Betting on the power of local stories, content-hungry vernacular viewership, and India's improving digital infrastructure, 15-odd regional video OTT players are keen to win their slice of the growing streaming pie. And they are unfazed by the deep-pocketed giants in the business
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Once upon a time, in the not-so-distant past, there were two OTT players in India—Netflix and Amazon Prime Video. For a subscription fee, they let you watch a lot of movies and TV shows from around the globe.
Soon,half a dozen more joined them and brought more content to your smartphones and TVs. This time, a couple of local languages were added to the mix. Now, five years after Netflix entered India and Reliance Jio introduced cheap data plans, India is home to 40-odd significant OTT players. A dozen or more among them are entirely home-grown regional players, which let you stream content exclusively in Tamil, Telugu, Malayalam, Kannada, Marathi, Bengali, Punjabi, Gujarati, Bhojpuri, Odia and more across a dizzying array of formats—movies, TV shows, web series, reality shows, originals, catch-up content and shorts. They are all vying for the wallets and viewership of a fast-digitising regional audience.
"India speaks various languages. Among those, there are 10 languages, which are spoken by 50-100 million-plus people on a global scale. Each of them can support an OTT platform… We should look at how to entertain households from different languages because they are underserved today," says SVF-promoted hoichoi's Co-Founder Vishnu Mohta.
Actor Allu Arjun-backed Telugu OTT platform aha's CEO Ajit Thakur says language was always a differentiator in entertainment. "In the OTT era, where the need for personalised entertainment has grown compared to broadcasting, one way of personalising is giving you content in your language."
India created 2,500 hours of original digital content last year, which is likely to go up to 4,500 hours in two years, estimates EY Partner (media and entertainment advisory services) Ashish Pherwani. "Around 50-60 per cent of new shows produced today are regional. This number was not more than 20 per cent three years ago," says Elara Capital SVP and Research Analyst Karan Taurani.
Put these numbers together, and it would take one roughly two months of 24x7 binge-watching to get through all the original regional content produced in the country.
There's also a lot of demand for all kinds of regional content, says Saregama India MD Vikram Mehra. India's oldest music label carries out extensive consumer research. "When we launched music player Carvaan in 2017, we were very clear that we'll launch it in Hindi. Within a year, based on the demand, we launched it in Punjabi, Marathi, Bengali, Tamil, Malayalam and Telugu… Digital adoption has leapfrogged four-five years during Covid-19 and the next round of digital content consumers is coming from smaller towns." The firm's Yoodlee Films is also investing heavily in regional languages, he says.
This is with just 25 per cent of the country having access to OTT platforms, going by consultancy agency Ormax Media's findings. With telecom companies reaching deeper into India to get more cities and smaller towns on smartphones, it is safe to bet that regional consumption will boom further.
EY's Pherwani says there's space for 25 regional OTTs—one, if not two, for each of the 10-12 major Indian languages. And they have their own set of advantages, he adds. Regional OTTs come with an intrinsic understanding of the local stories and audiences. Neestream streamed the highly acclaimed Malayalam movie The Great Indian Kitchen, which was rejected by the large players. Amazon Prime Video later bought non-exclusive rights to the film. "There is plenty of regional content with great artistic value, which has failed to gain recognition from the major platforms. That's where we come in. We do not necessarily look at the star value of content. Rather, we are interested in the subject and its making," says Regional Head Charles George.
Most of these players have a content background. Some, like hoichoi, aha and OHO Gujarati, are experienced in film production. The likes of Sun NXT, owned by southern broadcasting giant Sun Network, are sitting on such a mountain of TV content and film rights that an OTT platform is a natural progression.
But the OTT game is all about creating originals. The regional players' mantra is to release fresh content every week or 10 days to ensure that viewers return.
OHO Gujarati Co-Founder Abhishek Jain says they are trying to break the clutter by offering bite-sized content, which can be watched over a cup of tea—five-six episodes of 18-30 minutes or even smaller, at 10-12 minutes.
There are some 10 major languages in India spoken by 50-100 million-plus people each globally. To cater to [that] audience, you have to consistently give amazing content
Vishnu Mohta
Co-Founder, hoichoi; and Executive Director, SVF
"Our idea is to attune people to watching Gujarati content on an OTT platform and watch it quickly because we understand and respect that there are so many platforms available." He calls OHO a one-stop solution for all Gujarati content because it's all over the place on other platforms. hoichoi's Mohta also says other platforms don't stream original Bengali shows to make viewers binge-watch. He pegs the demand at 500 original shows a year across languages as new sets of viewers are coming on to the internet every week. "That's the challenge of India. We always liken it to America and China. But this is more Europe. You cannot cater to the Germans with a French show.”
