OTT content spending surges 52% in 2023, driven by sports rights
- Sports constituted around 51% of the ₹12,500 crore total expenditure, driven by a more than twofold increase in sports rights values
New Delhi: Over -the-top (OTT) content expenditure soared by 52% in 2023, driven by a more than twofold surge in sports rights values, which constituted around 51% of the ₹12,500 crore OTT content spending, according to the latest Ficci EY Media and Entertainment Report.
Moreover, while 24% of total OTT costs were allocated to acquiring film rights, only a quarter was spent on original content. However, streaming platforms saw minimal growth in total content hours, holding steady at 3,000 hours compared to the 2022 levels.
Sports rights, synonymous with high capital expenditure and limited monetization, are seasonal, with audiences spread thin across specific categories, players, and matches. In comparison, the cost of producing non-sport original content, such as shows and movies, are nominal.
Media and entertainment industry experts said streaming services must revamp their strategies, and invest in more compelling content slates before and after tournaments to stay relevant throughout the year.
“Sports is a category that comes with high input costs because of player fees, and expenses of holding the event," said Sourjya Mohanty, chief operating officer, EPIC ON, an OTT platform owned by IN10 Media Network.
"However, there are multiple challenges to it, considering that the audiences are sliced based on interest in particular categories, or when a specific name or state is playing, often resulting in pushback from advertisers,” he added.
“The cost of entertainment content is nothing compared to sports. While sports brings in large number of subscribers, it is seasonal while other content is needed to drive profitability, which should be easy to do,” Uday Sodhi, senior partner, Kurate Digital Consulting said.
The Disney-Reliance joint venture, too, should have enough leverage to drive entertainment value despite the guaranteed focus on sports, said experts.
“The competition to establish a foothold in the sports genre is clearly evident. Platforms in most cases have a clear strategy of being present or not. Content budgets are limited and investment in sports may leave a lesser pie to focus on original content or movie acquisitions," said Chandrashekhar Mantha, partner, media and entertainment sector leader, Deloitte India.
"Where sports is momentary, original content and movies provide platforms with remarkable consistency in terms of viewership and long-term loyalty to subscriptions,” he added.
Subscriber turnover is also likely since tournaments are seasonal, and platforms and content creators must prioritize concepts for sustained value, Mohanty said. “In fact, the period (during major tournaments), is a time to rejig strategies.”
According to the Ficci EY report, once premium cricket properties were made available for free instead of being behind paywalls, the number of paid subscriptions for Disney+ Hotstar fell by approximately 19 million..
In 2023, paid OTT users in India is estimated at 86-108 million, lower than the estimates for the previous year following the decline in paid subscribers, and a crackdown on password-sharing by certain platforms, the report added.
However, there is still hope for other entertainment categories, the report said. With regional OTTs flourishing and expanding, the share of vernacular content is expected to increase to 55% of total content produced, with dubbed and subtitled versions catering to small-town audiences.
This could also lead to increased regional content production cost, it added. Moreover, with the emergence of the TV plus model, featuring low-cost shows with more episodes, services can look to retain subscribers primarily attracted to tentpole sports and other properties.
With the Reliance-Disney joint venture now going through, it is also likely that sports rights will rationalize since there are fewer players now.
“SVoD (subscription video-on-demand) revenues serve as the cornerstone in determining investments in new content. Each platform will possess and adhere to a distinct investment strategy when it comes to sports versus original content and movie acquisition,” Mantha added.
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First Published:24 Mar 2024, 07:31 PM IST
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