Winning the streaming wars in India

A flashback:

12-year-old Sandeep: “Dad, can we get cable?”

Sandeep’s Dad: “Why?”

Sandeep: “Some of my friends have cable at home. They get to watch WWF matches and MTV. Then they come to school and discuss the latest fights and song videos, and I feel left out. I also want to watch those shows.”

Dad: “Who are these friends of yours?”

Sandeep (naively): “Arun, Pradeep, and Najaz.”

Dad: “Right, stop hanging out with them tomorrow onwards. Problem solved. End of discussion. Cable, huh? I never even had a radio while growing up.”

I didn’t have access to cable TV for the entirety of my childhood. While one can argue the merits of cable TV for kids (access to world news, scientific and cultural documentaries, exposure to English language, sports (including WWE), and endless re-runs of Independence Day) versus the obvious demerits (age-inappropriate content, addiction to the endless stream of dopamine hits, violence, and endless re-runs of Independence Day), there is no getting away from the fact that kids of this generation will definitely have access to an amazing variety of content across a plethora of platforms. Gone are the days when a family could restrict access to viewing time and be confident about their ability to enforce the restriction. These days the kids are more likely to stage an intervention for their content addicted parents.

The data seems to support this view. The latest FICCI-EY report on media and entertainment in India (source report here) estimates the M&E sector in India to reach INR 2.42 trillion (US$34 Bn) by 2022. This will represent a CAGR of 10% from 2019. Within this sector, the two fastest growing segments are online gaming (CAGR 43%) and digital media (CAGR 23%). Note that these figures have not been adjusted for the impact of COVID-19. With the amount of time folks have spent cooped up at home, this growth rate is only expected to go up. Online gaming is a different beast in and of itself, a story for another post. Let’s take a look at digital media. For all intents and purposes, OTT players drive digital media in India. And OTT is on the rise in India.

A recent forecast made by Ampere analysis, Ovum, Magna global and BCG (source report here) predicted that the Indian video OTT market will grow to $5Bn (revenue) by 2023. Several factors contribute to this massive number. Over the past five years, India has seen:

1. Massive connectivity improvement and fall in data prices;
2. Increased smartphone penetration;
3. Favourable demographics (younger audience with more disposable income);
4. Increase in supply of content.

Close to 50% of Internet users in India are from rural areas, with rural internet penetration growing to nearly 35%. In short, everybody and their uncle seem primed to make OTT their preferred media consumption platform.

Video OTT is driven primarily by a mix of three revenue models — AVoD (Advertising based Video on Demand), SVoD (Subscription based Video on Demand) and TVoD (Transaction based Video on Demand). The last model (TVoD) which is based on consumers paying only for specific content they want to watch instead of whole packages, is yet to take off in a big way in India. Advertising based approach is fairly familiar to everyone, and is expected to grow fast in India, contributing close to 43% of total OTT revenue by 2023.

It is the remaining model, SVoD, which is of interest to us. Traditionally, subscription based models have not caught on well in India, a country where folks are notoriously reluctant to pay for services. News organizations like the Ken, ET and The Hindu are experimenting with subscription based services, with varying degrees of success. However, when it comes to entertainment, Indians think thrice before loosening their purse strings. After all, this is a country where most college students rely on torrents and P2P services (remember DC++, anyone?), not to mention stolen wifi and Netflix passwords, for fulfilling their entertainment needs. How can anyone reasonably expect paywalled entertainment to catch on here?

Turns out, this is exactly what several big players are betting on. The three giants in the Indian OTT space, Disney+Hotstar, Netflix and Amazon Prime Video all have invested massively on this bet. There are a host of other players as well, including SonyLiv, Voot, EROS Now, Jiocinema and ALTBalaji. All of them are fighting for share of attention and wallet, but it’s going to be a tight race. The BCG report I mentioned earlier estimates that SVoD services will be used by only 40–50 Mn users by 2023, whereas AVoD services will be used by a whopping 600 Mn. Smaller the pie, fiercer the fight.

