Indian OTTs Growing Fast: Hotstar, Gaana, Wynk and AltBalaji Receive More Than ₹3k Crore Funding in Just 2 Years
Internet New posts

Indian OTTs Growing Fast: Hotstar, Gaana, Wynk and AltBalaji Receive More Than ₹3k Crore Funding in Just 2 Years

OTT - nextbigbrand
Sourav
Written by Sourav
sdblogs2011@gmail.com | | Published on: June-04-2019 02:17 PM

OTT platforms are all the rage right now, with an ever-expanding market and volumes of content being produced on a daily basis. The increasing popularity of OTT platforms in India is evidenced by the growth of four Indian platforms in particular. Hotstar, AltBalaji, Wynk, and Gaana have all been funded heavily over the last couple of years by their respective parent companies, with the total investment made to these platforms being above a whopping ₹ 3,000 Crore!

Hotstar has received a total of ₹ 1,749.3 Crore in funding from its parent companies Star India and Star US Holdings subsidiary, while AltBalaji saw an investment of ₹ 300 crores from its parent company Balaji Telefilms, as reported by paper.vc in data for 2017-18. Marking the growth of audio OTT platforms, Gaana, received an investment of around ₹ 1000 Crores from its parent companies Aceville Pte and Times Internet. Another audio OTT platform, Wynk, received funding of ₹ 35.4 Crore from Nettle Infrastructure Investments, which is a wholly owned subsidiary of its parent company Bharti Airtel.

Gaana.com - nextbigbrand

Image Source – gaana.com

A lot of the credit for the boost to OTT platforms is being given to the increasingly reducing data tariffs which have lead to a boom in the number of internet users across the country. With the entry of Reliance Jio having rocked the mobile internet space, there has been a sharp spike in the number of people who use the internet to consume content in various forms on their smartphones. The Indian market alone accounts for about 450 million smartphones out of the 3 billion smartphones being used across the world, as per data shared by the Boston Consulting Group. In the same report, the analysts also estimated that out of all media consumption in the country, 16% is on digital media and the number is only expected to grow. When it comes to the youth in the country, the number goes up to 25%. As per Raghav Anand, Segment Leader, Digital, Media and Convergence at Ernst & Young, “In the OTT space, the two biggest areas in which the funds are invested are customer acquisition cost and producing content.”

Netflix- nextbigbrand

Image Source – netflix.com

For video OTT platforms, the cost of customer acquisition generally falls anywhere between $3 and $8, while for their audio counterparts the cost can be anywhere between $1.5 to $6. In terms of the cost for production of content, original audio content can take up to three to four times per hour as compared to the cost of producing video content. According to Raghav, the standard equation to follow for OTT platforms is that the cost of customer acquisition combined with the content production cost should never exceed the lifetime value generated from a user.

altbalaji - nextbigbrand

Image Source – altbalaji.com

While the investments and fundings do paint a rosy picture for OTT platforms, there are a few causes for concern. In an ideal scenario, the lifetime value of a customer would be much higher. However, that is not the case currently, where OTT platforms are struggling in maintaining the equation between growth and profitability. As compared to the television’s viewer base of around 300-400 million, OTT platforms on an average can only account for about 5 million users. This results in a considerable disparity between the ad revenues that the two platforms generate. Even the bigger platforms like Hotstar, which has about 300 million registered users, need to figure out ways to scale up and maintain the equation. This despite the fact that Hotstar offers live cricket, which makes it easier for it to acquire viewers. In terms of digital advertising as well, the OTT platforms are struggling a bit, with most apart from Hotstar not being able to account for a considerable share in the space. In the present scenario, roughly 20% of all advertising spend is seen to be on digital media. Out of this, close to 80% is seen to be spent on Facebook and Google. The rest is divided between all the other avenues, which includes OTT platforms as well.

This is where the need to balance growth and profitability for OTT platforms arises. Wider customer acquisition strategies, better efficiency in handling content and overall growth in ad revenues are just some of the challenges that need to be addressed by the OTT players who want to make sure that they survive in the Indian market in the long run.

About the author

Sourav

Sourav

Excellent story-teller, with a background in SEO and Digital Marketing.
Likes to write and give form to opinion and incidents.

|

Leave a Comment