The global OTT video market is poised for nearly exponential growth, a report by Digital TV Research states. It forecasts that global revenues will climb to US$ 65 billion by 2021 covering 100 countries. By 2020, AVOD’s revenues of US$ 15.4 billion are expected to surpass SVOD revenues of US$ 14.6 billion. As per Frost & Sullivan, the video market is anticipated to expand at a CAGR of over 80 per cent till 2020.
By 2019, Cisco research states, almost 80 per cent of the global Internet consumption will be video content, OTT streaming will fuel growth, traffic from wireless and mobile devices will rise to 66 per cent in 2019, and Internet video to TV will increase fourfold by 2019.
Competition in the OTT segment is increasing owing to companies seeking to expand their user bases in other countries.
Indiantelevision.com’s Parvinder Sandhu caught up with Subin Subaiah, the global CEO and director of Spuul, a Singapore-based aggregator, which has a catalogue of 1000 movies, over 10,000 hours of programming and 18 million downloads to date. Co-founded by Subaiah, Sudesh Iyer, and S Mohan, Spuul (inspired from spool) has reduced the lead time between movie premieres in theaters to its availability on its platform to just two weeks and has established tiny downloads of less than 70mb for viewers in low bandwidth areas.
A banker who held senior positions at leading global financial institutions, Subin, mixing grit and persistence with patience and respect, set up Spuul in 2012 based on his absolute conviction that on-line streaming is the pre-cursor to the world of virtual cinema.
Excerpts from an interview:
How will you define Spuul? A start-up or a mature media company?
Start-ups are a buzzword these days. But, for how many years, a company can be called a start-up, and why? Start-ups need growth funding and capital support till they become self-sustaining corporates with independent and massive marketing budgets and eventual taxpayers. We are a mature start-up, which will be cash-flow positive in 18-24 months. Start-ups are nurtured till an inflection point comes in the industry.
How do you see Spuul in the Indian OTT eco-syestem?
In India, the OTT and VOD eco-system is still evolving and it may take 12-24 months to mature. Internet penetration here is quite low and the data cost is high, unlike in the US, China, or the UK. However, in India, the OTT/VOD eco-system is interdependent on a lot of stakeholders such as telcos, content owners, broadcasters, fibre-to-home entities, DTH players, IPTV, the OEMs and the device industry. Almost all the OTT/VOD players are struggling to find the right approach to the consumer and to understand the ideal user experience.
Spuul is a pure play and dedicated OTT player without an agenda. We are a disciplined ship -- a premium solution for the common man. Spuul is seeking to partner various industry outfits and is seeking content deals. We have already made our presence felt and are neither anxious nor feel threatened about competition. We use our own metrics to figure out ways to serve consumers.
Considering what you said about success’ interdependence on other factors, how would you describe the Indian market?
India is a complex market, no doubt. In India, one needs to see who is able to pay how much and what kind of value for money the consumer is seeking. We continuously address the consumer's issues and expectations. No doubt, one would need growth capital, but the timing is important. It's not primarily about money, but more about who we can partner with. This is a deep-pocket business. In the OTT/VOD business, there has been an escalation in
i) content cost;
(ii) customer acquisition cost;
(iii) BTL cost (cost of e-commerce is exorbitant) and
(iv) ability to hire and retain talent.
Though Reliance Jio, for example, is giving ESOPs, it does not work well in India since employees here expect cash today and not (notional money) for the future.
What are your expectations from the Indian market?
We expect Internet penetration in India to be sufficiently better in 12-24 months time. By that time, Internet, hopefully, would have enabled around 100-200 million people with easy access and affordable Internet. The arrival of Reliance Jio will hopefully change the scenario as it’s not just about good penetration, but affordable price points and quality (of service) that are also significant. When these converge, digital consumption would be much better.
The market dynamics keep changing. Now, after demonetisation, many players like us had to integrate with payment wallets. So, we had many balls in the air -- we may catch some and drop some. But, it’s okay.
What , according to you, is making OTT/VOD services mushroom all over despite Indian challenges? Has there been some major shift in viewing trends?
