Why Streaming is Becoming More like TV
As Netflix, Amazon Prime, JioStar and others try to scale up, What does this new phase mean?
In Episode 3 of The Media Room, media expert and author Vanita Kohli-Khandekar speaks to 3 experts, Tony Gunnarsson, Principal Analyst, TV, Video & Advertising at Omdia, Vivek Couto, Managing & Executive Director at Media Partners Asia and Sameer Nair, Managing Director at Applause entertainment on the biggest change sweeping across the world of streaming - its linearisation. As Netflix, Amazon Prime, JioStar and others try to scale up and become profitable, most are doing all the things TV did for reach - massy shows, sports, games, anything that would help them reach more people. What does this new phase mean?
NOTE: This transcript is done by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on [email protected].
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TRANSCRIPT
Vanita Kohli-Khandekar (Host): Netflix was launched as a DVD rental service in 1997. Ten years later in 2007, about two years after YouTube’s birth, it launched a video streaming service. None of these events changed how people watched their entertainment drastically. It was not clear what was being set in motion. It is when Netflix started commissioning originals beginning with the House of Cards in 2013 the game changed irrevocably. A new set of companies emerged. Apple, Alphabet (Google and YouTube) Meta (Facebook, Instagram and WhatsApp), Amazon (Prime Video, MX Player) among others started spending billions of dollars trying to get the audience that studios and broadcasters had a hold over for decades. This set in motion a chain of events that have ended up redrawing the global media map.
In 2018 when it became clear that the players with the biggest pockets and platforms would have the best negotiating power, Rupert Murdoch chose to sell Twenty First Century Fox’s entertainment assets, including, Star India to The Walt Disney Company. Across markets in the world, mainstream media firms were in consolidation mode. Many built their own streaming apps and sunk billions into it even while the core business continued to get eroded. Except perhaps for Netflix, no streaming service in the world has seen profits. The last two years have seen some correction and right-sizing as content budgets were held steady instead of the usual double digit rise.
Across the world and in India, streaming video is now seeing a change in texture as OTTs strive for scale and reach which justify the kind of money they spend on shows. Much of what we see is what TV did to achieve scale in the nineties. My analyst friends call it pay TV 2.0 and I call it the linearisation of streaming.
I had chats with three people on this change. Each of them offers a different perspective. But heard together, their views give you a complete picture.
The first is Tony Gunnarsson, senior principle analyst, TV, video and advertising for Omdia, a global analyst and advisory firm based out of London. Over to Tony
INTERVIEW TRANSCRIPT
Tony Gunnarsson: Yeah, so there's been attempts to create a replacement for Pay TV through streaming. Virtual MVPDs in the US, Virtual Pay TV Operators Internationally, those are the terms we typically use. And there's been big news around that recently in the US with Disney buying Fubo TV and that sort of thing.
But what I argued in my report is that actually streaming through the flagship products of Disney+, and Max, and Paramount+, and others, they're building up a sort of catalogue of content to really appeal to a mass market. You will have, of course, the traditional fare of drama series and movies, some produced by the streamer or the media company that owns the streaming platform, but also obviously third-party content. And over the years, as you know, I've been covering this field for 15 years now.
And the streaming services have really evolved away from that traditional S-Vod model of bingeable series and movies, and they're becoming something entirely different. You have game shows, reality TV shows invested by companies like Amazon, and Netflix, and others. Documentaries have, it's fair to say, been a part of the streaming offer from the beginning.
It makes sense. It's cheaper to produce than to produce full-length movies. But the picture, as I see it, is that these streaming services have pretty much all genres, all types of content.8
Some of that content is a lot more linear TV-like than what it used to be. And of course, the big topic currently is sports. We're starting to see a lot more sports get put onto streaming platforms.
And my day-to-day job, of course, is looking at not just the US or the most mature markets in the world, but around the world. One of the things that I found particularly remarkable or peculiar is how Disney Plus and Max, or formerly HBO Max, are positioned in Northern Europe, where I live. They are putting up big billboards with Swedish football leagues to sell subscriptions to Disney Plus.
And looking at that, it's like, it's not Mickey Mouse. It's not Star Wars. It's not The Mandalorian.
It is actually football. And it's got a Disney logo. And for me, that sort of illustrates this point that I'm talking about.
The streaming services are becoming pay TV-like. They're not trying to replace pay TV with linear channels per se, but the content and the experience for the customer is comparable to pay TV. So pay TV 2.0, it is a click-baity title that I came up with, of course. I have to think about the audience. And I actually spoke with a client, Netflix, the other day, and they had questions about pay TV 3.0, which is their definition of streaming services with linear-like content. But yeah, it's hugely interesting.
And it's not just necessarily about content. It's not necessarily about sports either. But to have a product, a service, a streaming service, that appeals to a mass market, i.e. they have everything, which is what pay TV used to be. Then, of course, there's other things around it. We can talk about distribution models, the pricing, the streaming services are coming up in price in Western markets. $20 a month for a streaming service that doesn't have linear channels.
