In January 2016, emerging markets OTT service Vuclip – operated by Hong Kong based PCCW -  appointed former Yahoo executive Vishal Maheshwari as country manager, India, close to the launch date of its Indian product. The Viu launch went through successfully three months later under his supervision. Since then the FMCG, telco and digital veteran has stealthily steered the service towards an enviable subscriber base of four million plus.

Viu’s has been a no-nonsense-back-to-basics roll out in the country; it had none of the frills and bells and whistles that are associated with launches.

Maheshwari has his task cut out for him. The OTT market is getting crowded with every one including his uncle, aunt and cousin believing that they could make a success of their streaming entertainment apps.

But Maheswari believes that  Viu  is being built bit by bit, content piece by content piece, and customer by customer. And that it is on the right track.

Maheshwari was part of Indiantelevision.com’s second edition  OTT conference Vident 2017 and he took part in a one on one conversation with founder, CEO and editor in chief Anil Wanvari. Excerpts:

What is your view of India as a VOD market?

We believe that this market is not a single homogeneous market, as a lot of people like to believe. We believe this a three tiered market. There is a bottom of the pyramid market which is called the mass market. There is a mid-market, which is being typically being catered to by mobile consumption and by apps.  And then there is the top end of the pyramid, that we have yet to see evolve over here. We think that eventually will happen. We are here to participate in the broad spectrum of the market. Currently we have offerings in the bottom of the pyramid in terms of the  B2B mass market offering . We have been so far been in the mid-market as we like to call It for a year and a half.  – the B2B offering

I believe you have got a massive war chest. Apparently, Nickhil was quoted saying that he spent about 100 million dollars so far since PCCW came in. So how big is the war chest in India, if you would like to disclose that. If you don’t want to talk about the initiative in terms of local content, making sure you’ve distributed well across different devices whether it’s handsets or being inbuilt into Telco, apps etc.

I think it is futile trying to talk about numbers in terms of millions of dollars of investments in so and so. It i suffices to say that this is a game of really deep pockets. I have always maintained that OTT is a very easy market to get into. Because I think the common understanding is that all you need is a little bit of content, slap on some technology, some vendors lurking around in Hyderabad and Bangalore who you can hire and get for cheap and you can get into the market.

But OTT is a very very difficult market to stay in. And a lot of players who were there in this market are beginning to  sort of understand that. The key and the bottom line over here is you need very deep pockets to fundamentally stay in this game. I wish I new how long you need to sustain it; I wish I was a clairvoyant.

Needless to say, I maintain that this is not a P&L business. It’s a balance sheet business. And you really got to have deep pockets and a very entrepreneurial attitude in terms of trying to win this market. If you try to play by the known rules of how these businesses are built, then there’s only one thing going to happen - you are gonna lose! Given that, we have our own game plan in terms of this market.

I believe in terms of content, people expect a very different set of content from a premium OTT player. So there is UGC and the YouTube type content at one side and then there is TV broadcasting and cinema on the other side. What consumers expect of an OTT play is really something in the middle. They want content that is high quality, that is potentially cinematographic, in terms of finish, look and feel. And more importantly for the target audience that we are after, which is frankly the millennials, they want content which is real. They want content which reflects their aims, aspirations etc. So, I think you got to be very very careful in terms of how you go about executing your content game. I would say the mantra is being fresh and contemporary. Secondly, we believe regional is really an important play. We were actually the first ones to launch Telugu regional content a couple of months back and that I think pretty much took the industry by storm. That’s because the content put in over there was very high quality. The content that we produced along with Annapurna Studios, was original - Pilla and Pelli Gola.

And what sort of traction did you get for those shows?

I am not going to drop numbers again but let me tell you what we did. It was really interesting. Our entire philosophy towards this game of OTT is that it isn’t like a ‘one night stand.’ It is a hare and a tortoise game, but with a little bit of a difference. We don’t believe that ‘slow and steady’ is going to make us win. We believe ‘smart and calibrated’ is going to make you win.

