In the world of over-the-top (OTT) streaming platforms, the majority of players operate on the “freemium” model, offering a mix of free content with advertisements and premium content behind a paywall.
However, as the quest for the right revenue model continues, platforms are now exploring transactional video-on-demand (TVoD) services, providing limited-period movie rentals at prices lower than full subscription fees. This article delves into the evolving landscape of OTT revenue models and the strategies employed by major players in India.
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The Emergence of TVoD
With TVoD, OTT platforms aim to replicate the success of cable TV and direct-to-home (DTH) services by offering bundled, sachet-like movie rentals at affordable prices. For example, ZEE5 offers movie rentals ranging from Rs 29 to Rs 349, providing viewers with the option to sample a variety of content. The focus for platforms like ZEE5 and Amazon Prime Video is to expand the market and build a subscriber base, with TVoD rentals contributing a small percentage to their overall revenues.
Challenges of TVoD
TVoD has its challenges, including the inconvenience of using one-time passwords (OTPs) and credit cards for each rental. However, industry experts liken this model to the FMCG industry’s successful foray into rural markets with affordable sachets, suggesting that TVoD could attract a new segment of subscribers. Platforms will need to carefully analyze whether TVoD complements their existing subscription offerings or potentially cannibalizes their annual subscription base.
The Dominance of Subscription Video-on-Demand (SVoD)
While TVoD is gaining traction, the subscription video-on-demand (SVoD) market continues to grow as the Indian OTT industry expands. However, it’s worth noting that an estimated 50-75% of SVoD revenues currently come from telecom bundling. Industry players are focusing on understanding subscriber activation and engagement to ensure sustainable growth in the streaming industry.
Beyond Video: Expanding Offerings
Facing the economic challenges of producing exclusive content, OTT platforms are exploring ways to provide additional value to viewers. Amazon Prime Video, for instance, leverages its shopping benefits to attract and retain subscribers, capitalizing on India’s high proportion of Prime members who also stream Prime Video regularly.
JioCinema, backed by Reliance Industries, benefits from access to over 400 million Reliance Jio telecom subscribers. Netflix, with its niche audience, aims to enhance viewer engagement by gamifying popular original series. In this competitive landscape, platforms without a content-plus edge may need to innovate or consolidate to thrive.
The OTT space in India is witnessing a dynamic shift in revenue models as platforms experiment with freemium, TVoD, and SVoD offerings. While the market is still evolving, platforms are becoming increasingly responsible in designing sustainable streaming models. The ability to provide diverse content, explore collaborations, and offer added benefits beyond video streaming will be key to capturing and retaining subscribers in this rapidly growing industry.