Sun TV Network is looking at expanding its presence in the over-the-top (OTT) segment with exclusive content in its app Sun NXT. The company is expecting the revenues from this to grow as it ties up with telecom majors to offer the content through the TV apps of these service providers.
The company, which launched the digital content platform in four languages — Tamil, Telugu, Malayalam, and Kannada — in June 2017, has been expanding the content library from its programmes telecasted in its channels, offering on a subscription basis. The subscription-based app, which sees more than 20,000 downloads per day, has crossed 1 million downloads so far.
The monthly subscription revenue from the app is around Rs 5-60 crore revenue a year. This is expected to go up in the next fiscal year when it would increase its investments into the platform, said sources. This revenue, at present, is without infusing much into exclusive content.
ALSO READ: Gangs of the OTT War
Sun TV Network has around 8,000 movie titles in its library apart from the content produced for its television channels. This, according to senior officials from the company, shows the potential of the business if there are investments made into generating exclusive content. “Till a few months back we were not convinced about the viability of a pure play OTT business case. But, we believe the situation is changing. We are now encouraged to explore the feasibility of launching exclusive content on Sun NXT," Sun TV Group Chief Financial Officer S L Narayanan told analysts earlier.
The company is expecting fixed revenue to come from agreements with telecom service providers. The company has also started feeding exclusive content into the app, which would be expedited in the near future.
The firm expects the mobile phone ecosystem to be a big disruptor and to encourage the business model.
According to a report by the Boston Consulting Group (BCG) in November last year, the Indian video OTT market is expected to go up from $0.5 billion to $4.5-5 billion in 2023, with around 40-50 million paying subscribers in the country. On an average, Indians use 2.33 OTT video apps, around 68 per cent have two or more than two such apps downloaded.
Already 16 per cent of the media consumption in the country is on digital platforms, which is not to the levels of the developed countries but is growing fast. Around 25 per cent of the media consumption is digital and this indicates that digital growth in the country is likely to catch up, it says. The OTT space in the country is also hyper-competitive with various business models and value propositions, with a number of players in the market has witnessed a 3.5x increase in six years, growing from just nine players in 2012 to 32 in 2018.
"Further, all platforms struggle with retention of consumers (on an average 50 per cent of OTT apps are uninstalled in the first seven days of installation). The competition for user share is intense (every OTT platform is vying to be among the top three of the consumer's attention)," says the report.
Industry sources say the content cost is heavy in the OTT space, especially for those which are standalone, which would result in the subscription fee to be exorbitant compared to the TV subscription prices in the country.
The BCG report, however, expects with various factors falling in place, OTT is expected to grow faster and given the challenges of electricity availability, TV screens and others, the rural market has the potential to become OTT first market.