Targeting 8 million paid subscribers by 2020, ALTBalaji to invest Rs 150 crore per year

ALTBalaji, the online video-on-demand platform of Ekta Kapoor’s Balaji Telefilms, is taking on the likes of international players such as Netflix and Amazon and home-grown giants such as Hotstar in an already crowded OTT space. The app has a monthly subscription model, where it charges as low as Rs 25 per month from consumers.

Nachiket Pantvaidya, Group COO, Balaji Telefilms and CEO, ALTBalaji, told BestMediaInfo.com that the low pricing, cheap data and quality content were fuelling the growth. “We have a strong pipeline of shows. 80% of our traffic is coming from non-metros,” he said.

“Internet is spreading to the masses and people are trying to consume video on the net like never before. Every month, we are witnessing an exponential rise in the minutes consumed. On an average, every user is spending 20-25 minutes of content per month on ALTBalaji,” he added.

Speaking on the monetisation plan, he said the platform at present was strictly subscription-based. The OTT platform has lined up 80 shows and plans to get eight million paid subscribers, up from the present 1.5 million by 2020. The total investment per year by the production house is Rs 150 crore. “If we have 8 million subscribers by 2020 paying Rs 20 each per month, we’ll easily break even,” Pantvaidya said.

Excerpts:

The plan to launch 32 original series was announced somewhere in May last year. Is there so much consumption on digital? After all, other players too are launching their content?

There is a lot of consumption on digital videos. We have over 1.5 million paid subscribers on the platform. There is a huge potential in the country with about 100 million people wanting to consume content.

We are right on target on the show launches, already having launched 20 fiction shows that are available on the app now. We also launched a large library of short films and kids’ shows. We will eventually end up with about 50 shows by the end of April 2019, which is two years after the launch. We have found that there is a tremendous appetite for content, especially after internet has been readily available at cheaper prices to a large mass in the country. Internet is spreading to the masses and people are trying to consume video like never before. Every month, we are witnessing an exponential rise in the minutes consumed, with an average of about 20-25 minutes of content consumed per month per subscriber on ALTBalaji.

Are all of these in the fiction format? Are you seeing some kind of cult viewership coming to the service, or to digital?

Most of the shows are fiction, while some of them might be comedy or stand-up genre. But 95% of our investment is in fiction.

80% of our viewership is mass viewership. We are attracting three kinds of viewers – one, female viewership for our drama series; second, male viewership for series such as Ragini MMS Returns and third, a chunk of universal (male+female) urban viewers for shows like The Test Case and Bose: Dead/ Alive.

How much traffic on ALTBalaji is coming from the tier II and tier III markets?

About 80% of the traffic on our app is not from the big cities. We feel that the kind of content we are creating appeals to mass India and it cuts across urban and the towns with one lakh plus population. We are able to get a wide spectrum of audiences on our app for our content. Like I said, there are three segments, but there are shows like Ragini MMS Returns, Karrle Tu Bhi Mohabbat and Kehne Ko Humsafar Hain that do very well across all geographies.

What is the kind of investment in content creation and what share of spends goes into other streams – operations, marketing and others?

We spend about Rs 100 crore in content every year, while about Rs 50-60 crore is spent on other expenses, including product, technology, people and marketing. The total cost is about Rs 150-160 crore per year.

As you increase the quality and quantity of your content, viewers will increase. Do you think there will be a corresponding increase in the cost on technology?

It depends on the market. We don’t want to either under-invest or over-invest. One thing that we are sure is that this is a growing market and we want to have at least 80 shows by the end of three years of the operation. How do we get there? We will have to deep dive into analytics to show us the way in terms of how much skew of programming should be mass, how much should be urban and likewise male/female. We are refining our development pipeline, as we are getting data and as of now, we have a large available pipeline of about 30-35 shows. This will keep us closer to the mark of launching 80 shows in three years.

Will we see long running webisodes on ALTBalaji? Do you think this kind of format will work on digital?

See, the ‘running’ series is clearly not for digital. The term is meant to be used for television, since a series is running and you can’t suddenly have the episode one playing on the channel. In case of a digital platform like ours, all the episodes of a series are right there, and the viewer can watch any episode anytime, even if he/she comes to the app, five years later. Long running, for some, is 1,000 episodes, for someone else, it is 500. This is a TV concept.

If you ask me what is the optimal length of a show on digital, I don’t know yet. If it’s a hit, we will soon see an evolution of the same series being put out in seasons. For example, Karrle Tu Bhi Mohabbat is running its second season and we are soon planning to launch a third season, which means there will be about 30-40 episodes for the viewers to watch. Typically, that’s the way the length will be built, it will be built in seasons. We are still a few years away from a digital soap, which will go on and never stop.

While on TV Indians have almost stopped watching fiction properties on weekly basis, it’s coming back on digital. Is it here to stay or we would soon see audiences move to the daily habit on digital too?

People do want to watch all episodes at one go, at least on digital. We did experiment by putting out two episodes in one go, every week of Kehne Ko Humsafar Hain. We found that once the whole series is uploaded, it takes a spike. However, the best right now is to put all of it out at one time and try and make it in larger chunks, rather than weekly. With weekly, the cost of keeping the viewers on and marketing the show is much more.

I think once we build our library of at least 50 shows, this might change. Because then, the viewer might come to watch a certain show and then he/she can sample something else from the complete platter of existing shows.

ALTBalaji had set two targets – to reach one million paid subscriber base, and to break even by 2020. Where are you on both the targets? How much does ALTBalaji contribute to the total revenues of Balaji Telefilms?

We already have 1.5 million paid subscribers and we are sure of breaking even in 2020. The revenue contribution and all will be declared in the annual financial results. Right now, though, the revenue number won’t be high. But by the end of the third year, we hope to have a larger revenue number so as to break even.

You have a subscription-based business model. Are you looking at going into part advertising, part subscription? Is subscription scalable enough to make business sense?

Right now, it is SVOD model. We are not looking at advertising for now. Subscription is very much scalable and it is more about the price point. We are at a good price point, which is just Rs 25-30 per month. That’s less than a rupee per day. That will enable our urban mass TG to consume our content without price being a barrier.

Is it that sustaining AVOD model is difficult? People keep saying that OTT is not making money.

People have to decide whether digital OTT is a viable business for them or not over a long term, say three to five years. AVOD is basically for the platforms that have large libraries, which are meant for mostly catch-up TV audiences. We don’t have those at ALTBalaji.  We are very sure of our target base, we are flexible with our price points and most importantly, we have original exclusive content and there is a lot of research and understanding that’s going behind making this content, so that the shows become bigger hits.

So, our target is to grab eight million subscribers at the end of three years, if each one of them, for example, has a Rs 25 per month ARPU, we have our break-even.

At the time of launch, you had mentioned that 19-34 is your core TG. How much of your viewership is coming out of this bracket?

Largely, 20-40 is what contributes to most of the viewership.

There is a lack of credible third-party measurement system for OTT. Everyone claims their own numbers. In such a scenario, do you think BARC India’s Ekam will be a solution?

It is for the AVOD people to understand. We are not taking any advertising and hence, we are not overly concerned about it. We don’t want to dilute the subscriber experience. We don’t want to necessarily make shows for advertisers, we want to make content for our TG.

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