That's the direction of travel where we are. So what's the cheapest basic cable package in North America or Western Europe? Well, it's about $20, $25.
So these streaming platforms are, from the beginning, they were dirt cheap. Five times the cost of basic cable. Now they're kind of approaching that level.
So in many different ways and different angles, I would say that streaming is becoming like pay TV.
Vanita Kohli-Khandekar: You're absolutely right. And it's something one has seen it coming through and happening. But Tony, is it the next logical step to take for more growth, for larger reach?
So, you know, I would say that Prime S-Word or getting whatever x million in India, for example, if you're looking at 60, 70 million subscriptions, I mean, that is the level to which the market will subscribe to S-Word service at that, whatever the prices, the average prices are. But even in the rest of the world, I mean, Netflix doing the ad tiers, for example, and your report says that many of the big guys now get up to 24% of their revenues from the ad tiers. Isn't that a logical next step to growth?
And therefore, this massification has to happen. A, does it come with some pitfalls, whether it's on the programming, whether it's on distribution, because you talked a lot about bundling also in the report. And your previous report also, I remember you talked about bundling.
So I'm sorry, there's lots of questions in that one, but if you could tackle that.
Tony Gunnarsson: Yeah, no, no, absolutely. I know you're right. The advertising, I could have added that for my previous response there about pay TV 2.0, because advertising on pay TV and for me, this has been a thought process that took many years to come around to. You know, I've been covering Netflix and other services like that. When they started expanding internationally, what they offered seemed radically different to pay TV. Advertising being part of that, and as you know, Netflix, they up until relatively recently said that they're all about the user experience and advertising or commercials shouldn't be a part of that.
That's what they argued. But now everything's changed. They're making money, profitability, and no one's making money from streaming yet.
So yeah, around 20-25% in the US. I think the numbers are slightly lower if we take a global view, but those streaming platforms rely already on advertising. But the point here is this is still very much early days.
Looking at our forecast currently, which I shouldn't say, but I think we are being a little bit modest or conservative. I think the advertising part is going to go up, maybe around 40-45% within the foreseeable future. That's how quickly this thing grows, and that really changes the economics of streaming.
As I said, no one's making much money from streaming currently. In fact, the term we use often is creative destruction of revenues by shifting from traditional platforms to streaming. Pay TV has generated money for the whole entire value chain.
It's a model that works for everyone. Streaming is directly auto-setted up, but with advertising, it's starting to make more sense for others. But yeah, distribution and bundling is a super big topic for us.
It has been for a number of years, but it's becoming more intense currently. So just to touch on that quickly, bundling, of course. Telcos and pay TV distributors have been principal in taking streaming platforms and making a mass market.
That means selling or adding streaming services to existing products and services that customers have. There could be, I wouldn't go as far and say utilities, but broadband, mobile, fixed landline in some markets is still important. And you buy those products and you get discounted or for free or otherwise subsidised access to things like Netflix.
Now, the streamers themselves have realised that this is important. You can't go it alone against the hype for direct-to-consumer. They aren't doing direct-to-consumer.
They are very much working with partners to make their services household services, scalability and that sort of thing. But yeah, we're now at the point where they're looking beyond strictly working with telcos. They're now, of course, doing increasingly, there are financial and banking products that are being bundled together with things like Netflix, which is crazy when you think about that, but that's a fact already.
Airlines, where you get points and then you can use your points air miles to get them a streaming service, that sort of thing. Other consumer products and membership clubs and loyalty clubs, those sort of things tend to have streaming services as part of that. But lastly, we're now starting to see an increased interest in all manner of aggregation of services, of streaming services.
And again, you and I have talked about this in the past. This brings us all back into pay TV, which was the big bundle of content from different producers and into one big package, right? And that's kind of what we need to be for the customers.
And I have an example. If I may, the other day we spoke to a telco in Latin America. They give for free seven streaming services to their customers, third-party streaming services.
So seven services, Netflix and a couple of others, Amazon, are provided for free as part of their bundle of telco products and also telco TV and telco streaming service. They do this. However, activation of that is incredibly difficult.
Customers get, for example, access to Amazon Prime Video for free as part of their mobile phone bill. But only one third of customers actually go through the trouble of activating that. And the number of steps from activation to being able to watch something on Amazon Prime is 16 steps.
That's the various signings, emails, confirmation, this, that, and the other. And it's very, very difficult for customers. So in my report, I talk about how direct-to-consumer has sort of failed the customers in a way.
Not only are they losing money moving from privacy platforms and services to a streaming offer, they've also sort of lost sight of how you and I and how people behave when they watch TV. It's too difficult as an analyst, socially. I get questions all the time.
I'm trying to watch Yellowstone. How do I do it? I'm like, well, you have to subscribe to this service, but it's not available on my smart TV or I can only watch it on my phone.
But then it's like the casting and it's very difficult.
Vanita Kohli-Khandekar: This is exactly why I think Netflix has the best UI, the business, the user interface, and the whole, at least from an India perspective, I can tell you, it is very difficult to sign up and get to the stage because you sign up on impulse. You watch a trailer or something and you say, oh, this looks interesting. But it has happened to me at least a dozen times that I've given up because it's just so complicated.