With the arrival of OTT/VOD, ‘viewing by appointment’ has been tossed out of the window. But, another big challenge for the OTT/VOD players is how they deliver the same content (that had been delivered till now or is still being done so via legacy platforms) on whichever device the consumer has. The scene has shifted from the broadcaster to the consumer.
Consumer in India needs to be first educated about the difference between paid and free content platforms. Second, they also need to be made aware of legal and pirated content. Education will lead consumers to understand the rewards and penalty for making the right or wrong choices. As of now, the consumer has made soft choices.
The industry too needs to understand some of the issues: how to provide hassle-free content? How much content is being consumed? Which type of content is being used? When is the content consumed?
How is Spuul trying to address some of the issues in the Indian market?
Spuul is non-discriminatory and sees every consumer as a potential client. Spuul enables downloads, consumption (rendition) of content in accordance with the device -- whether it’s running on an Android or Windows-based or some other platform, the size of the screen (large, medium or small), whether it’s a mobile phone or a tablet and similar such issues. It's a technical game and we pride ourselves as being the best at it. The problems of easy content delivery are something that forces companies such as Spuul to find solutions on a bumpy road.
Would you enumerate some of the initiatives of Spuul in this technical game?
We are the pioneers of Progressive Download (the process wherein a user downloads his/her favourite show for offline/low bandwidth viewing). Wi-Fi needs to significantly grow for a smoother user-experience in India. Other OTT/VOD companies soon caught up with Progressive Download technology as there’s hardly anything proprietary in such technologies. As OTT/VOD is a big execution game, technology, marketing and agility to adapt to changing landscape is as important as having good content.
In the OTT/ VOD realm, there are primarily two kinds of people who need to be taken care of:
1.Content consumer (all his likes/dislikes need to be kept in mind and served accordingly) and
2.Content owner who expects content to be showcased properly. We also need to take care of the licencing rights and that best exposure is given to content for the satisfaction of the owner as well.
As content-owners strike different deals these days to multiply its monetisation, how do companies like Spuul take care of sensitivities, including IPR issues, while rolling out services?
Sometimes, content owners are reluctant to part with their content. What if we were to licence a top media/production house content and show it alongside C-grade movies? That’s simply not done. At Spuul, we maintain that image of the content-owner and ours is as important. As we need to have a working model that is sustainable and long-term, we need to have a degree of decorum and a certain premium-ness attached to our product.
Relationships with the studios are important. In a corporate world, we all need to be careful about transparency in our deals and need to be aware about fighting piracy. Pirated Hindi movies that were available online lose more than half the revenue that they may have earned legitimately if online pirates had not milked their products. Spuul has created some rules around its content. Hindi movies are digitised with sub-titles. A-grade and B-grade movies are made available to discerning customers. For example, Spuul is also careful in choosing its content when it comes to markets such as the Middle East. For the sake of offering some select C-grade movies, one cannot risk jeopardising the whole franchise. We must eliminate that risk entirely.
We do offer some regular content like Bollywood and regional films. Racy and edgy content is a major attraction and is loved by people in the 18-35 years age-group. Except Eros, we have a tie-up with almost all producers and major content-owners. We are also in the process of moving from Hindi to Punjabi and South Indian movies and, subsequently, decent Bhojpuri movies. The inspiration for south Indian content came from a Delhi incident where we overheard a taxi-driver and his friend discussing action and VFX-laden movies from south India.
However, Spuul is not rushing in to provide original content. We are a technology company, and not a creative organisation. Big studios can afford to have, say, 10 originals of which three may fail. It still works out to be reasonably profitable. If I were to get two million users who are spending say US$ 5 a month, for example, I can break even for my US$ 10 million investment.
The market trends and consumer choices need to be tracked, so it seems?
Absolutely. We do keep abreast of the market trends in terms of price points, recency of content (how soon it is available after being released in theatres) and originals. But, India is a low-yield market compared to the Middle East, North America and New Zealand. Those markets are more remunerative with bigger payments and higher churn rates. In India, against 60 per cent consumption, the revenue is 20 per cent. However, in the rest of the world, revenue is 80 per cent against 40 per cent consumption.