In this article, I will take a look at what strategy can help drive up subscriptions for OTT. For ease of approach, I will consider English language content for a single player like Disney+Hotstar. The principles though, can be applied to any OTT. And because I am a nice guy, I will also include jokes in between. The complete article will cover the below sections:

1. Overall OTT audience split
2. Key barriers to trial for subscription
3. Consumer segmentation according to consumption occasions
4. Key consumer triggers to drive subscription and how to activate them

The first three points will set the stage for an understanding of ‘where to play’. The last point will explain ‘how to win’ our challenge.

This will be a long post, so feel free to skip to the sections you are interested in. I have written this post in a modular way to facilitate skipping.

With that said, let’s dive right in:

Overall OTT audience split

The universe of OTT viewers can broadly be split into three:

i) Traditionalist/Mainstream (60% of total) — These people form the bulk of the viewing audience. They are very accustomed to meeting their video consumption needs through free channels on TV and YouTube. It will be very difficult, though not impossible, to convert them.

ii) OTT experimenter (30% of total) — They are your affluent viewers who have the money and the inclination to pay for quality content. They are quite happy to pay for content that interests them. While it is easier to convert/upgrade such viewers to subscription based services, they will be quick to leave the platform if the content does not meet their high expectations.

iii) Early adopters (10% of total) — They are your precious core consumers. They don’t think twice about subscribing for multiple services, and firmly believe in paying for quality content.

The below image paints a picture of the viewing habits of these different segments of consumers:

OTT Audience in India

The audience segments we should target to drive up subscriptions for Disney+Hotstar are traditionalists and OTT experimenters.

While our aim would be to upgrade them both to the English subscription service of Hotstar, we should keep in mind that the competition for user share in this segment will be intense. Typically, over 80% of users have three or lesser video apps on their phones, since beyond the limit of three app fatigue starts to set in. And one of these three apps will ALWAYS be YouTube (damn you, Google). Which means ALL the other video apps will be competing for one of only two slots. Best of luck.

This doesn’t mean that we accept defeat. We will need to approach the problem systematically. The first step was to identify our target consumer segments. The next is to identify what the various barriers to trial are for these consumers (and before you say it, yes, Indians’ proclivity for free content is a BIG barrier to trial. I get it. Geez.)

Key Barriers to trial for subscription

I identified five key barriers to trial for the English content subscription for Disney+Hotstar. I have not yet tested these via consumer research, so I do not know their relative importance (ie, which barrier is the strongest and which is the weakest). I have arranged them in no particular order below:

1. Cost perception — Most Indian consumers have been accustomed to free/very cheap content from YouTube, FTA (free to air) TV, torrents, etc. So it is difficult to get them to shift their mindset and make them pay for content.
2. All or nothing choice — Lack of pay per view (TVoD) options in Disney+Hotstar can lead to consumers suffering from post purchase guilt/ app fatigue in pursuit of paywalled content they want to watch.
3. Lack of snackable content — YouTube offers a variety of less time consuming and low involvement content (movie and game trailers, standalone comedy pieces like Kay and Peele, motivational videos, opinion pieces, etc.) that drive engagement, especially during small breaks during the day.
4. Inability to view favourite content creator — YouTube provides a free platform for successful English content creators (eg. JordIndian, VidyaVox, Headbanger’s Kitchen). Fans of these content creators can view their content mostly only on YouTube currently (except for a few specials like AIB or VirDas)
5. Same content available on TV/others — Scarcity of original exclusive English content on Disney+Hotstar (with the notable exception of Star Wars and Mandalorian) leads to consumers refusing to pay premium to view content they can watch on other channels for free. This is the way (for the uninitiated, that was a Mandalorian joke. I told you there will be jokes.)

Barriers to trial for OTT subscriptions in India

Consumer segmentation according to consumption occasions

Consumer segmentation done by consumption occasions help to capture all touchpoints in the consumer journey where SVoD can deliver relevant content and personalization, thus driving up intent to subscribe.