You're running from your laptop to your phone, from your phone to your TV. But tell me one thing. A lot of that, what you're telling me, whether it's bundling or ad tiering, et cetera, what does it mean?
Because if it is coming back full circle to a more pay TV or a TV kind of ecosystem, does it also mean more rationalisation of costs? Does it mean lower ARPUs and therefore lower profitability? What is it doing today?
Because like you said, it's created destruction of value. You were at $45 and $80 bundles and you've come down to $20. Where is the rest of the money going to be coming from which creates the kind of programming for which you went to stream in the first place?
Tony Gunnarsson: Absolutely. You're absolutely right. And the devil is in the details here.
So this is like every company like mine is trying to understand the economics behind all of this. The biggest story besides the advertising on streaming is standalone bundles. So Disney and Warner Brothers have a deal in the US where you can get Disney Plus and Hulu and Max in one bundle for one price.
Who's benefiting from that? I mean, customers are. So you get free services for the same price as Netflix without advertising.
Okay, that bundle is with advertising. If you want to remove it, it's a lot more expensive. I'd run $16 for free streaming services but they are in their own right, each of them competing with Netflix.
Netflix without advertising costs around $16 in the US. So who's making the money there? How are they going to share revenues between Disney and Warner Brothers Discovery?
We don't know yet. We're certainly scratching our heads and trying to figure that out, speaking to contacts in the industry, et cetera. But the point really is that these details, as I say, the devil is in the details.
That's why it's taken this long for rival companies, US media companies to talk to each other and try to do something together. So HBO Max or Max and Disney Plus are now sold together. That's taken them a long time to get to that point, even to speak to each other and do that sort of thing.
Others have tried in the past. Amazon, when they did Prime channels, they went knocking on every door of every TV and video company in the world. We would like to aggregate your services within Amazon Prime.
And I know for a fact that a lot of people said, absolutely not, no way. We're not going to do that. But things are changing.
And the reason for that is that no one can succeed on their own. But they have to work together. Telcos do a great job of aggregating the services.
But that market, in my analysis, has reached an early maturity. There's not so much further they can go. So maybe one fifth, one fourth of the market comes through the telcos.
But these are services that are built for a mass market. And they're not going to get there through telcos alone. So yeah, there needs to be some sort of standalone aggregation of all of these services.
And that means they need to talk to each other and work out the details around the pricing and who makes the money. It's very, very difficult. And I don't anticipate that being sold for the, you know, it's going to take a couple of years before we even start to see the beginning of that sort of thing.
But that's the way it's going, in my opinion.
Vanita Kohli-Khandekar: So what about cable companies? Wouldn't they be the ideal sort of people to bundle this? Especially because, let's say, in the US, for example, broadband cable is very common.
In India, it is not. Wouldn't cable companies seem to be the right people to aggregate this? Why has that not happened?
Tony Gunnarsson: That's a great question. So the first thing is, they are already doing that sort of thing. But that's tied to, you know, a legacy product and service.
The challenge from their point of view is they have their own products. They're not necessarily worried about cannibalisation currently. But every day, it seems, certainly so far this year, I've spoken to customers asking about, should we keep the set-top box?
Should we continue to do our own TV service, our own streaming service? We're, after all, funding all of these third-party services, right? A lot of change can come very quickly and very suddenly, but it can also take a lot of time.
And we're now in this very chaotic period in the development. And like the news about Disney and FuboTV and Venu, the sports thing, and DirecTV launching their MySports package, $70 a month, and you get a bundle of sports rights streaming. A lot of this is happening really quickly, and there's lawsuits around it too.
It's kind of like, think about how the theatrical exhibitors, the cinema chains are acting towards windowing in the US. Netflix says, we're going to release our brand new movie on Netflix. And everyone goes out, we're going to blackmail Netflix movies from now on.
There are very powerful vested interests in our industry that want to, obviously, for obvious reasons, maintain the status quo.
Vanita Kohli-Khandekar: A lot of what you're saying, though I see a lot of green shoots in India, is it more true for developed markets? Are there sort of trends that you see that this cluster of markets in the world, this is more true for? For example, in India, pay TV remains reasonably strong.
It's not declined as sharply as it has declined in the West. Even newspapers remain strong, by the way. Last week, I was interviewing a newspaper man.
So when we come to streaming, is this more true for a cluster of markets, whether they're developed or from other parts of the world?
Tony Gunnarsson: So again, I've had to go through a sort of evolution of thinking here personally, because I feel like maybe five, 10 years ago, the idea was that developing markets would leapfrog some of the developments within the mature markets, right? But I'm increasingly seeing, I went to Asia twice in the last couple of months, and a lot of innovation I see is actually coming from developing markets, not from the West, as it were. I think a lot of innovation can come from India, for example.
And I think it does. And that might actually take a while before those kinds of solutions are put into practise in the West.
Vanita Kohli-Khandekar: And India is also a very ad-heavy market. But Tony, your prognosis for this year, and what is your sense of where we are going to see streaming? You're saying that streaming will overtake pay TV in the current year.
