determine the status of economic development in a country. Nonetheless, the contribution of small businesses has always been crucial all along. According to The World Bank, Small and Medium Enterprises (SMEs) contribute around 40% of the nation’s GDP in emerging countries and 60% of national employment. Small businesses consist of sole proprietorships and partnerships that are commonly privately owned and have fewer employees and overall revenue. 

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