SonyLIV, the streaming arm of Culver Max Entertainment (previously known as Sony Pictures Networks India) is betting on the advertising video on-demand (AVOD) model for growth in India.
The platform, which offers paid and free content, expects its ad revenue to grow 40-50 percent this year, a top company official said.
According to Ranjana Mangla, head of ad sales revenue at SonyLIV, a subscription-led strategy alone will not suffice for a mass-media platform.
“Content acquisition is a fairly expensive deal and by just sticking to a certain model it doesn’t become viable,” Mangla told Moneycontrol. “A combination of the two will help.”
According to experts, streaming platforms spend Rs 50 lakh to Rs 1 crore per episode for shows. The cost of content is expected to increase almost 30 percent annually over the next two years as demand increases from existing and new platforms.
The AVOD market is 10 times the size of the subscription video-on-demand (SVOD) market, giving streaming companies more room to increase revenue. The ad market for streaming companies is expected to grow to $2.4 billion in 2026 from $1.1 billion last year.
Mangla said the ad model is the future in India, where audiences are willing to watch ads for free content.
“The Indian audience loves free content and is ready to watch advertising for it. That is a choice the viewer makes,” she said. “For a certain type of content, the audience opts for advertising and our experience shows that in the case of catch-up TV content, they don’t mind advertising. Our view-through rates (completion rate of watching an ad) are as high as 90 percent.”
Subscription-led streaming giant Netflix is also looking to take the ad route to offset a dwindling user base. Telugu-Tamil streaming platform aha entered the AVOD space, which it sees as the next phase of growth, and expects advertising revenue to contribute 15-20 percent to business.
For broadcast platforms such as SonyLIV, 40 percent of revenue comes from advertising. The platform expects growth in ad revenue on the back of sports and general entertainment content including Kaun Banega Crorepati hosted by Bollywood star Amitabh Bachchan, Indian Idol and Shark Tank India.
Sports, shows
“Sports is a big vertical and 40-50 percent share in overall ad revenue of the platform is from sports,” Mangla said. “We have just wrapped up the India-England cricket tournament and the Commonwealth Games 2022. We have the ongoing India-Zimbabwe tournament and then we have the US and French Open tennis tournaments. We have back-to-back sporting tournaments and have 300 days of live sports activity.”
JSW Group, Acko, Adani, LIC, Maruti Suzuki India and Herbalife Nutrition came on board as sponsors for the recent CWG 2022, she said. Advertisers are also lapping up non-fiction content like KBC which is in its 14th season.
“For KBC, there are sponsors including Acko, Vimal Elaichi, Voda Idea, Ultra Tech Cement, Asian Paints and brands like RBI. Also, IDFC First Bank came on board as it chose to go digital-first,” said the ad sales revenue head.
For the second season of Shark Tank India in November-December, the sponsorship slots are almost sold out and “we have close to eight sponsors,” she said. “The next show is MasterChef India with which we are entering the food vertical… We have a lot of queries from advertisers for MasterChef India.”
Acko, which advertises across sports and other content on SonyLIV, said its spending on marketing on the platform has gone up by 150 percent to over Rs 30 crore this year.
“Last year, we witnessed strong business growth by being on the platform across all our key markets,” said Ashish Mishra, EVP of marketing at Acko.
Acko is associated with KBC, India’s tour of England, Shark Tank India, CWG 2022, UEFA Champions League 2022-23, and LIV Originals, among others.
Mangla is also counting on a revenue surge during the upcoming festive period, for which there is an acceleration in terms of enquiries from advertisers.
“Ad revenue should be 40-45 percent higher during the festive period than the regular periods,” she said.
Growth avenues
Analysts said while digital advertising is growing at 25 percent annually, the AVOD market is expanding at 30-35 percent in India.
According to Mangla, while streaming ad revenue taps digital-first revenue, there are other avenues as well, such as cinema advertising. Companies that advertise on cinema are looking at spending on streaming platforms.
“Also, connected TV is growing and the trends are similar to TV including prime time. Watch time is also higher as compared to mobile and it is a multi-audience environment so, your multiplier is a minimum of four,” said Mangla.