So where is this headed in terms of the texture of the business and in terms of size?
Tony Gunnarsson: Yeah, yeah, absolutely. So I had a conversation yesterday with a company in LA that does both streaming and paid TV internationally and domestically in the US. And they were incredibly worried about growth and, you know, bad times and change and things like this.
And we're speculating whether growth is going to happen this year. Certainly our numbers are indicating that advertising is going to be the game-changer. That's going to turn it all around, not all of it, but make that change that is needed to take streaming to the next level.
If you add up all the different pieces of online video, then yes, the revenues are going to be bigger than paid TV. And that's actually a big sort of milestone. And that's happening this year, 2025, at the global level, driven, of course, by the US and other mature markets.
But again, I've seen similar things happen in the past where those sea change evolutions in the market happen. And then suddenly, you know, companies make swift decisions that change everything. And then a lot of other companies will follow.
I don't think it's going to be this year, but I think 2025 is going to be a modestly good year for TV and video. There's going to be more growth, things like fast and AVODs and hybrids. It's starting to actually pick up the way that I didn't really anticipate.
I didn't think it would. And an example of that, which I keep returning to because I'm so fascinated by it, because I'm a premium contents guy, but I'm starting to see a lot more younger demographics or even my own demographic spending a lot of time watching reruns on fast services because they have nice smart TVs that come packaged with Samsung TV+, Bluetooth TV, that sort of thing. And they're finding reality TV shows produced by MTV five years ago.
And they spend all their time watching that. You know, my friends, family, and I asked them, so what about Netflix? Don't you watch, you know, Squid Game 2 or whatever?
Yeah, we watch that too, but no, I just want to watch this reality TV show. It's so good. The whole thing runs fast.
And I've been a huge sceptic because it's reruns, it's daytime TV content. If I want to watch something, I would go, I know exactly what I want to watch. Okay, I'm an analyst, so I also know what service it is.
You know, the sort of talkable new drama series seems to be less interesting to customers these days in ways they didn't perhaps expect. And I've been saying that because of public broadcasters in Europe, for example, fast is probably not going to be that successful, but I'm being proven wrong. Again, it is becoming super popular.
And from people that perhaps, I don't want to be arrogant or anything, but people are, you know, they're well-educated, well-read, they have the money to pay for content, they could buy and rent if they want, you know, latest movies or, you know, they probably have five, six streaming services, yet they choose to watch things with advertising on a fast service because it's so convenient. It's that lean back experience that all the people like you and me will remember, you know, it really appeals to people. And I didn't think it would be this perverse, but it really is.
It's really, really powerful.
Vanita Kohli-Khandekar: You know, what you're saying resonates in some way, in India at the top end, we are all, I think streaming is very well penetrated, but at the middle and the lower end, what is driving growth of video, and you know that India is like huge video consumption, is free TV and fast. So YouTube, and there's a free DTH, what you call a satellite service, we call it direct to home. It's called FreeDish, it's from the state broadcaster.
And YouTube, these are the, any free video you pick up, it is the, and it also gets, YouTube alone is a $2 billion advertising business. Just YouTube. And of course, your Samsungs, etc.
offer anything like 50 to 100 channels, which is a fast market. All of that is the growing end of the pie, not this end of the pie.
Tony Gunnarsson: Absolutely. Yeah. You know, like fast, it's not about the number of channels, because it doesn't matter if, you know, you can have 10,000 channels, and people only watch five, but those five are watched enormously.
Fast is going to be like YouTube. YouTube is the world's biggest TV service currently. And it continues to be.
And like, I thought maybe five years ago, that YouTube would lose out to public broadcasters, because they are loved everywhere, but also to SVOD services. But actually, YouTube just continues to grow. It's a big success story.
We shouldn't be talking so much about Netflix, it's actually YouTube. And I don't think we really fully understand how powerful they are. Personally, I see it for game streaming.
It's super, you know, if you play video games, you also have to watch others play video games. I used to stand on stage and say, I'm too old to even understand why you would do that. Well, I do it myself now.
I do it myself now. But it's not just that. It's just YouTube has democratised TV viewing and TV producing, content producing in ways that I'm continually fascinated by.
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Vanita Kohli-Khandekar (Host): Now lets zoom in on the Asia pacific markets with Vivek Couto, co-founder and executive director of Media Partners Asia. MPA is a Singapore based research, advisory and consulting firm in the Asia Pacific media and telecom sector.
INTERVIEW TRANSCRIPT
Vivek Couto: I think a few things stand out. Some are obviously as one would expect, but at a more accelerated level is the pace of transition online.
You know, if we look at it, 24 to 25 billion dollars in new revenues over the next five years are coming almost entirely from a streaming economy led by UGC and then obviously subscription video on demand and then what we call premium advertising video on demand, which is very important for some of the key local players that we look at. And with that surprise comes the disappointment and challenge that television is declining faster than we expected. We always thought about TV's decline as very much a US phenomenon, but it's actually happening at a pretty accelerated rate, particularly in the advertising economy in India and in Japan and in Indonesia and even in South Korea.
