Good afternoon!

Welcome to the very first edition of The Impression, your weekly primer on the business of media, entertainment, and content.

I’m Soumya, a Mumbai-based media and entertainment reporter. I’ve been a journalist since 2014, reporting on consumer and retail businesses before moving to writing on media, advertising, and entertainment as well. I have worked for The CapTable (at YourStory), The Economic Times, Livemint, and Fortune India.

I’ll cover a wide range of subjects at The Impression—from traditional and new media platforms, content, its creators, and those who stream it, brands and advertisers, and technology that’s changing this ecosystem. This newsletter focuses on India, but with relevant global context.

You’ll get a mix of original reporting and deep analysis every Wednesday at 3 pm India time. Have feedback, comments, suggestions, or thoughts? Share them with me anytime at soumya@thesignal.co or DM me on Twitter and LinkedIn.

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This week’s story is on OTT platforms, and why they’re getting increasingly dependent on (telecom/aggregator) bundles to sell subscriptions. Plus, I have two exclusive news developments—both will change the face of this bundling business in India. Let’s get right to it.

Cable To OTT Bundle

I cut the cord on my cable connection more than 10 years ago. And since then, I’ve moved from my laptop in bed to a connected TV, and from ‘extra-legal’ sources of content to about four-five of my favourite OTT/streaming apps. But what once felt like freedom from cable now feels like déjà vu for almost everybody, I think. There’s too many damn apps.

Selling subscriptions in India is already a tedious business. Paying for an entertainment service is a discretionary expense—it’s among the first to get cut during any kind of downturn or financial distress. Imagine getting people (at scale, in India) to first pay for data and then for so many individual apps, each with their own walled gardens of content. It’s hard.

That’s probably why everyone likes a subscription deal in OTT bundling.

For a viewer like you and me, it’s an easy one. Getting a few months of Netflix, Disney+ Hotstar, Prime Video, SonyLIV, maybe a couple more to try out in one subscription package is a no-brainer. In the last few years, telecom companies (Airtel, Jio), cable and direct-to-home providers (Dish TV, Tata Play), OTT aggregators (OTTPlay, ScreenHits), and other streaming platforms (Amazon Prime Video, Apple TV+) are offering a cable-like experience with a bouquet of streaming services all under one roof. Some are add-ons, typically in your broadband or mobile data plan; but some, like Prime Video, charge an additional price per streaming channel offered. This could be because a) buying through an aggregator makes it cheaper for the customer or b) that channel isn’t otherwise available in your country/region.

What’s in it for the bundling platforms? More audience, more data, and a slice of streaming revenue. It also helps them make their own offering more rounded. So, a Tata Play Binge monthly pack or an Airtel XStream broadband bundle will lure more new and existing users into upgrading because the bigger OTT bouquet offers more bang for their buck. In return, the aggregator can get direct, deep insights into their user’s behaviour across various streaming and other services.

Between them and the customer, bundling is a win-win.

The dynamic gets a little more complex when you consider what’s in it for the smaller OTT platform.

At first glance, it’s a terrific deal. There are far too many streaming platforms in India, both local and foreign. And they all compete anyway with YouTube, the app that is synonymous with video in India and comes pre-loaded on literally every Android smartphone. With a bundling deal, a smaller platform with no endless cash at its disposal can cut down on its customer acquisition cost.

“The biggest problem right now is getting reach and marketing our content,” a founder of a regional language streaming platform told The Impression on the condition of anonymity. “With bundling, we can save on marketing costs and use that cash to build brand awareness and on content acquisition instead.”

In a sea of streaming platforms and their deluge of content, it’s hard to grab the audience’s attention. And it’s not good enough to market your streaming services—every platform also needs to put equal (if not more, in many cases) investment into marketing individual titles as they release. If you’re part of a bundle, your aggregator takes care of a part of this. You can get discovered by virtue of being in the bundle, and new releases across platforms are advertised on the aggregator’s app, say in a banner on the home page.

This also leaves platforms cash to commission originals and acquire popular content for themselves. Already they are struggling to keep up with the kind of content slates that Amazon Prime Video, Netflix, SonyLIV, and Hotstar are drawing up. “Even the biggest hits in regional languages go to the big platforms,” says the founder of the regional language streaming platform quoted above. “Not everyone has the kind of money to spend on such deals.” Telugu hit RRR went to Zee5 (the Hindi version was on Netflix), while recent Kannada and Tamil blockbusters are releasing online on Netflix and Amazon Prime Video.

