OTT THE NEW NORMAL?

by Abha Kashyap Managing Patner

As they say, there could be infinite unbelievable experiences which could come up in ones’ life and there is one such which we all are facing COVID-19. But we all would agree that that the OTT platforms have made the current times a bit easy to take with facilitating the contents for the binge-watching of movies and shows accessible for the wide segment of consumers. The pandemic which we are into has actually made us more accustomed and reliable on the OTT platforms and this could have been possible because of the wide availability of smartphones with an internet connection having diving data charges. Today, we just need to have a subscription to the OTT platforms, and the next minute we have everything within our reach. Is this a result of the situation we are into or the result of the growth of OTT itself?

The inception of the OTT platform in India began in the year 2008 when Reliance Entertainment launched BIGFlix. But from 2013 onwards, the OTT platform started seeing momentum in its viewership and the result is that India now has more than 30 players in this market . The growth of OTT in India as per the KPMG Media and Entertainment report of 2018 is expected to grow at a CAGR of 45% to reach Rs. 13,800 cr. by the end of FY 2023. Not only is this, but the subscription revenue of the OTT video platform also expected to be about 44% of the total revenue in 2024. The report also highlights the average time spent by the subscribers on the OTT platforms is more than 30 minutes per day , suggestive of the fact that the maelstrom created by the pandemic is a cherry over the already booming market.

The Indian Audience’s craze for OTTs has brought a new move for the film producers to keep up with finances through the release of movies on the OTT platforms instead of theatres. The idea obviously came because of the Covid-19 which made it impossible for films to release on the big screens, but certainly, this has created a furor within the film industry. Theatres are facing severe loss due to the non-working of the theatres on one hand and OTTs are earning well as the audience is appreciating the newly added contents on the various platforms. OTT is serving both the producers by providing a comparatively cheaper platform for their films to release and consumers by facilitating a high-quality content. But then where does the problem lies?

Out of the total film producers’ revenue, the Indian cinema contributes 57% i.e. more than half when compared to 12-13% which comes from OTTs. This implies that film producers profit from fine quality content would any day is more from cinema than OTT as the producers/distributors change of making abundant profits depend on the box office collections. Moreover, the collection from the sale of OTT is also limited as OTT itself has predefined limited budgets for content acquisition. Undoubtedly, the current times are full of hardships for the theatres as the films which go to other platforms after almost 50 days are being provided the very day for release. And due to this, many single screens around 50 percent of the total 6,327 single screens in India are on the verge of close down. But the cinema experience can never be taken by the OTTs in India considering the fan base who have a fondness to watch their favourite stars on the big screens on the first days of the release. To substantiate, in a recent survey by Book My Show, 54% of Indians accepted to go to watch movies after 15-90 days of the lockdown lifting.

Well, the future is full of uncertainty but the trends we can witness now shows that there is a golden opportunity for OTTs to flourish considering the atmosphere we all are forced into. OTTs provide us with some unique attributes like easy accessibility, blend of world-wide entertainment data, ease of watching without negotiating on our comforts. As per KPMG report, 2019 the direct subscribers base would rise to 55-65 million by the year 2024, which would be driven by the availability of high quality content made as per the audience’s taste with continued growth potential in the digital infrastructure. Unfortunately, the report also projected the growth of the film industry at a CAGR of 7.3 % to the digital industry growth of 29.1% from FY19-24. The absence of any significant and more consistent performance across regional markets, the theatrical revenue would seep deep down. Therefore, films that are facing financial difficulties can go for the OTT release till things get back to normal and in fact, this a good time to test new genre contents being relatively less risky in terms of financial loss than the case with traditional theatres.

Originally posted on www.kpalegal.com on 17th August 2020