These are big TV markets. I think that's something very important. At the same time, as a result of that, you're seeing new things develop such as retail media where you're seeing these big commerce giants really grow advertising pools.
In fact, 50% of incremental growth over the next five years is going to come through in the ad economy specifically, is going to come through retail media, particularly in the top six markets. That includes China, Japan and India.
Vanita Kohli-Khandekar: What do you mean by retail media?
Vivek Couto: Retail media are basically companies like Amazon or ByteDance or companies like Tencent who have big e-commerce businesses in the region and are growing at quite a rapid rate in Korea and in the region. And we're seeing that particularly in China, India, Indonesia, Japan and also in Korea. So advertising is going to be a big pillar of the business going forward.
It's just going to get bigger and more important, particularly as players develop strategies to monetise on connected TV in markets like India. I think you're seeing connected TV right now at about 15%, 20% penetration. It's going to double over the next five years.
So yes, that benefits YouTube substantially. That's the largest player right now in connected TV. But it's also going to benefit other players, local players in India, such as Geostar or Tiva in Japan or various other players.
It will also benefit long-form streaming players who love big screen consumption such as Netflix and Prime Video and so forth. So connected TV is another big theme that we're seeing going forward. I think the other big thing that we're seeing is people are starting to make money in streaming.
So we're seeing the first signs of people profiting and making money either as a standalone business or merging with other players to really compete at a scale. So we've started seeing that in Japan, in China, where Tencent Video is profitable now. And we're also seeing that in Australia.
And I'm sure we're going to start seeing that in places like India and Indonesia over the next three to four years as well.
Vanita Kohli-Khandekar: So those are the three big ones. Retail media, the decline of TV, and streaming is starting to make money. I'm surprised about one of the themes. I remember two months back, I met Uday, and he says the decline of TV is because people are not investing in TV.
Is that, I mean, how would you react to that? And one of the markets which everybody talks about is a little steadier compared to other global markets or your back markets is India. Is it just advertisement revenue driven or is there something more at play here?
Vivek Couto: I think there's a big structural shift in India, right? As you well know, particularly with free dishes and the rise of cord nevers, you're seeing the universe shrink by 30 million plus. India had its worst year in television since the pandemic.
So it's down by 8% to 9%. So for sure, a lot of these things are driven by where's your focus, where's your resource, where's your investment? Now, what we're seeing is, without a doubt, for the global players that operate in this region, some of whom have legacy TV businesses, whether it's Warner, whether it's Disney, they, I know, have streaming businesses.
They're putting a lot more focus, a lot more resources, a lot more investment into streaming and into storytelling for streaming and, to some extent, theatrical. For the local players, yes, they're putting more resources into television where they can. But sometimes the pace of change and the velocity of change and shift online means that you have no option but to manage TV as a cost business or as a margin business with little resource and investment.
And you need to focus more of your resources and capital towards driving streaming or bowing out and just saying, you know what, I can't compete in streaming. I'll just do TV and I'll licence the hell out of the rest of my business to these global players. So, for sure, if JioStar falls between sports and entertainment, they have a very strong business in television over the next three to four years, let's see.
But sometimes you can't escape economics.
Vanita Kohli-Khandekar: Your last question, Vivek, some time back you'd mentioned to me that nowhere in the world has a company managed to combine not just on a metric level or a revenue level but the strength of TV. So, for example, Disney has a robust TV business in India but it also has a largest streaming platform in JioStar. How do you combine these two strengths to do something?
Because what is happening right now is one business is subsidising the other.
Vivek Couto: Correct.
Vanita Kohli-Khandekar: At a very broad level, correct? The legacy business is subsidising the growing streaming business. How do you do that?
I mean, have you seen examples in APAC now because of this report or because of the research that Media Partners Asia might have done?
Vivek Couto: Yeah, we're starting to see it. But look, the bottom line is we focus as a company on what gets investors excited. And right now, investors are excited about the transition online and how you can grow a connection with the next generation of consumers.
And that generation of consumers is 15 to 30 or 20 to 40 if you want to be generous. And those are not TV-consuming customers. Well, number one.
Number two, investors are excited in how you completely disrupt content creation and content focus, right? Are we still going to be talking about people going to theatres in five years' time to watch two-hour shows? We've just seen the worst year of decline in China and in the U.S. in theatrical, right? On the 24th. And I hear India's not been great either, okay?
Vanita Kohli-Khandekar: We've done the same as last year.
Vivek Couto: Yeah. So how is that going to work in terms of people creating a shorter form of content where people want to pay, using new technology tools such as AI? I know a lot's been written about it.
And look at that. So, you know, unfortunately, I agree with you. You have to focus and operate on where the money is.
And if the money's in TV, then you've got to find a way of legitimately extending the lifespan of that medium. The issue is, in these markets that a JioStar or a Video or a TiVo operate in, everything but China, you have the existence of three big giants. Or four.
But in all markets, three. And those three giants are YouTube, Meta, and Netflix. In some of the markets, you have TikTok.
