Is it an SVOD VS AVOD situation in India?

Uday Sodhi of SonyLIV and Eros Now's Ali Hussein are of the opinion that both can grow simultaneously in India.

The recently released 'This Year Next Year' (TYNY) report, by media agency GroupM, suggests that about Rs 16,038 crores will be spent on digital advertising in 2019. Search, social, video, and voice are popular avenues where marketers spend their digital ad dollars. YouTube and Facebook remain the giants in digital advertising as they, together, own the largest piece of the digital advertising pie. Nonetheless, there are other digital video-on-demand (VOD) platforms making a case with their content and consumption. These are the advertising video-on-demand (AVOD) businesses.

On the other hand, there are other VOD platforms that do not chase advertisers; instead, they ask consumers to pay for the content they wish to consume. Netflix, Amazon Prime Video, Eros Now, ALTBalaji are the big names that follow this subscription video-on-demand (SVOD) business model.

So, will India be an advertising-driven VOD market or will subscriptions be the key? Does it even have to be one or the other? Can a platform try both?

L-R: Janine Stein, Uday Sodhi, Ali Hussein (Click here to enlarge)

In a panel discussion titled - The great AVOD VS SVOD debate - at the third edition of vdonxt asia, held in Mumbai last month, Uday Sodhi, business head - digital business, Sony Pictures Networks India and Ali Hussein, COO, Eros Digital were quizzed by moderator, Janine Stein, editorial director, ContentAsia.

Uday Sodhi

"There is no AVOD VS SVOD scenario in India," started Sodhi. "These are monetisation methodologies and in early stage markets, people will experiment with both. Larger platforms like SonyLIV will have a mix of both. So, we see ourselves as a freemium service which means some of our content is available for free and monetised through advertisements, while one would need to pay for access to the rest," Sodhi explained.

Hussein joined in saying he looks at it from a customer's point of view. "There are different types of content which do well in different business models. We had 11,000 movies in our library which were driving the viewership on TV channels and with those movies that we tried to target the top of the funnel with; that is why we decided to go with SVOD," he stated.

Uday Sodhi decoded the scenario further by saying, "The fundamental challenge for us, whether it is SVOD or AVOD, is how many people are willing to pay and how much are they happy paying. And then, how many advertisers are ready to associate with digital video and how much money are they willing to spend". He continued, "The good part is there is a real positive movement in the number of consumers for digital video. As consumers move, monetisation too will move, with a lag, but it is just a matter of time."

Being a freemium business, SonyLIV has content which is available for free and a catalogue behind a paywall too. Stein asked Sodhi about the classification - how is it that the platform decided which content was to be made available for free and which would be paid.

"It is still very much an art-based decision and not a science yet. Whatever is windowed first for TV goes on an AVOD on digital and whatever we create for digital goes behind the paywall," was Sodhi's reply.

Stein then moved to Hussein and asked him about the possible tipping point for SVOD businesses like Eros Now in India.

Ali Hussein

"It is not going to be one tipping point; rather, there will be three or four. The one large tipping point is going to be the launch of Jio Gigafiber in 2019 as that is going to change the number of connected homes we have at this stage. Another tipping point is going to be the quantity of content. The programming, so far, largely targeted either women or the 35-plus age group. Youth were underserved and now we are seeing a lot of content being created for them," Hussein responded.

Sodhi was of the opinion that the digital video space will move from a mobile-based 4G economy to a fibre smart TV and an SVOD-based ecosystem, going forward. He believes it will change the time spent on watching digital video too.

"The moment you go to television, the time spent shoots up; while in mobile it is comparatively less," he asserted. To put the gap in the time spent, what Sodhi was referring to, into perspective - the average time spent per viewer, per day on television, as per BARC India, is 3 hours 44 minutes. While the time spent on digital video platforms like SonyLIV and Hotstar, as per their claims, is around 45 minutes.

Sodhi quickly clarified his stance by stating that he believes SVOD will grow faster in India as the infrastructure improves. He added, "It is a natural transition that will occur; that does not mean AVOD reduces its size. The top 250 advertisers in India, today, have allocated a decent part of their advertising budget to digital video and every plan of those brands has OTT included."

Janine Stein

Stein then moved the discussion to content and Hussein referred to their recent innovation - "Quickies". He stated that because there are a lot of commuter-viewers who tune in to the platform while travelling, Eros Now decided to release a series of 'snackable' content.

If Eros Now's learning came from consumer behaviour, SonyLIV learned from introspection.

"Our first learning in creating original content came two years ago where we made a show and integrated a brand into it, and the story somewhat revolved around the brand. We realised this is more of content marketing and less content creation for consumers. Then we told ourselves, whenever we are creating stories for consumers, we will put it on SVOD," Sodhi shared.

'Algorithms' and 'recommendations' - the technical aspects of an OTT platform, are often talked about. Also, data is considered the new oil that will drive the OTT future. Stein asked the heads of the digital platform to share their view on data. Hussein replied first saying, "Data can help in identifying trends; it enables us to do things differently. However, it is not the single isolated answer, that data is the one that is going to drive the future."

Sodhi had this to say, "Data analytics are the backbone of our business. Given that we are such a large advertisers-driven business and with the huge amount of content we put up on the platform, we need data and analytics to keep the fire burning."

Both senior executives in the media and entertainment space were of the opinion that there is no 'one versus other' at this stage in the Indian ecosystem.