It will be important to capture ALL consumption occasions and deliver relevant content against those occasions, to ensure sustainable subscription.

Segmentations:

1. Family viewing in the evening vs short break at work -Short, snackable and shareable content is important during breaks at work whereas family viewing in the evening calls for longer content with high entertainment quotient.

2. Emotional vs Functional — S02E01 of a popular series / a new documentary about Liverpool is an emotional viewing experience. On the other hand, catching up/re-viewing an old series or watching a documentary on personal productivity/religion is an intensely functional experience.

3. Friends vs Family — Content consumed with friends needs to be brag worthy and shareable. Augmenting features like chat option, real time trivia about content and instant status update features to social media increase stickiness and engagement, which can lead to WOM (word of mouth) validation.

4. Static vs On the Go — Content consumed alone at home can satisfy guilty pleasures and needs to be high on entertainment value. On the Go content should be informative, newsworthy, entertaining and shareable.

Key consumer triggers to drive subscription

The biggest trial barrier to subscription services is the fact that competing services like YouTube and FTA cable TV offer content for free. Additionally, consumers can see even more content if they are willing to adopt AVoD (advertisement based Video on Demand) services. Of course, there will be compromises like ad interrupted viewing, non-availability of new content, reduced quality of streaming etc. But, in a country where the total number of internet users exceed the population of the G7 countries combined (~600–650 Mn) and more than 50% of the internet growth is expected to come from rural areas, such compromises are irrelevant.

Therefore, subscription services cannot win in India by playing the price game. There will always be some other platform or service provider who can find a better compromise than you at the price vs services game. What’s needed to be done is to change the paradigm of the game. Instead of trying to find the bottom of the barrel when it comes to price points, steadily INCREASE THE VALUE of your offering and BE KNOWN for it. What does this mean? In a nutshell, provide great quality content for reasonable (read profitable) price points and constantly talk about it (on various marketing channels) so consumers come to associate your brand with a specific form of content. This will be a journey and not an overnight victory. For instance, Netflix has done a great job of this, but in that process they have pigeonholed themselves into a premium English language content provider. In India, explosive growth is going to come from regional language content in the next couple of years. Is Netflix poised to take advantage of this growth? I don’t think so.

But we digress. Our aim was to see what could be done to drive up premium English language content for Disney+ Hotstar. With over 300 Mn users in total, Hotstar claims to be India’s largest video platform. Their biggest competition when it comes to acquiring users is YouTube, with over 250 Mn active users. As we saw earlier, OTT experimenters and mainstream viewers alike rely on YouTube for a large chunk of their entertainment needs. Hence it is to YouTube that Hotstar must look first to woo new subscribers. The first step, of course, is for Hotstar Premium to establish TOMA and own the equity for “quality English content” in order to differentiate itself from YouTube and justify the price premium. This can be achieved by moving five key levers:

• Content
• Communications
• Product experience
• Word of mouth
• Pricing

Let’s take a look at each of them.

Activating key consumer triggers to drive subscription

CONTENT

The content available in YouTube shows the below characteristics:

• Premium English content in India tends to follow US trends
• Music videos lead the content category by a large margin
• Gaming content (walkthroughs, reviews, trailers) are just catching up in India
• The ‘entertainment’ category is a mix of short form and long form content and needs to be further analysed by mapping content against occasions
• The category consumption data for YouTube is as mapped below. This has been done by taking data from top 5000 YouTube channels (from SocialBlade) and mapping it against the respective categories.

Source: https://medium.com/@agrawal.chemical/youtube-content-consumption-trends-in-india-d6c2433ed615

Source: https://medium.com/@agrawal.chemical/youtube-content-consumption-trends-in-india-d6c2433ed615

Content approach for Disney+ Hotstar

To establish Hotstar premium as the go-to streaming service for quality English content, we need to ensure Hotstar offerings cover most of the content for top viewed 8–10 content buckets for free/cheap alternatives. We can adopt a two pronged approach for this.