In some of the markets, you have Prime Video. And those people just compete in the streaming economy. So when you have that depth of resource and investment to grow a category at a significant pace, and you're operating on TV and you're holding it on your shoulders just alone and no one else is investing, it's tough.
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Vanita Kohli-Khandekar (Host): And finally onto India. The last two years have seen a lot of action – both good and bad in the Indian streaming business especially consolidation. Reliance led a merger that saw the collapsing of three OTTs – Disney+Hotstar, Voot and JioCinema – into one. Telcos also pruned their bundles. There was some fall in subscribers in 2023 over 2022 going by Media partners Asia data. And content spending remained stagnant.. This is why a whole gloom and doom conversation around streaming began. But going Media Partners Asia’s latest report this churn has been a force for good – subscriber numbers rose to 125 million in 2024. That is an audience of about 375-400 million people. All Smart devices put together reach about 650 million people. TV reaches 900 million people. If OTT has to expand beyond this, get more reach, scale and profits, it has to do what TV did – plug into all the markets India offers. And this means exactly what Tony talked about – ad-tiers, sports, massy programming. To discuss some of the changes and the prognosis for how this market will pan out, I have with me Sameer Nair managing director, Applause Entertainment. It is the creator of Netflix’s latest hit, Black Warrant . Its earlier series include Scam 1992 and 2003.Over to Sameer .
INTERVIEW TRANSCRIPT
Sameer Nair: Well, I think it's not as dissonant as much as the behaviour of the last couple of years. You know, from 22, at the end of 22, when that, you know, Netflix lost subscribers for the first time in 32 quarters or something. And there was a real sort of a tailspin after that for their own share price.
Then later the writer's strike happened, the actor's strike happened. You know, that whole Netflix effect, you know, burnt everyone in the US. HBO pulled back, Paramount, everyone went back.
Disney proceeded to get itself merged into Jio, which took the whole year before Sony and Zee were merging. So I think the last two years, which are all of 23 and all of 24, have been slow years from a business point of view. And there's been obviously a lot of backlog because the years prior, there was a lot of euphoria in the market.
So there was a lot of stuff that had been commissioned, a lot of stuff that had been greenlit. So all of that was in production. So in many ways, what you're seeing now is the outcome of that.
Right? A lot of the announcements, slate announcements, are things which have been in the works. It's not like it started now.
It's been in progress for some time. Now things are looking better because I think the mergers that have to happen have happened and the divorces that had to happen have happened. So now it's all, you know, sort of clearer as to, you know, this is the roadmap, this is the sort of, you know, this is the way ahead.
And there is a market, there is, you know, SVOD AVOD, , all of that is there. So I think a few things that come to play in this is that obviously there has been some degree of rationalisation with regard to cost, as in how much to spend on content creation. So that's one thing that's happened and that is, you know, that has got a play in it.
Two is the number of platforms, you know, what was originally supposed to be eight or ten have now really settled to six. So that's a little bit of a small thing, at least in India. And third is that there is this conversation happening about, you know, not everyone wanting to do, you know, good quality premium drama series.
There's a lot of talk of TV plus, there's a lot of talk of long form content. You know, there are those kinds of things, discussions happening as well. People are still trying to figure out unscripted and how it will work in the streaming world.
So I think all of that is coming to play. So I don't know whether it's real gloom and doom as much as a sort of a recalibration of what's to be done, at what cost, you know, at what revenue model. I think those kinds of things are going on.
Vanita Kohli-Khandekar: From an applause perspective, therefore, what does the year look like? And, you know, have you had to make any course corrections in these two years? Because you spend money on developing.
It's not that you wait for someone to read like a show. That was your model. Have you changed the model?
What do you do?
Sameer Nair: We are still doing what we are doing. We continue to develop shows. We continue to, you know, get them, you know, get them into production.
We produced a whole bunch of shows. So what obviously the last two years did to us, per se, is that it obviously put a certain degree of pressure onto us because we are invested in content. We are invested in making shows.
We are doing all those things. So when the market slows down, obviously, it's not a good thing, not good for us, not good for anyone. But I think that that whole situation as it goes forward, the market for content will reignite, if you will, as now, you know, more shows are acquired and more because, see, finally, at the end of the day, at some level, the genie is out of the bottle.
Right. There are already some 600 million odd customers out there who have access to, you know, smartphones and to data. There are these subscribers already.
YouTube is a 450 million base. You know, people have bought IPL rights that these are stated media goals now, you know, that you've got to entertain a large audience and you've got to give them content. You've got to give them movies.
You've got to give them support. You've got to do all that. So I think that there's no going back from there.
I don't think you can go and tell a billion Indians that, OK, guess what? There's no more streaming available. No, nothing available.
Now just watch TV. There's no question of all that happening. You know, like a lot of the platforms are looking to get movies that are, you know, that have done well theatrically and then come to the platform.
So they're encouraging that and we're happy for that because we think that makes sense because it also splits the revenue. It does not put the entire burden onto the streamer. You also earn some theatrical revenue which should be taken because it is out there and you get a streaming right.
