OTT apps roll out ad-backed models to keep prices low

While Amazon is developing separate ad-based offerings such as miniTV, other platforms like Aha Video offer both ad-supported and subscription-based access to the same content. ZEE5 also offers free streaming of select shows and short-form videos.

Industry insiders said production budgets for ad-supported content can be nearly 40% lower than long-format subscription video on demand (SVoD) shows. Although categories like fast-moving consumer goods and consumer durables are expressing interest in advertising on SVoD services, challenges remain as tech giants Google and Facebook claim 65-70% of digital advertising spend.

“Most realise that no platform can survive on subscriptions alone. Content cost is only going up because there is cut-throat competition and essentially all services are trying to acquire the same content, while Indian consumers are not really used to paying," said Nitin Burman, head, non-subscription revenue, Arha Media, which owns aha Video.

Aha Video operates a hybrid model, wherein its library is available with or without ads for different price tiers, Burman added. It has also set up a brand solutions team, which is actively in touch with brands on what they want to be part of a show. Most recently, the Telugu version, Tharagathi Gadhi Daati, of TVF original Flames, among others, partnered with brands to cover at least a portion of the show’s budget.

AVoD entertainment content has grown significantly, and the popularity has accelerated with major sport events being made available outside the paywall, said Manish Kalra, chief business officer, ZEE5 India, that aired the ILT20 cricket league as well as e-sports tournament IESF Big Bang Asia Open 2023 as part of it. “We have experimented with sampling, where the first episode of subscription shows is offered for free. Currently, the commissioned shows are primarily an extension of existing TV shows, offering exclusive content like play-along games, backstage footage and short-form videos featuring TV stars. Additionally, ZEE5 sources international films and web series and dubs them in local languages. We have invested in exclusive AVoD titles like Ardh, Am I Next and Country Mafia," Kalra said.

To be sure, media and entertainment industry experts point out advertising is good news in a market like India that cannot afford for ARPUs (average revenue per user) to drop further. However, nearly 65-70% of the digital advertising market is dominated by giants like Google and Facebook besides e-commerce players. Several analysts feel the model will give the best results if web originals remain behind a paywall and catch-up television content continues to stream for free.

“Originals, even if streaming for free, will not come really cheap if the production quality is of a certain standard and ad sales will take some time to pay off," said a media analyst requesting anonymity.

To profitably tap into demand for AVoD content, platforms need to focus on two key aspects - high volume of viewership, not just the number of viewers, but also time spent per viewer and a wide range of low-risk content that does not cost a lot and can be produced in quick cycles, said Neeraj Sharma, managing director, communications, media and technology, Accenture India.

“Many AVoD players feature repurposed content from legacy title libraries. There is an opportunity for aspiring creators and user-generated content to be monetized on these platforms," Sharma said.