There's also the ease of curation if the team is locally sourced and based. "We know of a small film getting shot in one corner of Andhra Pradesh much before anybody else. Everybody competes for the big film. But it's the small films which are undiscovered where there's a gem of a storyline or a talent who is a local. We find those creators and stories and market them," says Thakur. The aha vans go to multiple small towns, he adds. Plus, a large Indian diaspora is fanned out across the US, the UK, Canada, Australia, the Middle-East, South-East Asia, even New Zealand and Japan. Sun Group CFO SL Narayanan said in the last earnings call that their international subscription revenue is decreasing because many subscribers abroad are shifting from cable channels to their Sun NXT app, which is a part of their digital revenues.
In fact, with an addressable market of 250 million Bengali speakers globally, how is hoichoi a regional player, asks Mohta. The diaspora is a segment they can cater to at higher ARPUs, too, says Pherwani.
But in a price-sensitive market like India, the customer wallet and smartphone have space for two-three paid OTT apps at most, say experts. A study by Ormax Media found that there are 2.4 paid OTT apps on each paying customer's smartphone already.
With monthly plans, viewers also tend to jump from one app to another based on whoever is offering them something interesting. The newbie will have to spend more to get customers to their platform, unlike a Netflix, Amazon Prime Video or other mid-rung players who have had an early-mover advantage.
OHO's Jain concedes this is a challenge. His CFO Parimal Modi says they spend Rs 1,500 on every customer, given that the Gujarati-speaking community is only 70-million-strong globally.
Customer acquisition and marketing spends are a huge drag on their already limited budgets. Netflix says it pumped in Rs 3,000 crore over the past two years with more in the offing. hoichoi or aha may have Rs 100-150 crore, say industry insiders. For the first year, Neestream and OHO have budgeted Rs 60 crore and Rs 25-30 crore, respectively.
Our marketing budget is as big as some of the big players, who don’t market their content enough. They think people will discover the films themselves. That’s not true because this audience is spoilt for choice”
Ajit Thakur
CEO, aha
With an audience that is exposed to world-class content, the production value of episodes also comes into play. Taurani says the big OTTs shell out even Rs 1.5-2 crore per episode for the large-scale shows, whereas home-grown regional players can spend Rs 30–35 lakh per episode.
Regional players don't agree entirely about cash constraints. Yes, the budgets are smaller but significant, given that they focus on that language alone. Specific language-wise, the budgets are not that far off, say aha and hoichoi.
In the works are also a few marketing and branding experiments to cut down customer spends and boost revenue.
aha, for instance, is selling subscriptions to supermarkets, milk stores, mobile stores and electronic stores to reach every town and village. It has tried advertiser-funded programming with deep integrations of brands into its content. The firm is aiming for a 70:30 revenue mix of subscriptions and ads.
"Our marketing budget is as big as some of the big players, who don't market their content enough. They think people will discover the films themselves. That's not true because this audience is spoilt for choice," says Thakur.
OHO CFO Modi says they plan to cut customer acquisition cost to Rs 500 over the next six months by tying up with FMCG and a number of other brands to offer discounted subscriptions. Community outreach among the diaspora through religious groups is also on the cards.
It's also tapping into parent firm Khushi Advertising's portfolio of 2,000 brands for sponsorship of their originals. "We are exploring in-film branding if it fits with the content without compromising on the storyline," says CFO Modi. It's a 50:50 revenue share from subscriptions and advertising, he adds.
Regional OTTs face an undeniably tough contest, however, as major players are also focusing on regional languages now, especially the entertainment-hungry southern region, which has four thriving film industries.
"The bigger players are not targeting niche regional, they are targeting large regional. So the large Tamil and Telugu markets are their initial targets," says Taurani. Amazon Prime Video has taken a big share of the southern market, virtually becoming the digital home for Malayalam films. Industry insiders estimate the tech giant has spent Rs 120-150 crore on films during the pandemic, including the Tamil blockbuster Soorarai Pottru. Netflix, which recently started a separate Twitter handle for the south, made a splash with Dhanush's Jagame Thandhiram and the Mani Ratnam-backed anthology Navarasa in Tamil. But neither worked well.
