“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”!