• Curate top rated english content
• Create original english content

Note that you can replace English with any regional language as appropriate.

Content approach for English premium OTT in India

COMMUNICATIONS

Overall awareness for Hotstar SVoD is critical to drive overall brand equity. Hotstar by itself will not have an awareness problem due to its hybrid AVoD plus SVoD model. But it will be interesting to check its SVoD awareness levels especially among females. According to the BCG research quoted below, SVoD generally has low awareness amongst females (only 47% aided awareness of at least 2 SVoD apps). Of course, this is at the universe level. If Hotstar SVoD suffers from a similar level of awareness, perhaps specific female oriented communications and curated content will need to be made.

Communications would also need a two fold approach. For ease of differentiation, I like to call them ‘connect’ and ‘convince’ legs. Connect comms are mainly made to drive an emotional connection with the consumers and land the value proposition with them (Awareness, Interest, and Desire), whereas convince legs are meant only to drive the benefit and hence, subscriptions (Desire and Action):

Connect leg — Marketing campaigns intended to drive brand awareness among consumers (these can be video led, flighted campaigns)

1. Consumption occasion led insights can be used to create advertisements to drive awareness of how Hotstar Premium has the best English content for all occasions
2. These campaigns should NOT be run in concurrence with other high affinity impact properties like IPL, a new season release of a popular series etc. in order to reduce clutter
3. Input metrics will be REACH and FREQUENCY
4. Output metrics will be TOMA, brand recall, equity reads improvement ( “has quality English content”, “value for money”)

Convince leg — Always on performance marketing campaigns meant to drive trial with a clear CTA (Call To Action)

1. These are short ads that can run across platforms throughout the year, with clear intent to drive subscription
2. Each of these campaigns need to be run as a/b tests to help optimize for message, creative, placement and targeting
3. Input metric will be target CPA
4. Output metric will be new user subscription

PRODUCT EXPERIENCE

There is a reason why product managers and UI/UX teams are paid insanely large sums of money by startups (don’t ask me which startups. I don’t know. All my friends who are product managers or designers constantly tell me they are underpaid and overworked). A seamless and intuitive product experience is critical to convince experimenters and traditionalists to subscribe and new subscribers to remain engaged with the platform. A critical point to note about the product experience is that the marketing team should work very closely with the product team to run continuous a/b tests to test hypotheses and optimise UX for undecided users, with the aim being to nudge them to subscribe.

1. Content recommendations are important — According to a recent OTT trends and future predictions report released by Zemoga, over 70% of YouTube views are driven by content recommendations. This number, I suspect, is applicable for other OTT content providers also. Currently the content recommendation engine for Hotstar is not as seamless as that of Netflix, primarily because unlike Netflix, Hotstar has content in 15 different languages, including English. And most Indians comfortably view content in at least two languages. This makes it very difficult for the AI engine to learn personal preferences and deliver sharp recommendations.
2. Welcome mats for new subscribers — A new user should be treated just the same as a prospective buyer of a new condominium. The interiors should be laid out just so, and she should be made to feel welcome. The fireplace should be lit, there should be a warm, happy glow in the air, and all the utilities and lighting must be in perfect working order. If she asks for a few adjustments to be made to the balcony or the bathroom, those should be noted and actioned immediately. In fact, the estate agent should be proactively asking her if she wants any changes made. This is the way to ensure a prospective user converts to a confirmed buyer. Similarly, Hotstar needs to ask new subscribers for their content preferences upon first login (note: they do this currently). However, instead of being dryly asked to select a few movie genres and language preferences, new user experience could be gamified to make it more interesting. Imagine asking a new user to participate in a short quiz to identify her latent preferences in movies or shows. Depending on how the user performs, the AI engine could increase or decrease the relative difficulty of the questions and the genre behind the scenes to get an accurate picture of her preferences. A gift (like a week’s extension to her free signup period) could be given to sweeten the deal. Additionally, the user will have the added pleasure of seeing actual movies/shows she likes being recommended to her, instead of the genres she might otherwise have selected to maintain her public image (remember Dangerous Liaisons vs Weekend at Bernie’s? — subtle F.R.I.E.N.D.S. reference for those who didn’t understand)
3. Video previews on scrollover to prevent browser fatigue and automatic preview/screening of next movie/episode after current show ends should be made mandatory. This removes friction from decision making and ensures higher engagement for consumers. Disney+Hotstar currently does not implement this, whereas YouTube and Netflix do.
4. Over time, the recommendations of movies and shows should also be personalized to drive engagement (for instance, the new James Bond movie posters should feature Daniel Craig for Craig fans and Rami Malek for Malek fans)

