aha launches AVoD model; expects ad revenue to grow 5 times this year

The hyperlocal OTT platform believes the model will help it become profitable and lead to its next big growth opportunity.

aha has announced the launch of an ad-based video on demand (AVoD) model. After acquiring over two million paid subscribers in the first two years of its existence, the OTT platform believes its next big growth opportunity will come from AVoD consumers and it will also help it become profitable.

The growth of OTT platforms, which saw a surge in viewership during COVID-induced lockdowns, plateaued after the lockdowns were lifted and people went back to their routine. aha believes that post-lockdowns, AVoD can be another important growth opportunity to continue its market dominance.

“Every region has a cap of around three-to-five million paying subscribers. The next big growth opportunity comes from AVoD consumers, which are around 10 times or more than the paying subscription market,” says Vaasudev Koppineni, senior vice president, content and non-subscription revenue business.

The platform is targeting 5x growth in its non-subscription revenue over last year. Providing brand solutions from the middle of the last financial year, it garnered $2 million of non-subscription revenue in the first six months. “This financial year we have already doubled our numbers. We are aiming for 5x growth over last year. It is an ambitious target. But with the AVoD launch we can achieve it,” says Nitin Burman, vice president, head – non-subscription revenue.

Beyond AVoD, non-subscription revenue also includes brand solutions, content integrations and show sponsorships. Its YouTube channel, which has around 2 million subscribers, is also a source of revenue. It has also partnered with Google for its inventory. “We are planning to upscale our YouTube channel and also launch a few impact properties. These will lead us to our targeted 5x growth,” he adds.

The thought to foray into AVoD model came from the rising interest of national advertisers to reach out to hyperlocal audiences.

“It also opens gateways for a platform to become profitable. Everybody is putting in huge investments for content, but it is difficult for OTT platforms to be profitable. There are only so many paid subscribers in the market. AVoD will help us to stay relevant. It will also help us to challenge the competitors with deep pockets,” he adds.

The platform, which offers Telugu and Tamil content, will have a hybrid model, whereby viewers can choose whether they want to opt for an ad-free or an ad-based plan.

“A certain set of audience will be willing to pay a premium to get an ad-free experience. Meanwhile, there will be another set of audience, especially in Tier-II and III cities, who will have a fixed wallet size. They will not want to spend too much on one particular platform to watch content. For them, this will give a lower entry-level pack,” says Burman.

Putting it in context with numbers, Burman says the AP-Telangana market has around 8-10 million SVOD subscribers. Of this only 3-4 million are paying subscribers, that is the ones who make the payment for the subscription. The rest are their friends and family who share the subscription. “Of this 3-4 million, we have already acquired more than 2 million. The next set of customers are the ones who want to pay less and are okay to watch content with ads,” he explains.

aha initially plans to offer video inventory and banner ads to advertisers. It has also partnered with Google for delivering ads to the consumers. It is also developing technology to offer live commerce on its platform. With that, viewers will be able to shop from e-commerce partners, while watching content.

After establishing its presence in the metro cities of Andhra Pradesh, Telangana and, more recently, Tamil Nadu, aha is now betting on the ‘Deep Bharat strategy’, whereby it is attempting to acquire users in Tier-II and III cities of these three states.

“The introduction of 5G and easy Internet access, give us an expandable opportunity to tap into these markets,” mentions Koppineni.