OTT prospects bright amid Covid-19 blues

In an unprecedented situation, the country is in a semi-lockdown mode following the spread of the coronavirus pandemic. Employees have been working from home, schools have been shut, and avenues of recreation have been limited with some state governments asking malls to close down.

While various sectors feel the pinch, one of the most affected is the media and entertainment industry. Movie theatres have been shut in all states, except Andhra Pradesh (which may follow suit soon) and shooting for new films has come to a complete halt. Big-ticket film releases like Sooryavanshi—starring Akshay Kumar, Ajay Devgn, and Ranveer Singh—have been pushed back and those like Irrfan Khan-starrer Angrezi Medium that were released have fared poorly as cine-goers have stayed away from multiplexes owing to health concerns.

But, on the flip side, one segment of the media and entertainment industry that is making the most of people staying indoors and is seeing an uptick are OTT (over-the-top) video streaming platforms.

On Tuesday, The Times of India carried a full-page jacket ad issued by Hotstar, Disney, and Star’s OTT platform in the country announcing the arrival of a new original series called Special Ops, which is an action thriller. The bottom half of the front page of the same edition carried an ad by MX Player, the OTT platform acquired by Times Internet (part of Bennett Coleman and Co. Ltd that publishes The Times of India). The MX Player ad also features some interesting copy, which read: ‘No Malls or Halls? Stay Safe with Free Entertainment Within Your 4 Walls’.

Indeed, with limited things to do to keep oneself occupied while confined at home, video streaming platforms may well come to the rescue and build a sticky and sizeable subscriber base in the process. “With the families and kids staying home, there has definitely been a spike in consumption between last weekend and now,” says Tarun Katial, chief executive officer of Zee5, the OTT streaming platform of media company Zee Entertainment Enterprises Ltd. “There has been a significant uptick in subscriptions as well and many people have been downloading the app on their smart TVs to watch the content on a larger screen.”

According to Katial, there has been a 10% jump in viewership for Zee5’s original content and a 5% rise in people viewing Zee5 via the TV app. Overall subscriptions are also up 10% over the preceding weekend. Zee5 had 11.4 million daily active users as of December 2019, according to the company.

A Kotak Institutional Equities report had estimated the aggregate revenue of OTT platforms (through advertisements and subscription), including Netflix, Amazon Prime Video, Hotstar, and Zee5, to grow at a CAGR of 48% between FY18 and FY23 to reach $3.1 billion.

Karan Taurani, vice president and research analyst (media) at Elara Capital, says that, excluding the India Premier League and other sporting events that have been cancelled, there could be a 50-60% surge in consumption, including viewership and incremental time spent on these OTT platforms.

“I think this will continue for the next two to four weeks. Once things start coming back on track, people would want to catch up with the latest theatrical releases,” says Taurani. “Smaller films made on a budget of ₹5-10 crore, however, may directly get releases on OTT platforms in the meantime.”

But will the current pause on production not impact the future content pipeline for OTT players? Unlikely, says Katial, provided the hiatus doesn’t extend before the stated March 31. Since OTT platforms can the shooting for limited cinematic series at a time, they are better placed than the daily soaps that air on linear television, shooting for which happens in batches in which a few episodes are shot at one go. “We may at best have to move new releases by 10-15 days, but nothing more than that. Also, we have a lot of inventory of content like direct-to-digital films that we will air.”