"Certain languages, we are leaning in more at this stage and we will expand as we go… The regional streaming platforms are catering to very, very specific tastes. What larger services, which operate pan-India, do is to cater to the widest set of audience in India for those languages," says Monika Shergill, Vice President, Content, Netflix India.
Disney+ Hotstar has also had a spate of original films and shows in Telugu and Tamil, including the Tamannaah Bhatia-starrer November Story. SonyLIV, meanwhile, launched its first exclusive Malayalam film Kaanekkaane on September 17. Both platforms declined to comment.
ZEE5, which just forayed into original Punjabi programming, targets doubling its Telugu and Tamil originals by early 2022. After that on its radar is Bengali, says ZEE5 India Chief Business Officer Manish Kalra. "A major part of ZEE5's strategy is to convey realistic and original tales from the heartland. Almost 50 per cent of our viewership comes from regional language content. Around 30-40 per cent of our content investments will be in the regional space going forward, and we expect this percentage to increase as we further cater to untapped regions." He looks at the rise of regional OTT players as healthy competition, which validates the potential of the OTT industry in India.
But it's the regional web series headlined by a big name that the larger players are struggling to crack. Unlike the north where Kabir Khan, Abhinay Deo, Shaad Ali, Nagesh Kukunoor and Alankrita Shrivastava have embraced the web series, the talent in the south is more interested in making films, says an industry executive requesting anonymity.
"The key OTT players are reaching out to content creators like us, especially in Tamil and Telugu, as directors or showrunners for a series. But when you enter a market, you need big names like a Karthik Subbaraj to make some of these shows because that's what will get the audience to tune in first," he says. The stories they are looking for are "not local for local, but local for global", so that they can scale it up, he adds.
Sun NXT, with a viewership of 23.5 million largely amassed inorganically through Reliance Jio and Vi connections, is also a strong contender in the south. But it has been delaying the planned Rs 150-200 crore investments in originals for two years now and streaming its extensive TV and movie content. With five Rs 100 crore-plus films in its kitty, Sun's focus is to get them off the block before getting into OTT originals.
"We have seen time and again that every time a movie premieres on Sun NXT, it drives up subscriptions noticeably. Our OTT business is actually doing well for us with zero investment in content. Our profit numbers are nothing to sneer at," said Sun Group CFO SL Narayanan in the earnings call. Meanwhile, aha is also foraying into Tamil by the end of the year, with plans to enter either Kannada or Malayalam soon after.
Consolidation is inevitable five years down the line with these many players in the market, say experts.
In fact, the proposed merger of leading media houses Sony Pictures Networks India (SPNI) and Zee Entertainment Enterprises Ltd. (ZEEL) has already paved the way for ZEE5 and SonyLIV to join forces.
The deal, if it goes through, will likely create India's second-largest homegrown OTT player after Disney+ Hotstar, which will offer everything from sports to regional programming. The merged media company will also have a $1.5-billion kitty at its disposal.
Not to be left out, Amazon Prime Video recently launched its Channels vertical in India by tying up with eight other subscription-based OTT video streaming players, including hoichoi and manoramaMAX (Malayalam). Their content can be viewed on the Prime Video platform itself as the American retail tech giant sets its sight on becoming a super app.
"Most of the small OTTs will merge with each other or get taken over once the number of users plateaus and incremental user growth slows down," says Taurani. Regional OTT players say they've already had some queries for a buyout. But they are in it for the long haul and want to give it their best shot by investing in technology and as much original content as possible. And competition doesn't scare them. "Every bigger player once was small," says Neestream's George.
"Blue oceans attract a lot of fish—big and small. But size really does not matter because there are 250 million-plus homes available. They are converting rapidly," says Thakur. If they can build efficiencies in marketing and customer acquisition, they can be on a par with any of the players, Pherwani says. "You don't need big content budgets in regional languages to make a big impact. So long as the content strategy is correct and the costs are nimble, there is definitely scope for regional OTT players to grow profitably.”
As Thakur says, the sky is the limit for growth in India. In Bharat, to be more accurate.
Story: Vidya S.
Producer: Vivek Dubey, Arnav Das Sharma
Creative Producer: Raj Verma, Anirban Ghosh
Videos: Mohsin Shaikh