So when we actually launched our first suite of originals in the month of April, people were surprised, there was no brand campaign? There was  no full page in The Times of India?

What we actually did over here was very simply put the content into the market, used all organic means to sort of see what the traction on the content was, ran that content frankly for a 10 week period, which is when we actually released our content and came back absolutely beaming in terms of  the results. The traction numbers that we were seeing over there were completely mind boggling as far as we were actually concerned. And if this year proof of the pudding is in the eating, we’ve actually come in and post that have commissioned another eight originals.

When do we see these eight originals rolling out? Are they with the same production studios or are they with new studios?

If it ain’t broke, why fix it? Yes, Vikram Bhatt did a couple of products with us. After Gehraiyaan and Spotlight, we have commissioned him again for another two products that will be out in the fourth quarter of this year. And you will see this new suite rolling out from the month of September onwards. We will continue to sharpen our focus on the regional market, we will be adding regional markets to our suite, we will continue our focus on Telugu and you will see some really high quality content coming for those regional markets.

You were mentioning that you were actually going to do dual language production? Is it going to go beyond dual language, while doing a Hindi show?

It is part of our overall DNA of experimenting. In our first round, what we actually did was create content specifically for Telugu, create content for Hindi, we have done dubs, we have done crossovers, we are actually studying how that market reacts, what their uptake on that sort of content is. And in the next phase what we are getting into is doing bilingual productions. It could make sense from an advertiser point of view.  It could make sense from a marketing economics point of view. So I think like any good old internet company we are really open to lot of experimentation and bilingual production is one of them. I don’t think the die is set as yet, we are still sort of in discovery mode on these types of things.

Some numbers on your (monthly active users) MAUs and (daily active users)  DAUs? Downloads?

We hate downloads because downloads is a bought number. Actually anyone can go out and buy those numbers. As company we are very focused on the metrics that can not be bought and the type of metrics we really focused on UVs (unique viewers), minutes per UV and returning users.

I think these are the three sets we are absolutely concerned about. Those metrics you can not buy and you have to earn those metrics from the consumers.

I think with all these three we are on top of the chart in terms of these numbers.

We have minutes of usages in excess of 100 minutes a month. We have people coming back to us at least six to seven times in a month to view content and that is with the limited suite of the kind of content we have right now.

Those are some very important numbers we look at and we think that, as content depth fundamentally expands, those numbers are actually going to go up. I think all indicators we are currently capped  on these two consumption metrics by the volume of depth we have available with us on our platform. So that's the reason we are looking at large volumes of content getting commissioned because once that goes up we know the guy is going to come back to us.  

You mentioned there are four and half million active users a month?

Yes, that's the number we had in the month of April in India.

So the number has gone up?

The number has moved up very significantly because April was when we started out with the original content. Those numbers are significantly north.

Somebody who has visited once month is your active user?

Everybody has got their own definition. We sort of tried to stick to the most acceptable definition that somebody at least consumed the video once a month and somebody who has  come in and just opened your app. We are sort of pretty clear in terms of the type of standard apply to us in terms of measurement. Honestly BARC coming in is going to be really very interesting.

What lessons have you learnt in terms of distribution, the customer’s propensity to pay, content creation, technology. Sometimes acquiring a customer is not worth it that what some players are discovering. So the acquisition cost can go haywire and set your entire gameplan haywire.

Our philosophy in terms of distribution is to go with where the customer is and therefore what we really followed has been a really multi-headed distribution strategy where we had content housed on our apps, we had content housed on our browser. We incidentally believed that the browser still have a very important role to play especially for certain types of content and specifically for certain types of devices. We have also got the Viu video audience network where we collaborated with a bunch of like minded sites who ingest our player. For instance, we have What the duck 2 today which is a cricketing product which runs on Cricbuzz also. We have a strategy in terms of YouTube, Facebook where we don’t hesitate to put our full form of original content. Therefore the strategy for distribution is very clear  - go where the customer is.