(60 per cent of Spuul content is consumed in India and the remainder by the Indian and sub-continental diaspora, across the world. In India, almost 90 per cent content of Spuul content is consumed on mobile devices.)
How different is the Indian consumer from those elsewhere for Spuul?
In India, the consumption patterns are different. There is an involuntary churn since consumers switch from one telecom service-provider to another. After the switch, one needs to re-acquire the consumer, which entails a reasonably high cost. The country is a different ballgame altogether. Users here would want to watch selective content, but privately. It is not the same as content on cable TV, for example, where it is watched by the entire family. A majority of women in India do not leave their homes, lest they miss on their favourite TV programme.
In the OTT/ VOD world, one needs to constantly empower and engage with the user. A consumer needs to be prompted to download the OTT/VOD app, which he may or may not, depending on his mood, availability of memory/space on his devise, Internet speed, cash balance and finally his willingness to spend. We may need to have all his co-ordinates to reach out to him – his email IDs, FB account IDs, his mobile number, etc. The environment is totally different from the cable TV business.
(Spuul India CEO Rajiv Vaidya held forth on certain marketing aspects. He said that Spuul’s sachet pricing was applicable only in the India market. The sachet pricing is marketed through the telecom operator. A user is offered an entertainment pack of various duration ranging from a day to a week to a fortnight, depending on the consumer’s financial capability. The fee is automatically deducted from his prepaid mobile balance once he chooses to take a service. In India, almost 90-95 per cent mobile voice and data subscribers are pre-paid consumers.)
You said Spuul has tie-ups with content owners. Does that strategy also include broadcasting companies?
Spuul had taken a conscious decision to offer primarily movies and that’s why we do tie-ups with content-owners. But, I agree it would have been better if we too had a content supply chain as it happens when the OTT/VOD platform is a (brand) extension of a broadcasting company or a production house (Hotstar, Voot and Balaji’s ALT readily come to mind). A production factory is always valuable and movie studios are our production factory.
Still, Spuul has partnerships with several broadcasters, especially the GECs, which are primarily looking at marketing their content to the Indian and sub-continental diaspora abroad
How would a Spuul service be different from others and other delivery platforms such as cable and DTH?
Spuul has tie-ups in place where it gets a week-long or a 10-day exclusive window before new movies are aired on television via DTH or cable TV services. We need to market and leverage that window correctly through digital and targeted marketing. We need to study users’ browsing habits and aim properly at targeted customers. We also need to engage directly (through in-app notifications). Text messages or SMSes are expensive in India. But, in the Middle East, we have tie-ups with telcos through whom we do SMS blasts to thousands of customers together.
How does Spuul view the arrival of big daddies such as Amazon Prime and Netflix in India?
The likes of Amazon Prime Video and Netflix would help expand the OTT/VOD market and all new players are welcome. They have educated the Indian consumer that one needs to pay to watch good content at a convenient time and place. They all have helped in enlightening people that one can't rely on pirated content and, thus, have helped the ecosystem grow. Everybody here is learning and nobody is an expert on content. All companies have their advantages and limitations. Some are in the OTT/VOD business alright, but their primary aim is to grow e-commerce revenues.
Will AVoD be a success?
AVoD is not expected to succeed because potential advertisers expect certain million downloads before they take a call on putting their money. Also, content owners generally are not happy when their creations are available for free. They expect it to be put behind a pay-wall.
What are Spuul’s targets?
Of the 23 million global consumers, 60-65 per cent users have downloaded the Spuul app. Of the Spuul subscribers, around 60 per cent are in India and the remainder in the U.S, U.K, Australia and New Zealand. We are growing 30-40 per cent month on month. Of the projected 700-800 million global OTT/VOD subscribers by 2020, we are targeting approximately 200 million or roughly 25 per cent to be on the Spuul platform.
By 2020, owing to the sheer numbers and the status of being the second-largest penetrated market, India's OTT/VOD subscribers should leapfrog ahead of the U.S but remain below China where the growth trajectory is similar. The opportunity in India is huge.
