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Depending only on advertising is not sustainable in the long run, says Neeraj Roy, Hungama Digital

Roy, Managing Director and CEO, Hungama Digital Media, suggests that the OTT industry can grow its subscription revenue only if the mottos are aligned and each company ensures every step they take makes business sense

Neeraj Roy

On one side where almost all the OTT players are complaining about profitability and revenue, Neeraj Roy, Managing Director and CEO, Hungama Digital Media, feels that the AVOD-only model is not good for sustenance. Scaling up of advertising revenues is challenging beyond a certain level, he says. Hungama Digital is a Freemium model, where the free side of the app hosts repeat (catch up content from TV) and lifestyle programming and is aimed at building a community.

Roy explained, “Hungama Play is largely a subscription-driven service. About three months back, we brought some amount of short form, which is a free access service, so that the consumers can sample what we offer. The ad monetisation is not the main aim here too, the motto is to build the community and then offer compelling content for these people to shift to subscription-based service.”

Speaking about the industry, Roy said, “Each company has to understand their motivation. I feel depending only on advertising for revenue is very short term and far more difficult battle because the amount of consumption happening on digital is rapidly increasing, while the amount of allocation of mainstream ad budgets is not much.”

To further its subscriber base, Hungama Digital will launch 10 original shows in the current fiscal ending in March 2019. Foraying into the original programming space, the company is launching four shows in the next three months titled ‘Damaged’, ‘Hankaar’, ‘Bar Code’ and ‘Boys with Toys’. Damaged was launched on June 6, 2018 on Hungama Play. While the initial four shows would be in Hindi, Hungama also plans to create original content in other major Indian languages.

Plans are underway to take the content to a global audience with the help of existing and new partners. Hungama’s association with Xiaomi will enable consumers to watch the shows via Hungama Play on Mi Video and Mi TV. In addition to this, users will be able to stream the shows through Hungama Play on Vodafone Play, Idea Movies and TV, Amazon Fire TV Stick and other Android TVs.

Speaking to BestMediaInfo, Roy explained how different kind of content gets picked by the viewer. On whether films or series have high demand, Roy said, “It depends a lot on where and when you are watching. If you are waiting for a bus, you might want to watch something snacky, may be a 5-minute video, while one might prefer a TV series episode while travelling on the local train, or on a lazy afternoon, one might want to watch all episodes of his favourite show. In terms of overall consumption, original TV series form of content works better than films.”

Having existed in this space, and being of the early arrivers here, Hungama’s original content play is coming quite late in their timeline. When asked why does he think it makes sense to launch the shows now, Roy said, “Being in the digital content space for the longest time, we have had a successful track record of being able to monetise, for a variety of reasons; transactions are easier, the payment options are many – monthly, weekly or annually, different geographies. Everyone will be working towards building sustainable business models and so do we. We will always be focused towards prudent timelines for monetisation. We will not do anything that has a breakeven point of five years or more. You will always be tempted to make super expensive glamorous shows, but it should make business sense. Everything you do should make business sense.”

Having said that, while the AVOD-only model, in Roy’s opinion, is not good, it is understood that the subscription model too is difficult to sustain.

Plus there are examples like Hotstar and others which started asking for money, much after they launched with free content consumption options. This is like habituating the viewer to consume free content and then asking for money for the same.

Secondly, other than Netflix, who is an international player, all the OTT players are placed in very low subscription fee game. Rs 25-50 per month isn’t a substantial amount to really add up to making profits. Is subscription going to be a volume game, ultimately?

Roy answered, “The subscription model is not an impossible idea: Consider this, if in next five years, say by 2022-2023, there would be 500 million people consuming content on digital. If, say, there is an allocation of Rs 100 average per month per consumer for various types of services, it essentially means a Rs50,000-crore market on annual basis. Five years hence, the GDP of the country is going to be close to US$ 5 trillion, at the rate it is growing, which means you are talking about US$ 3,500 per capita income. Entertainment to take up about 0.4% of per cent of this; is not impossible to imagine.”

Roy concluded, “Right now, it seems ambitious because various entities have different objectives and have habituated the viewers for free content. A lot of players have quite good supreme quality content which they didn’t charge for, for a long time. Unless everyone starts getting aligned towards a common goal of monetisation, we won’t be able to grow the industry.”

Info@BestMediaInfo.com

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