In terms of relationship, we have a very deep relationship with Samsung, where every Samsung device that has been shipped out since November 2016, the Viu SDK ingested in every device as part and parcel of the my Galaxy 2.0 product. So, it’s a bit of a Trojan strategy that we are present on the best Android device that is out there. The underlying philosophy is don’t pull them in,  go also where they are that is the strategy we are going to continue.

Coming to your questions of acquisition and acquisition cost, it’s a fairly bloody game at this particular point of time. Let’s face it,  your economics are going to tend to infinity and the only way any OTT player can counter that is frankly focus on the depth of engagement that he actually got.

So there are two philosophies that drive us over there. Either I get you here and make sure that you stay with me for a prolonged period of time and you keep coming back to me. So the strategy of a  sustained-content-release calendar works really well. Or I  get you in and make you consume as much you can within a short period of time because I really can’t stop you from going. And I think that’s where a binge consumption strategy works really well.

So from us what you will really see is a combination of sustained content release and binge watching strategy and that's going to be very powerful in terms of trying to maximize the lifetime value of the customer as he comes in. And in terms of recouping your acquisition cost over there. Obviously, I think as we get a lot more brand visible, as brand Viu becomes known, and we expect those costs to move southwards. I think a combination of these two strategies will help us to turn the corner in terms of starting to break even at a unit economics.

So what is the sweet spot for the price that customer can pay? You’re charging Rs99 apart from the free content that you are giving out to a premium subscriber. So is that a sweet spot  or is the Amazon price a sweet spot, Rs 40-45 when they announced.  What's the sweet spot?

Sweet spot is like saccharine, if you have too much of it is going to be very bitter. Our belief over here is customer are going to  pay you for value.

Indians paid Rs 350 crore a few months back to watch a man beat up his daughters to make them wrestlers. And that’s Dangal.  People do pay for content.

We think the fundamental point is it's not about whether customer is willing to pay or not, it's about the value he is seeing from what you are actually giving to him and we want to keep that power  to choose and decide in the hands of the customer.

Our strategy is out and out a freemium pricing strategy. We believe that we will continue to give the customer the best possible value in terms of content. He can come and continue it without any barriers, as long as he does not have a problem to get somebody else to pay for him doing it via advertising. We believe we have to make advertising as non-obstrusive as possible. A bunch of initiatives we have taken over there. We collaborate extensively with Facebook and Google to ensure that advertising delveries should be non- obstrusive as possible. We are innovating in terms of ad monetization models. Native is a much abused word but we have taken it very seriously in terms of what are we doing while building our entire ad ecosystem and ad model around.

At the end of it if we able to give enough value to that customer and he decides  that he actually doesn’t want to see your advertising, he will come and pay us. So we have the patience to sort of wait for customer to graduate from a free service to a paid service.

Is that happening, the graduation?

Honestly, at this point of time I don’t care. The one number I don’t look at is what is my free to paid conversion. I think it's too early and anybody trying to build a castle on subscriptions from day one I think you are walking on  broken glass and it's going to be very tough.

On advertising side you have done some deals with DBS and you got some other partners on board?

We got success with What The Duck 2 where we got DBS Yes we have DBS and Hike coming in as sponsors on the content. I think that's a very good example of what the philosophy has been in terms of  getting the advertisers to participate as natively as possible in your content. We have recently done a show with McDowell's known as Yaari No 1 which has Rana Dagubatti over there. It is like a Koffee with Karan kind of a show in Telugu which runs on Gemini TV. A very interesting  product where we actually have gone OTT plus TV simulcast at the  same time with an advertiser like McDowell's actually coming in and sponsoring that particular product.  And you will see a lot more disruption over here in terms of the type of models we are looking at, they could be ad inventory based, those could be sponsorship based, branded content based or TV to OTT. So it's going to be multi headed in terms of the monetization approach.