Decoding OTT Subscription Pricing in India
Decoding OTT Subscription Pricing in India
+ Kickstarting a debate on "radical change" for media companies' survival
Hey Streamers 👋,
A warm welcome to the 33rd edition of the “Streaming in India” newsletter, your weekly news digest about streaming players, OTT trends and more in one of the fastest growing video markets! Appreciate your support and in case there are topics that we might have missed out so far, we are open for suggestions and feedback. If you are not already a subscriber, please sign up and join 2,700+ others who receive it directly in their inbox every Wednesday.
+
Accenture announced the launch of its Media Thrive Index to assess the impact of reinvention strategies on media and entertainment companies’ ability to succeed financially and strategically in an increasingly challenging industry. We will reference this as we analyze this newsletter’s topic on pricing strategies of Indian OTTs as it corroborates a lot of our own opinions and theories on how streaming destinations need to “re-invent” to not only survive but also thrive.
Neeraj Sharma, MD and Lead for Accenture’s Media industry in Growth Markets, said, “While the media industry is growing, the industry players are not. This essentially means that the value is shifting elsewhere. It is amply clear that incremental actions taken with a survivalist mentality will not help media companies thrive in the future.”
“For media companies, the need of the hour is to place big bets, go where consumers want to be while exploring new avenues of growth, redefining new roles in the entertainment value chain, and tapping new sources of revenue,” Sharma added.
Today’s program:
OTT Subscription Pricing in India
Options for additional revenues
My Views
And….Action!
OTT Subscription Pricing in India
Note that OTTPlay offers 9 OTT app and 150 live channels as part of it’s annual subscription of Rs. 360 per year, Watcho is at 14 OTT apps bundled for Rs. 1,599 per year and Tata Play Binge offers 26 apps bundled for a price of Rs. 3,588 per year just to give you an idea of the bundled offerings by three of the better known OTT and content aggregators in the country.
Jio Cinema is an ad supported platform for it’s Indian content including all the live sports, however has an annual subscription of Rs. 999 for the Hollywood bundle which includes HBO content.
The cheapest regional language app is AAO NXT in Odiya from the state of Orissa, Eastern India, at Rs. 299 per year and the most expensive regional content app is Adda Times which is a Bengali OTT platform from the state of West Bengal.
The other two big names in OTT, Zee5 and SonyLIV are at annual subscriptions of Rs. 699 and Rs. 999 respectively. One can argue that given the depth and diversity of Zee’s content library, a Rs. 699 / year price point is great value sitting at the mid section of the overall pricing table (and assuming that Netflix at Rs. 5,988 is an outlier).
At some point Fancode (one of the larger sports OTTs in India) will have to re-evaluate their all you can watch annual pricing strategy which is at Rs. 999, given that Jio Cinema is offering all live sports for free and ad supported.
ALTT and Ullu, both offering majority of erotic / semi-porn content showcase pricing which reflects the state of play and business dynamics at each of these company.
ALTT is at an annual subscription price of Rs. 250 and Ullu (with an upcoming IPO) is at Rs. 495 (almost double of ALTT, however with surging popularity).
From the South Indian OTT stable, ManoramaMAX (Malayalam) and aha (Telugu) charge the same annual subscription price of Rs. 899, coming in higher than SunNXT (Tamil, Kannada, Malayalam & Telugu) at Rs. 799.
Amazon Prime Video and Disney+ Hotstar are tied for annual subscriptions at Rs. 1,499. Hotstar’s current pricing might not justifiable given that they don’t have IPL now, however all that is set to change with the new JV.
The average annual subscription cost across 31 OTTs (leaving aside Tata Play Binge and Netflix) is Rs. 735 OR $9.
This is only $0.75 per month = India is a low ARPU market where platform owners rely on volume of subscribers to maximize returns.
This further fuels the argument to go back to the basics of hybrid business models including a combination of ad supported, transaction video on demand and subscriptions to increase revenues.
Options for Additional Revenues
The FICCI-EY Media & Entertainment Report 2023 forecasts a modest rise in households subscribing to SVoD services in India, reaching 52 million by 2025 from the current 45 million, given the current pricing structure.
According to Ashish Pherwani, Media & Entertainment Leader at EY and author of the report, “the relatively high cost of OTT services limits market expansion, suggesting that reducing prices could double the market size. However, slashing content costs isn't a viable solution as it's a key differentiator for platforms. Instead, focus should shift to customer acquisition, technology, content variety, and other expenses. Bundling offerings could be a strategy to achieve scalability. With intense competition, platforms are investing heavily in content creation and customer acquisition, often spending significantly more than the revenue generated per customer.”
^ This is one point of view, however as we were evaluating additional revenue options for direct to consumer streaming platforms, we analyzed some of the information and data available on the recent Accenture report on the media & entertainment industry as shown on the snapshot below.