There are several ways to structure a bundling deal, but here are the most common:

1. Revenue share: the average revenue per user (ARPU) earned per viewer who subscribes to a bundled OTT is shared between the platform and its aggregator. Exact shares can vary. The aggregator may also pay the OTT platform a fixed fee per subscribing user. In many such deals, the payment happens only if the viewer or subscriber is considered ‘eligible’, meaning they have spent more than a certain number of minutes viewing content, indicating engagement.

2. Upfront payment: the aggregator pays the OTT platform a fixed, upfront lump-sum amount and takes on the risk of getting viewers/subscribers entirely themselves. This one is the most risk-free deal for a smaller platform. But if the users don’t come in, your deal may not get renewed.

Dependence

And that exactly is the problem with a bundling deal. If the majority of a platform’s user acquisition and marketing depends on bundling, revenue will only come in if that deal with Tata Play, or Prime Video, or JioFiber (or others) is renewed on time.

Consider Zee5, among the largest OTT platforms in India. Its quarterly growth in revenue had stumbled in the June 2022 quarter because some ‘B2B’ or bundling deals hadn’t renewed in time. “We continue to evaluate B2B deals opportunistically and periodically when some of these deals conclude, it can cause QoQ [quarter on quarter] variation on some of the Zee5 metrics,” Zee Entertainment chairman Punit Goenka had said in an investor call in August last year (pdf).

So, a platform may not need to invest in a direct funnel for customers, but it will need a robust sales/business development team to ensure these bundling deals keep rolling over smoothly. Isn’t that a problem?

Bundling is not a new business model,” Aditya Pittie, founder and CEO of IN10 Media, told The Impression. His company runs streaming platforms Docubay and EPIC ON, among a host of other entertainment ventures. “It has been part of the satellite and cable TV industry for years now. The broadcasters have to keep working their deals with various cable and satellite television providers.”

That’s fair. But the other major problem in bundling deals is that while it offers you scale, it grossly cuts down your revenue. Streaming platform executives I spoke to said that the ARPU that comes to them from a bundling deal can be as low as 10-15% of the ARPU they generate when a viewer comes to them directly.

But, it looks like bundling will be here to stay. For platforms without really deep pockets and some sort of international reach, it’s the only way to get a viable audience.

“I believe bundling is the way forward for smaller OTT platforms,” PIttie says. “My prediction is that the share of direct-to-consumer revenue will continue to see a downward trend, at least in the SVOD [subscription-based video on demand] space. In India, the per capita income in India is not high enough to afford premium subscription content. The only way the SVOD business will grow is two things - one, growth in per capita income which I believe is only a matter of time. And two, getting bundling deals. All SVOD businesses are facing headwinds now and that is why bundling is so popular.”

Still, there are contrarians holding out. Telugu-language platform aha! (which now also has content in Tamil and is expanding to other Indian languages), has firmly stayed away from bundling deals of all kinds. Ajit Thakur, now director of aha!, had told me a few weeks ago that when an OTT platform enters a bundling deal “too early” in its growth, it eventually becomes dependent on these deals and turns into merely a content provider for the big aggregator. For aha!, the priority is to acquire customers directly and retain them for themselves, even if it takes a little longer. The platform recently said it will earmark ₹1,000 crore (~$120 million) for the business over the next three years.

Gamechangers

Two developments brewing in this bundling business could potentially change all this in the next couple of years.

One, an industry streaming executive aware of Google’s plans told me YouTube India might begin a pilot of free, ad-supported streaming television (FAST) channels, similar to one it’s been running in the US since January. It has been in talks with streaming platforms to sign them up for the India pilot, but a launch date isn’t clear yet. This will have a massive impact on the business of bundling. “YouTube goes to every town, every village, every street in India, so naturally every OTT will want to be a part of this,” the founder of the regional-language streaming platform quoted above said.

Two, industry executives have also told me Amazon Prime Video is considering taking all its entertainment offerings—Prime Video, Prime Music, miniTV, Prime Video Channels, and others—and putting them in a single app/platform for Indian users. Currently, most of these services are spread across different apps and websites: miniTV sits in a tab in the Amazon shopping app, while Prime Video Channels are part of the Prime Video platform. Remember, Amazon is also in advanced talks to acquire the Times Internet-owned MX Player, which has both an ad-funded free service and a subscription-only offering called MX Gold. It’s unclear if Amazon will retain the brand name and platform separately or merge it with its existing service. ShareChat, for instance, merged Times Internet’s MX TakaTak with its own short form app Moj after acquiring it.

