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What changes in the OTT space with introduction of new guidelines

The new norms to regulate content on OTT platforms likely to intensify consolidation in this space.

February 28, 2021 / 02:56 PM IST
As many as one crore Indians shifted to OTTs last year.

As many as one crore Indians shifted to OTTs last year.

At present, you can choose from around 35 to 40 video streaming platforms, but all that can change soon.

And that's because smaller over-the-top (OTT) players are expected to combine with bigger players. So, consolidation in the streaming space due to the new OTT guidelines is expected to happen sooner than expected.

In the last two years, many experts predicted that OTT platforms will see consolidation over the next five years and about 10 big platforms will remain.

Consolidation and its benefits

But now it looks like the new norms to regulate content on OTT platforms will intensify consolidation in this space.

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This is because smaller players that were dependent on adult content would prefer partnering with platforms that will focus on making more universal content.

In an earlier interview with Moneycontrol, Kailash Adhikari, Managing Director, Governance Now, A Sri Adhikari brothers enterprise, had said OTTs would have to look at creating more universal content like SonyLIV's Scam 1992.

Hence, broadcast OTTs are likely to benefit as they have been creating content for the television audience which is more universal in nature.

"Broadcasters have best knowledge of content creativity following norms," said Karan Taurani, Vice-President, Elara Capital.

But TV broadcasters that have their own OTTs can benefit if they work on a few factors.

Broadcaster OTTs include platforms like Disney+Hotstar, ZEE5, among others.

According to Taurani, broadcaster OTTs can go a long way if they are able to address issues of tech and artificial intelligence (AI) and offer better user experience.

It will also be important for such OTTs to focus on distribution via the B2C (business to consumer) route for their app as against their heavy reliance on aggregators and telcos, he added.

Up to 80 percent of viewership volumes of certain OTT platforms was generated by telcos in 2019, pointed out an EY 2020 report.

Cost of content

Another change expected is that the new norms are likely to arrest the increasing content cost in the OTT space.

Every OTT platform, to set itself apart from others, has been investing heavily in original content which has increased content cost.

In fact, the EY report noted that the cost of this content is between 2x and 10x higher than that of TV content.

As the report correctly points out, cost of one episode of a web series could start from Rs 50 lakh and could go up to Rs 2 crore. The cost could also be as high as Rs 3-4 crore for shows like Sacred Games, according to industry estimates.

Compare this with TV, the cost of making one episode of a daily soap on a Hindi general entertainment channel ranges from Rs 8-15 lakh.

Movie mania

One other change expected after the introduction of new norms is that the focus on movies will increase. This is because all censorship norms are met by producers while releasing films in theatres.

This sounds like a strong opportunity, especially for small to medium filmmakers, as more OTTs will be looking to acquire films in a bid to offer fresh and new content to their viewers.

While a lot is likely to change for OTTs with the new norms coming into the picture, the good thing is that there's no blanket censorship. So, OTTs have freedom, but they have to tread with caution.
Maryam Farooqui
first published: Feb 28, 2021 02:56 pm

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