It presents a great starting point for us to think about strategies that will help turbo charge growth for media companies.
Some of the other ideas (Ok, some are not radical, however the idea is to spark a constructive debate on solving for the major issues plaguing the OTT space, revenues & profitability) include taking a leaf out of my favorite theme: content, commerce and community such as:
Merchandizing / e-commerce
Community building features (think user chat, reviews, recommendations etc)
Live Streaming of regional sports (for example if you are a regional language OTT then include hyper local sports that are played by your target community)
Devotional content addition - spirituality and religious fervor has taken off post COVID and offering live darshan (temples popular amongst your target audience - for example in Gujarat if you are Oho Gujarati), pujas (religious ceremonies) etc
Sachet pricing and micro transactions
Expanding AVOD capabilities (Beyond just pre and mid roll ads - think executing performance marketing campaigns for brands, server side ad insertion to beat ad blockers, hyper local ad sales teams etc)
Create your own “virtual” cable TV network - FAST / PAST channels with EPGs
Pushing Boundaries
For legacy media firms and even existing OTT platforms, relying solely on traditional strengths won't cut it anymore. To thrive in today's landscape, they must embrace new realms like social media management, content creator ecosystems, gaming, and sports betting – areas where their expertise may be lacking but growth opportunities abound.
It's time to expand horizons beyond familiar territory and chart a course towards innovation and diversification.
TVOD?
In their quest for the optimal revenue model, streaming platforms are exploring transactional video-on-demand (TVOD) services, offering viewers temporary movie rentals at discounted rates compared to full subscriptions.
ZEE5, for example, provides rentals ranging from Rs 29 to Rs 349, drawing parallels to the evolution of cable TV and DTH behind paywalls with bundles, sachets, and customizable pricing.
However, TVOD encounters challenges, such as the inconvenience of using OTPs and credit cards for each transaction. The debate is whether TVOD will attract new subscribers or potentially cannibalize annual subscriptions.
Content+ is the need of the hour
As the financial strain of producing exclusive streaming content becomes increasingly evident, OTT platforms need to diversify their offerings to provide more value to Indian viewers. The next step could well be that each of these OTT platforms evolve into commerce machines (e-commerce niches?) selling everyday goods like soap but also cars :-)
This integrated approach mirrors Amazon Prime Video's successful model, where its shopping perks give it a competitive advantage. India boasts one of the highest proportions of Prime members who regularly stream Prime Video.
Meanwhile, JioCinema, backed by Reliance Industries, taps into the vast subscriber base of over 400 million users through Reliance Jio's telecom services.
Netflix, traditionally viewed as a niche platform with around 6 million subscribers, is innovating by gamifying popular original series like Narcos and Stranger Things.
My Views
As consumer preferences shift away from traditional media platforms and tech giants disrupt established business models, the media and entertainment industry faces a significant challenge. Legacy media companies are grappling with sluggish revenue growth, profitability, and operating cash flows compared to their tech counterparts.
But what does such transformation entail? It necessitates a fundamental reimagining of traditional media enterprises, urging them to explore new revenue sources and redefine their roles within the entertainment landscape. These companies must reconsider their target demographics and contemplate entry into uncharted industries.
Achieving such radical change demands a departure from conventional strategic planning approaches and a willingness to embrace innovative growth opportunities that extend beyond their existing capabilities.
Though the task of transformation may seem daunting, it presents a remarkable opportunity for rejuvenation. I would love to hear your thoughts as well on strategies and options available to resolve pressing challenges confronting today's media landscape and together we can hopefully present a some ideas to ignite reinvention and drive enduring success.
That’s all for today folks. If you enjoyed this breakdown, please consider sharing it with your friends and colleagues.
Must watch content this week is the Telugu movie Gaami (transl. Seeker) epic adventure / thriller movie on Zee5, written and directed by debutant Vidyadhar Kagita Initially started with a crowd-funding campaign (!), it was finally produced under Karthik Kult Kreations.
Vishwas Sen plays the role of an aghori saadhu, who sets out on a mystical adventure into the deep Himalayas to find a cure for his touch starvation. Great cast's performances, a very unique concept, and a visual delight.
Streaming in India is a weekly newsletter exploring the trends that matter to streaming professionals in India. If you are not already a subscriber, sign up and join several others who receive it directly in their inbox every Wednesday.
Interested in advertising with The Streaming Lab and reach a qualified audience in MENA & India? Email me
Download our market reports STREAMING in MENA and STREAMING in INDIA.
I also work with streaming services, content creators, rights holders, platform providers or media consultants and help them upgrade their tech & turbo charge their revenues (especially programmatic video / display ads for streamers). Contact me here.