OTT Industry Undergoing Transformation of Technology and Content

Manish Sinha has close to two decades of experience in the Media & Entertainment (M&E) industry working with top media companies across the globe providing business and technology consulting to top broadcasters, studios, and pure-play OTT companies. With his deep understanding of the media value chain, related technologies, business models, and consumers, Manish’s expertise lies in bringing in the right set of technology, industry, and consumer insights to design and build result-oriented and sustainable streaming businesses.

“Netflix and Chill” is a trending phrase for the current generation and also the reason for a great transition in the entertainment industry. The emergence of OTT platforms have changed the perception towards entertainment as a whole with entities like Netflix, Prime Video and Diney+Hotstar that have immensely helped in reshaping the nature of sources for content consumption. Currently, there is a plethora of such platforms in India that consists of new businesses as well as established ones which are going digital. Initially, the focus was on the subscription based business model that could only be driven forward by good quality content and various OTT platforms have gained huge amount of subscribers through this. But now, times are changing. An abundance of these platforms have resulted in creating an extended number of options for a consumer resulting in paradox of choices and unpredictable churn. This situation has impacted the revenue model for many such businesses which are now searching for an alternative idea to build revenue. There are several factors that need to be considered in this regard if one wants to achieve sustainability in this market.

Quality Driven Content

Not until a few years back, show business was everything for the entertainment industry. The simple idea in order to create popular content was to involve celebrities as much as possible. A movie with many super stars was apparently a big hit. This way of thinking is slowly but steadily changing for the current generation. The emergence of OTT platforms has made way for the kind of content that brings out a story or a message and we have witnessed the growth of many individuals who have performed in these creations. This idea has also been helpful in driving cost effectiveness for production as well. The involvement of celebrities and super stars create a sky high budget for production but OTT platforms are involving emerging and passionate individuals. This is bringing down the budget without disturbing the effectiveness of the creation.

Technology Expertise

It is a common misconception that the success of OTT platforms only depends on the quality of content. Here, technology plays a significant role. There are a few factors that need to be discussed in this aspect. Firstly, it is very important how an OTT platform creates its UI using technology. A lot depends on the backend operations and the technology expertise that it is able to provide. Recently we have seen various integrations like creation of group chat, social watching and gamification of the user journey in the OTT platforms that has helped them in gaining popularity among consumers. Secondly, the usage of AI to create a personal recommendation engine for a consumer is gaining a lot of traction in the market. With this technology, consumers are able to create a personal portfolio of their interests and the AI of the platforms keeps recommending content in accordance with that. This factor has helped consumers immensely in finding the required content after logging on to the platform as earlier, if a consumer wanted to watch something for half an hour, more than 10 minutes will be wasted on deciding upon the content.   Last but not the least; the streaming quality plays a vital role in consumer retention for OTT platforms. If good quality videos can be played by an OTT at a lesser bandwidth, it acts as a big advantage and creates consumer friendliness.

Alternative Revenue Model

With widespread competition in the OTT market, subscription alone cannot become the source of income for businesses working in this domain. Advertising supported monetization models are gaining more relevance and acceptance as a key building block in the OTT businesses.  Many platforms are adopting the hybrid model, subscription and advertsising, of business and combining it with the efforts on creating consumer engagement and experience and gaining sustainability in the market. Another aspect for revenue generation for OTT platforms especially in the sports domain have been the integration with betting platforms for drving more engagement and revenues.

"The OTT industry is poised for transformation along multiple dimensions in the coming years to move towards a more stable, robust and long term businesses"

Future Looking Bright

Looking ahead, the OTT industry is poised for transformation along multiple dimensions in the coming years to move towards a more stable, robust and long term businesses. A consolidation and emergence of new frontiers within the industry seems inevitable and we are already seeing rapid growth of OTT aggregator and FAST based streaming platforms and green shoots of M&A activity.