Viewers will pay for good content, ad-driven model doesn't ensure large revenues: Ali Hussein, COO, Eros Digital

After spending a substantial amount of time at YouTube, Ali Hussein is now heading the subscription-based video-on-demand service of Eros Digital, Eros Now.

At a time when other OTT platforms are announcing hours of programming for digital, Eros is taking a more conservative approach by launching fewer shows but aiming for the top when it comes to quality. The platform is focusing more on movies than web series.

Speaking to BestMediaInfo.com on the sidelines of announcing its first digital first movie, Anand L Rai's Meri Nimmo, the Eros Digital COO talked about monetisation of content on digital, why the Eros platform would always be ad-free and how aggregation will unclutter the crowded OTT platform space for viewers.

"We are not an ad-supported business. We are looking to work with advertisers in a very interesting fashion, wherein we are able to weave them into our product strategy," he said. Talking about how willing the consumer was to pay for content online when there was already so much available for free, he said, “The moment you have quality product experience, and quality programming with nominal charges, I believe you have a lot of scope,” he said.

Excerpts:

What is your strategy on show launches in 2018? Suddenly, everyone is getting aggressive with show launches. What are the plans for regional languages?

It sounds fancy to say that we are going to launch 150 originals or 1,000 hours. But I don't want to do that. I would rather focus more on lower number and better quality and deeply thought-over content. One must also ensure that these shows are sustained over a period of time. Our strategy is little different. Even if you see big players like Amazon Prime Video or Netflix, they haven't announced the number of shows they will bring up. These large format originals take anywhere from 18-24 months to mount, starting from inception to completion.

We are just about starting and we will start launching with Hindi, slowly moving to couple of other languages over the next 12-18 months. Since we understand the movie space better, it allows us to get into the other languages quicker. We are still learning the episodic long format shows.

But why is everyone getting so aggressive with newer content. While video is the most consumed content on digital, has the consumption suddenly increased?

No. It has not suddenly increased. When I was at YouTube till sometime back, we noticed that someone like Jio has opened the supply chain of consumers drastically. YouTube gets about 225-250 million unique video viewers every month and of these, the last 100 million were coming from Jio. Why are so many people suddenly focusing on it? Two reasons – the base has gone up dramatically in the last two to three years because of the increase in the number of viewers and second, more importantly, the youth was highly underserved from the content standpoint. So there is a lot of demand in the market from the viewing point of view.

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

The main infrastructures in terms of resources are three costs – content, technology and product and the third is marketing. As content costs increase and the quality improves and we get more viewers, technology starts becoming more expensive because my content delivery platforms need to be more sturdy. The better content we make brings more viewers, which puts a larger burden on my technology and product costs.

Since you are completely S-VOD model, what are your other revenue streams? Which one is the most scalable?

We are not an ad-supported business. We are looking to work with advertisers in a very interesting fashion, wherein we are able to weave them into our product strategy. We won't get into ad spots and branded content. We want to be on the consumer happy phase.

Is subscription scalable enough to make business sense?

That is a space we are willing to invest in and keep learning. The moment you have quality product experience, and quality programming with nominal charges, I believe you have a lot of scope. The fact is that the viewers have already been exposed to a lot of free content, which has habituated them to some extent. Everyone pays for the TV programming, without even realising that they are just because TV content is to be consumed every day. It is a subconscious action. The payment is not challenging or difficult. The moment you make a product palatable in a customer's lifestyle, he would be okay to pay.

What are your targets on breaking even?

Amazon has a pure SVOD model. When you talk about the freemium model, I think the only stakeholders in India are Hotstar and Zee5. I think the biggest challenge is because it is essentially TV programming, which is available to a consumer at a pretty nominal cost on television. Historically, even on Netflix, people are willing to pay for movies. What we are focused on is consumer centric ad-free experience. The consumer proposition is that he is getting over 10,000 hours to watch in this Rs 50, which is our base pack.

I have worked actively on the advertising-driven business too, but that doesn’t ensure consistent revenue, or you have large revenues coming in. I think the ad ecosystem needs to mature itself drastically from where it is today, but we will continue to stay S-VOD.

Do you think there will soon be aggregators of all the content on digital? How many subscriptions is a consumer expected to maintain?

It has actually started with options like Apple TV, Jio TV, Airtel and others. Aggregation is going to be an important part of the cycle. They are pivotal to reach out to the end consumer from distribution strength, though the aggregation strategy may differ. As on December 2017, five million registered subscribers came from carrier telco partners and 18 million were direct consumers.

You have a lot of movies and music on your app. How is the consumption on each?

Since Eros has the movie rights for a lot of titles, many of these come along with music rights too. That is why, we host music videos that have a topical consumption, but the majority of consumption happens on movie content. A lot of music and trailers are not behind the paywall, so they are in the sampling space for us.

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?

There are various things being proposed by BARC in terms of looking at measurement. In general, you have to first generate the unit economic in terms of what are you looking at measuring. Once there’s a consensus on that, then you have to see whether it is a TVOD, SVOD or AVOD business. The metric will be very different in all three cases, because the objective is different.

Whether a central system will be set up or not, it is difficult to say since it is early days in the business. TV is almost 20-30 times the size of the digital business.

It looks like Ekam is invariably delayed. What is the issue there?

With OTT, it will be covering everyone, but traditionally, it is a broadcast-driven organisation. So, the answer to this question probably lies with them. I think one of the reasons why BARC is waiting is that they want to conduct a pilot. We are not specifically aware of the reasons for the delay.

Eros Now has a mix of live action and animated original series. Does animation get consumed on small screens as much?

There are just two of them. That is more like ‘content around content’ property that we did around Bajirao Mastani – a strategy to try new ideas, it may not be a consistent choice. We have a significant appetite for experimentation, to try and break the clutter. That's the culture of the brand that we are. Animation was done a while ago, but even an Anand L Rai movie going on digital first is also a part of our experimentation.

A few years ago, Kamal Hassan wanted to launch one of his movies on DTH platform, before it hit the big screen. He could not do it because of a lot of hindrances, including regulation issues. Do you think the industry is in a better situation now?

A lot of the broadcast and distribution players face that issue. A constant dilemma is between the subscription on a certain pack on DTH or MSO platform versus making that content freely available on the digital platform. We don't face that issue since we don't have any such pre-decided pricing.

Distribution platforms and broadcasters will always be averse of the digital platform because that eats into their business, or so they believe. It is a difficult time for everybody in terms of business. Technology as a mechanism is disruptive in nature. So, either the existing people continue innovate to climb up the ladder, or they have to make space for others.

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