Monetisation of OTTs

By: Faisal Kawoosa, Head- New Initiatives, CMR

OTTs or specifically OTAs (Over the App) have seen a surge in a year or so on the Indian landscape.  After 4G started becoming commercially available to users, the content industry went ahead with bringing the entertainment and other content via apps over a Smart device, predominantly Smartphones.

Currently, there are only a few traditional models being followed by these OTAs to generate revenues.  Either they offer some content against a monthly subscription or there are ad insertions in-between. There is nothing new brought on to the table as regards enriching the experience of a user.  It is just the broadcast being fed through a different channel now.

In this scenario, the traditional TV and OTAs become competitors as the end product is the same.  Yes, there is a bit of add-on in terms of catch-up and on-demand content. So how do OTAs differentiate to bring something unique for users taking the experience to a new level, which would be technically too difficult for the traditional broadcast industry to replicate?

One, of course, is advertisements driven by analytics, where these apps can insert ads as per the analysis of various data sources that can be obtained from the personalised device, Smartphone of a user.  So, the user can get to see only the relevant ads. Second, again, could be serving location-based ads leading to hyperlocal advertising.

Serving of preferential and hyperlocal ads definitely would bring a different experience through OTAs for its users and distinctly make them different than the conventional TV viewing.  There is also a scope of changing the revenue model for OTAs that will democratise the entire ad space for a user.

Between the extremes of ad-supported content and content against subscription, there could be a continuum of ads and subscription that would give a user choice to select the frequency of ads against the content they are going to consume.  This model of ‘differential pricing’ would democratise the ad space and give subscribers the power to select how many ads they would be comfortable with while watching their favourite entertainment show or some sports events. It also brings in a consent mechanism where users decide how many ads are okay for them to watch.

Bringing in ‘differential pricing’ model would increase the stickiness of users and take their experience a few notches up while giving the app owners an extra bit of revenue.  They would have a mix of assured and consumption-based revenue improving their P&L attracting more investors for next round of funding that most of these would seek in due course as they grow.