WORD OF MOUTH

Just like restaurant discovery, over 50% of OTT platform discovery happens via WOM (word of mouth). The best way to ensure WOM is to create a loyal tribe of fans for Disneyplus Hotstar who are more than happy to evangelize its English content services. This helps to achieve two things, in addition to securing new user subscriptions:

1. It creates a ready to tap base for testing/promoting new features or releases
2. It creates a safety net composed of consumers who are willing to forgive errors/omissions from the platform. This is critical if you are planning to run multiple experiments to constantly optimize your campaigns and your platform experience

A strong and popular content base is the keystone of creating a superfan ecosystem.

Initially, these tribes can be built via campaigns around key tentpole content, by driving referral programmes, merchandizing, celeb meetups, etc.

This fan base should then be sustained by continuous engagement via preferential treatment — ability to influence new content, create curated playlists on Hotstar premium, early viewing nights before movie releases etc. These fans should be given incentives for driving new subscriptions. Disneyplus Hotstar should be vocal about giving preferential treatment to its fans. The idea is not just to reward those who have converted, but to entice those who haven’t yet done so.

PRICING

This is tricky. The critical goal here will be to reframe the pricing problem (namely, YouTube is free) to a value problem. The assumption is that mainstream consumers are likely to pay if they can be convinced of the value, which is what the previous levers of content, comms, word of mouth and overall product experience is meant to achieve.

But these levers will take time to move. You cannot establish equity superiority overnight. While product experience is easier to tweak, remember that users take time to get used to a particular UX, and once they do, they tend to stick with it, irrespective of whether it’s good or not (baby duck syndrome). They then view changes with deep suspicion. (there’s even been an entertaining timeline created of all the facebook UX change backlashes. Read it here, it’s good fun).

Pricing, however, is easier to change quickly, and often has immediate effects. That makes it a double edged sword, though. Disney+ hotstar definitely will not want to get into a price war with Netflix (superior equity) or Amazon prime (superior Bezos). The way forward would be multiple experiments run on a small scale before scaling up.

• First off, they should definitely maintain their premium status and so should refrain from straight price cuts from their current price of INR 1499/- month. Indian consumers expect quality english content to be premium priced. There’s nothing to be gained from confusing them by reducing the sticker price drastically
• However, periodic discounts/freebies campaigns for new user acquisition can be tested (with clear CAC targets)
• TVOD format could also be experimented with to drive fence sitters to commit to a subscription (watchout: consumers can easily be led into a TVOD only behaviour, so this format should only be tested in limited quantities, with the success metric being new user acquisition)

Another long term experiment could be to create a super app platform, where content from multiple OTT players can be syndicated — to ensure consumers have a one stop shop for all their English viewing needs, which is a win win for Hotstar and consumers alike (Hotstar gets new subscribers and consumers get a single platform at a reasonable price).

To recap, the key levers Disneyplus Hotstar can move to acquire new subscribers are content, comms, product experience, word of mouth and pricing. Of these, content is king (cliched statement, I know. Nevertheless it fits the occasion). If they can get the content right, everything else will follow. The general sense in the industry also seems to be the same, with several industry players saying that they expect more and more Indian consumers will turn subscribers IF the OTT players can demonstrate value in the form of original and exclusive content (read story here).

The OTT space in India is going to heat up in the coming years, and will be an extremely interesting space to watch.