So those are good things to happen. Even with regard to the show, some of the initial days, you know, and the first time the broadcaster gets a degree, a little bit of that drunken sailor moment where, you know, when you convert from dollars to rupees to dollars, it sounds really cheap. So I think all of those kinds of expenses happen.
But now, you know, settling down and, you know, working for some time, some costs are being rationalised. So those are good things to happen. So I think we had a great start of the year with Black Warrant.
We've got some more interesting things coming up in the rest of the year. We've got some new shows in production. We've got a lot of subsequent seasons going on.
You know, the subsequent season of Criminal Justice, the subsequent season of Scam, the subsequent season of Tanav. So that's a good part of our business. We've got some big movies lined up.
So, I mean, even though we've been through this little firestorm, including the LA fires at the very end of it all. But now I think it's sort of settling into hopefully, you know, calmer and better seas.
Vanita Kohli-Khandekar: A little digression here, Scam. What is Scam 3 about? Which scam are you looking at this time?
Sameer Nair: Have you announced it? It is based on the, you know, the wonderful story of Subrata Roy.
Vanita Kohli-Khandekar: Oh, of course, of course. We've talked about this. You also mentioned, Sameer, when we were talking earlier that you're going to get into films.
So is that sort of just a scaling up thing? Also, you know, and therefore you have a larger portfolio of things to offer. And again, will the model be the same, that you develop it totally and then are you getting partners in?
Because the money involved here would be larger, I'm assuming.
Sameer Nair: Well, actually, you know, historically, the way applause has operated is like a traditional film studio where you, you know, you come and you develop an idea, you sign up a director, you buy a book, maybe, or whatever. And you proceed to write a piece of content and then you produce it and then you release it and then you sell the rights for it. That is how films were made historically. We did that for a series.
So what we are doing now is that we are doing the same thing. I mean, it's real, that's the way movies were made and have always been made. So there's nothing different that we are doing.
For example, recently we've signed Kabir Khan. So we will work with Kabir Khan. We will develop two movies with him.
He will direct one, produce one. And, you know, we'll follow that same sequence of events. I just think that, you know, it's important.
And I think it's important for us to try and save the theatrical business. Because if you kill the theatrical business, then, in essence, the movie business will become a direct-to-platform business, which is then not going to allow you to make so many movies. It's going to be too expensive for the platforms and it's all going to become quite difficult.
So it is important for the movie business to have multiple revenue streams for it to have a theatrical, you know, a robust theatrical business and then go on to streaming and satellite and music and international and all of that, that happens. So I think for us, it is a natural progression. We've made a lot of great series.
We have made a few smaller movies, but they were more indie in nature. Now we want to really get into the, you know, the larger piece of the pie, if you will.
Vanita Kohli-Khandekar: Zwigato was yours.
Sameer Nair: We made Zwigato. We made Sharmaji Ki Beti. We made Do aur Do Pyaar.
So we've made a few. We made a film with Aparna Sen which is yet to release. So we've done a few, but they were smaller movies, you know, and more designed for a straight-to-platform kind of release as compared to going theatrical and then streaming.
But currently we are shooting a film called Bison, directed by Mari Selvaraj and produced by Nilam Paranji which is currently filming and that is going to come to stream on Netflix as soon as they say.
Vanita Kohli-Khandekar: Amazon Prime Video is planning to get into theatrical as a form of backward integration. They say We're getting to ask (producers) to have a theatrical release and then. Because that brings value to the entire ecosystem. Otherwise, you disrupt it.
Sameer Nair: And also what the theatrical release does is that it does a certain degree of marketing and promotion for the film. A theatrically successful film creates a very positive vibe. And in any case, because we've got so few studios.
One sec. Because we've got so few screens available. Not everyone sees the movie, right?
So like, I mean, even if we take a movie like Pushpa 2, which is done so well, there are still enough people who haven't seen it, right? But it does well then for the platform because then for the platform, it becomes a, you know, there's much more excitement around it. So I think it makes sense for everyone to do it that way. You get better stars, better revenues and hopefully we will get better screens. India needs more screens
This, you know, I mean, this is a discussion I have with everybody.
Vanita Kohli-Khandekar: But great. On the applause side, anything you can share on there's films and there's, of course, more series. Has your sort of capacity expanded hugely?
Do you need to do that? I mean, are there, what kind of goals are there for 2025?
Sameer Nair: Well, actually from asking things, we are just continuing our business. The movies were always a part of the plan. So it's just now coming to fruition.
Gandhi is in production. That's our big series.
Vanita Kohli-Khandekar: Oh, of course.
Sameer Nair: So that's now currently in post and we are doing, you know, here Rehman is doing the music score for it. But that's all in the works.
Vanita Kohli-Khandekar: Oh, free. Post is over here?
Sameer Nair: Yeah, we are in post now. It should be ready by June-July. So we have to see. So we are continuing to do that.
We've got now this show is done well, so we'll do more of that. So, I mean, I think both the series and the movie business for us is, you know, it's an exciting time. It has been difficult for two years, but now, you know, hopefully things will improve.
