Vanita Kohli-Khandekar: It is party time for content creators

Boom in video apps has pushed up the demand for online content creators. Will they go the TV way?

In times of war the only firms that win are the arms dealers. And content owners are the arms dealers of this (the video apps) world,” quips Nickhil Jakatdar, CEO, Vuclip. He is referring to the party that online content creators are having in India right now. 

Viu (from Vuclip), SonyLiv, PressPlay, Fastfilmz, NexGTv, Voot, Spuul, Amazon Prime and Netflix are among the dozens of video apps or OTT (over-the-top) brands in India. Each has raised anywhere from Rs 100 crore to Rs 500 crore to fulfil the promise one of the world’s fastest growing video market offers. It is also a chaotic and hyper-competitive one. For now Google’s YouTube, the original and oldest video aggregator, takes away over 50 per cent of the Rs 2,000-crore ad revenues and a bulk of the 110 million audience that online video gets. 

On the back of rising internet penetration and falling data costs, video apps are now moving from predominantly shorter videos to longer ones. It helps increase the time audiences spend and therefore the ad revenues online video gets. As a result the battle to find that one big hit — a la House of Cards on Netflix — is now getting serious. 

Take a look at the action. Along with Star India, both Reliance Jio and Amazon Prime will probably bid for the Indian Premier League, by far India’s biggest sporting property, later this month. This could push up the billion-odd-dollar price Sony Pictures Network paid in 2008 by two or three times, say analysts. The cost of rights for English shows has already jumped by that much. Vuclip recently commissioned film-maker Vikram Bhatt and others for original shows. AIB, one of the most popular online content creators is making Ministry, an original series for Amazon Prime along with those for other apps. “As a content creator it is an amazing time, because everybody is throwing money at me,” says Tanmay Bhat, co-founder AIB.   

There are dozens of such examples of large technology, broadcast firms or start-ups, allying with, bidding for or commissioning original content. The money is small compared to the Rs 8 lakh to Rs 1 crore per episode that TV broadcasters spend on a fiction or reality show. And if you know that the TV industry reaches over 900 million people and made Rs 47,500 crore in 2015, you might wonder about the fuss about 110 million viewers and Rs 2,000 crore in revenues. 

The scale is different. But online has “content arbitrage”. Broadcasters operate in a partially digital market with negligible pay revenues and heavy price regulation. Now add predominantly single TV homes and the fact that “TV” is seen as a family activity. All of this limits linear TV’s ability to segment a richly heterogeneous market. “TV is very mass,” said Ekta Kapoor, joint managing director of Balaji Telefilms last year. As a creator, she reckons her ability to explore adult themes is better with Alt Balaji, the video app her firm will be launching soon. The possibilities for exploring new genres and themes are huge. There is no censorship on content creation online a la film though the usual norms, under the Indian Penal Code and other acts apply. 

The format, its ability to time-shift naturally, to be interactive and personal thanks to smartphones liberates creators from the need to make a one-size-fits-all show that gets maximum eyeballs in an advertising-dominated industry. That is the theory on which most video apps have been funded. 

It hasn’t worked out quite that way because of the one similarity online and linear TV share — they are hugely ad-dependent. However, unlike TV where a spot costs a few lakh rupees per 30 seconds, online gets paid anywhere between Rs 100-300 for a thousand viewers. And it doesn’t look like audiences are in a hurry to pay — most subscription-driven services struggle and then go free. Much of the creativity online then is being subsidised by private equity funds, venture capital or by other business that app firms may own. The true test will be when either audiences or advertisers are willing to pay more. 

Twitter: @vanitakohlik