Theatre reopening may impact OTT originals, platforms to see slower subscription growth

Studios and producers are lining up movie releases for cinemas

The pandemic lockdown helped the video-streaming industry grow, with viewership and subscriptions numbers increasing significantly during the period. Now, with restrictions being lifted and theatres reopening, the streaming platforms are likely to take a hit. 

According to analysts tracking the space, the number of direct-to-digital releases could fall with producers and studios lining up movie releases for cinemas.

It was only last year that the over-the-top (OTT) platforms opted for a new content strategy of offering direct-to-digital releases, and its subscription numbers shot up-- from 21 million paid subscriptions in 2019 to 53 million last year.

Lost advantage

"When theatres were closed, many big films were released on OTT first as originals. Now, such films will go to theatres first and then to OTTs. This takes away a huge marketing plank that OTT platforms such as Disney+ Hotstar, Amazon Prime Video and ZEE5 have been relying on since mid-2020," said Shailesh Kapoor, CEO of media-consulting firm Ormax Media.

Nitin Menon, cofounder of NV Capital, sees a marginal dent in the overall paid subscriber base with tent-pole movies not being exclusively premiered on OTT. NV Capital is a credit fund for the media and entertainment sector.

Kapoor sees the growth of the platforms slowing down for the next few years. "As per the Ormax OTT Audience Report 2021, India has an estimated 96 million paid subscriptions on OTT platforms. This number has grown over the last two years, at an estimated annual growth rate of 25-30% with the lockdowns. The growth here onwards will be slower at 15% for the next 1-2 years at least," he said.

Drop in viewership

Even in terms of viewership, the numbers hit a peak during the lockdown and now they are falling to the pre-COVID levels.

Hiren Gada, CEO at Shemaroo Entertainment, which also runs the OTT platform ShemarooMe, said, "With the unlocking, the consumption has come down from its peak COVID period and gone back to a pre-COVID level. At its peak, which was April-May last year, consumption on OTTs had increased by over 40 percent," he said.

However, Gada thinks that reopening of theatres will be good for OTTs.

"The big film release pipeline was completely dry because producers were not able to do a nation-wide release. The OTT business was suffering from lack of supply of content and were paying higher prices to compensate the producers for no theatrical revenue," he said.

Content strategy

While there might be some delay in their digital release, movies will continue to stream on these platforms. Chandrashekhar Mantha, partner, Deloitte India said that while the window (period for a film to come on an OTT) might increase, content partnerships of OTTs with studios will continue to stream movies on digital platforms.

Filmmaker and producer Akshay Bardapurkar, who has also launched a Marathi OTT platform called Planet Marathi, thinks that OTTs face no competition from theatres because cinemas across India have not opened completely.

Also, the theatre experience has to make it worth people's while. "Theatres have to create an experience and compel people to come out of their homes. If they don't, people might wait until a film comes on OTT," said Bardapurkar.

Abhigyan Jha, co-founder, Mrinal Abhigyan Jha Productions concurs with Bardapurkar. He said, "Theatres need to have much bigger and better content to convince people to cough up that kind of money and to make that trip.”

Adding to this, Deloitte’s Mantha said, "While theatres have reopened, in many states seating capacity is still not 100%. Audiences are still getting back to theatres. During the festive season, there will be footfalls in theatres but it is going to be a gradual process."

Festive offerings

For the festive period, OTTs are upping their game by offering great content.

For Diwali, Netflix will stream Meenakshi Sudareshwar, Disney+Hotstar will release Hum Do Hamare Do starring Rajkumar Rao, ALTBalaji will offer Girgit and Pavitra Rishta season 2 their festive releases, Eros Now will stream a horror show Aisa Waisa Pyaar and ShemarooMe will launch a Gujarati show.

As for regional OTTs, Planet Marathi will launch a Marathi web series Anuradha and Hoichoi will stream Byomkesh 7, this Diwali.

While reopening of cinemas will change OTTs’ content strategy to retain subscribers, the platforms already have a certain amount of customer-stickiness because of the pandemic, said NV Capital’s Menon. "OTT players will continue to innovate to retain and grow their existing subscriber base,” he said.