Both YouTube India and Amazon Prime Video India did not respond to requests for comment. But I’ll be tracking these developments closely, and you’ll probably get an update on them soon.

Last Scroll Down📲

Who wouldn’t like to dance their way to the bank? Creators, some of whom started with TikTok dances, are doing just that. Vox profiled creators selling online courses for everything, from mobile marketing to Miss Excel’s Microsoft Excel hacks (see above) to life coaching, for hundreds of thousands of dollars. Most of these creators usually start off via viral TikTok videos. Of course, as with any internet trend, this one is rife with scammers and lazy teachers recycling old content. In India, several social media celebrity traders have been criticised for luring their followers into crappy options trading seminars. So much so that options trading seminars are now a meme on Indian FinTwit.

Safety first: Speaking of creators, the French Parliament has proposed a law to regulate social media influencers. Among other things, the rules will legally define ‘commercial influencers’ and influencer agencies, make it a legal requirement to post disclaimers on a sponsored post, and bring influencers below 16 years of age under protection of France’s labour laws regulating children working on the internet that were introduced in 2020. India’s Advertising Standards Council of India (ASCI) has also been releasing guidelines for social media influencers including genre-specific prescriptions for crypto and financial content, but these aren’t legally enforceable in a court of law.

Search for the best: Generative AI has already led people to imagine the worst sort of doomsday scenarios (the robots are coming for our jobs!). But before it makes humans redundant, it will dramatically change the biggest and oldest part of digital advertising—search. So, it figures that search engine optimisation specialists are already testing out Big Tech’s AI tools. This comprehensive study in Search Engine Land scores Bard, two of Bing’s AI services, and ChatGPT on everything from accuracy to creativity, and even jokes and hate speech. The verdict? It’s not really in yet. ChatGPT has a bit of an edge, but all of them need improvement, especially in accuracy.

Desi detective: Two major high-profile British detectives could be coming to Indian screens. The first is an adaptation of Agatha Christie’s The Sittaford Mystery by veteran director Vishal Bhardwaj for SonyLIV. This is one of the few Christie novels that don’t feature her quintessential detectives, Miss Marple and Hercule Poirot. The second could be a Sherlock Holmes adaptation by director Srijit Mukherji, starring Bollywood actors Kay Kay Menon and Ranvir Shorey, and produced by BBC Studios India. There’s buzz, but no official confirmation yet.

Muzzled: Streaming platforms are also getting worried about moral regulations on their content, Livemint reports. Last month, India’s minister for information and broadcasting had warned of action against platforms that indulge in “obscenity”. Some of those concerns are valid, such as children getting easy access to age-inappropriate content. But streaming executives say they’re playing it safe because they fear a rise in viewer complaints in a polarised environment. That’s a tragedy because web shows and films were initially seen as a refuge from the onerous content regulations of legacy TV and cinema formats.

Slapped: Yesterday, Britain fined TikTok £12.7 million (~$15.86 million) for allowing approximately 1.4 million children in the UK under age 13 to use the short-video app in 2020, in violation of data protection laws and its own platform rules. TikTok has said it disagrees with the decision. A group of state attorney generals in the US are also investigating TikTok for its effect on kids and teens’ health since last year, and the US’ Department of Homeland Security is examining how the platform handles child sexual abuse material, the FT had reported last year.

Spent: Ad spends in sports grew nearly 50% to over ₹14,000 crore last year, according to GroupM ESP’s Sporting Nation Report 2023. Most of it came from cricket (and went to TV spends), including more Indian men’s cricket team games, and additional IPL teams. And most of the endorsement money goes to India’s top male cricketers, although Olympian Neeraj Chopra and badminton champion PV Sindhu figure on the list.

Trumpet 🎺

Hollywood celebrities and international supermodels may need a crash course in how to handle the Indian paparazzi. Videos from the red carpet at last week’s Nita Mukesh Ambani Cultural Centre have been doing the rounds.

This is one of my favourites, by Instagram user guillltypleasure, featuring the paps getting irritated with actor Tom Holland for missing the camera mark (where you’re supposed to stand and pose for the cameras); another good one is this video of a photographer asking his colleague if the woman on the red carpet was Shakira (it was supermodel Gigi Hadid). Shakira truly still has us Indians in a chokehold.

That’s all this week. If you enjoyed reading The Impression, please share it with your friends, family, and colleagues. And please write to me anytime at soumya@thesignal.co with thoughts, feedback, criticism or anything you’d like to see discussed in this space. I'd love to hear from you.

Thanks for reading, and see you again next Wednesday!