I say hopefully because I hope it improves. It should. As I was telling you earlier that, you know, a lot of our entertainment business in the media business operates in that space.
You know, the economy being vibrant makes the entertainment business more exuberant and more exciting.
Vanita Kohli-Khandekar: Last last question, Sameer, is, you know, one of the things which and we've seen this building up over several years that as you as streaming tries to reach more people, if you look at the pyramid at the top end, you know, everybody you have to reach through SVOd, a large section of that has already got SVOD or the subscription services. Now, a lot of the growth will be coming from the middle and the lower tiers. And that means more ad supported programming.
Does that change both the economics and the texture of programming? And we've had a discussion on this earlier because this is a different market. This is a market which will compete, let's say, with YouTube or DD Freedish.
It is that section. Because right now, when we talk about streaming, we're essentially talking about Netflix, Amazon, SonyLIV kind of subscribers or kind of audience. We're talking about a far more broad based audience here going for professionally created programming.
So how do you see that panning out? It looks more like TV to me, frankly, the way the
Sameer Nair: It does look like TV.And the thing is that TV itself,Vanita, grew over 25, 30 years. Right. So, I mean, in 2000, when we did KBC and Koki, there were 25 million cable satellite homes that got to a peak of, I think, 197 homes in 2017.
So now in streaming, when this term is used, that, you know, we are going wider and we are going to a larger audience. We must understand that the larger audience is then mostly broke or, you know, they are a lower economic and they are at a lower economic base. Or the reason why social and YouTube and all of that works so well at that base is because everything is free.
And importantly, the content itself does not cost to make because it's all user generated. Right. So that's what is being consumed and used and sort of, you know, really enjoy it.
TikTOk works like that in studies, all of that. So now when you say that you want to make professionally generated content, right, and you want to reach out to the large mass and you want it to be ad supported, when you're competing with these big social giants with their fleeting impressions and, you know, pennies instead of dollars or prices, it is a complicated situation because the default thing that happens is that you think that since I'm giving all this content free and it's ad supported and I'm barely making ad revenue, the cost of the content also should be lower. Right.
I mean, it's a natural sort of assumption. I'm not so sure how that works because if you make low cost professionally created content, I fear that it does not compete effectively even with free UGC content. Right.
So it becomes a bit of a, it's a bit of a trick. See, at the end of the day, when you give IPL free, IPL is still ultra high quality, ultra international standard sporting content. Right.
And it's free. So that's like a good thing. That's why people watch it and you have whatever five crore concurrent viewers and all of that.
I'm not so sure if the same thing works with low quality professionally created content because that you already got with TV. You've already got TV content available. You've got all the shows available.
Something like an Amazon MX player is free. They are spending money on creating that content, but they are free. That's a big promise, right?
That whatever we make, it's all free for you. Plus, they're going to take all the movies from Amazon. They're going to take all the reruns from Amazon.
I think Amazon Mini is going to become quite an interesting player in this. Right. And they are still going to spend money creating content.
So I think AVOD being a solution at the end of the day, TV grew so much because we did spend money creating the TV content. I mean, all the unscripted programming on TV is international standard, whether you're Big Brother or KBC or Idol or whatever operates at international standards. It's not like low cost, cheap and cheerful programming.
So I don't know. I just think, you know, when we are going after this big, diverse mass and going to the bottom of the pyramid, I think you'd still go to them with a proposition.
Vanita Kohli-Khandekar: It's very well said. Yeah, very well said. You know, because that's one fear you wonder what will happen here.
So, you know, are we looking at the lowest common denominator? Are we looking at slightly better? Because always the assumption is the free market is about cheap content.
Sameer Nair: So, yeah. And one more thing is that if you take the example of what's happening in politics, right, there's so much of what they call revdi, right? That is giving things away for free.
But that raved politics does not always give you the same return because at the end of the day, an audience, it's not about just getting free. It's still you're asking me to give my time to this, right? Like, just because you're giving me something free, that doesn't mean I've got the time to watch it.
And I won't because I've got so many other options to do. And there are so many things available. So I don't think cheap is going to solve it.
What can happen, of course, is that we can make things better. We can make things more efficiently. We can make things more cost effectively.
Those are all possibilities. And I think all of that will get sort of explored, you know, as to how to do things smarter, how to make things better. You know what different kinds of stories to tell.
All of that will happen.
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Vanita Kohli-Khandekar (Host): Amazon MX Player, a free service has announced 100 new shows all free. Netflix, which had a great 2024 in India has just announced a slate of 26 shows and films. This includes World Wrestling Entertainment. Some forms of WWE got 50 million viewers in India last time around.. so the gamble for reach and scale is very clear. There is some sports and sport centric programming on other services, there are games and lots and lots of family friendly programming – since connected TV is rising.
In 2024 the entire streaming video business in India was about Rs 35,600 crore. It spent over Rs 18000 crore on making shows and buying films. Not surprisingly nobody made money. This phase of growth then will focus on increasing both reach and the bottomline.
