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Players shift strategy from earlier focus on subscriber growth and content expansion
Javed Farooqui (THE ECONOMIC TIMES; October 8, 2024)

Indian over-the-top (OTT) platforms are increasingly focusing on cutting losses and aiming for profitability, marking a shift from their earlier focus on subscriber growth and content expansion at the expense of profits, according to industry executives.

With competition intensifying and subscriber growth plateauing, these platforms are now prioritizing sustainability. Traditional business profits are under pressure, and external funding is becoming scarce, leading to a decline in aggressive OTT investments. Previously, large media companies funnelled profits into OTT, viewing it as a future-oriented business.

For instance, SVF Entertainment's Bengali OTT platform Hoichoi recently posted a modest profit in FY24. Kolkata-headquartered SVF Entertainment is a regional powerhouse with a strong TV and film production business.

The company's executive director, Vishnu Mohta, stated that Hoichoi's FY24 revenue saw a 30% year-on-year increase, with a sixfold growth in margins and profitability. The streaming business operates under a separate entity, Hoichoi Technologies, which has two subsidiaries.

"There is plenty of opportunity for us to scale up because we cater to Bengali-speaking audiences not just in India but also in Bangladesh," Mohta said. In addition to geographical expansion, Hoichoi is diversifying its content offerings, including new formats such as Hoichoi FM, an audio platform set to launch with 30 audio stories in Bengali, English, and Hindi across multiple genres, appealing to a broad audience.

Hoichoi has a content library of over 1,800 hours, including 160+ Bengali original series, 500+ Bengali films, and 140+ Hindi-dubbed originals.

Among national players, Zee Entertainment Enterprises-owned ZEE5 reduced its quarterly operating losses by Rs. 165 crore, bringing the total to Rs. 178 crore in Q1 FY25. The platform's Q1 revenue rose 15% to Rs. 224 crore. Zee Entertainment CEO Punit Goenka recently stated that the company's near-term focus for ZEE5 is to achieve a balanced cost structure to drive long-term profitability.

Similarly, Balaji Telefilms' OTT platform ALTT, which operates under its subsidiary ALT Digital Media Entertainment, significantly reduced its EBITDA losses, from Rs. 135 crore in FY22 to Rs. 65 crore in FY23, and further down to Rs. 21 crore in FY24.

"The platform achieved positive cash flow and generated Rs. 18.45 crore in direct subscription revenue from 1.28 million subscriptions (including renewals). With an order book exceeding Rs. 230 crore for web series, ALT Digital is expanding its content offerings and revenue streams beyond subscriptions," said Balaji Telefilms Group COO Sanjay Dwivedi.

According to its FY24 annual report, Balaji Telefilms has invested a cumulative Rs. 795 crore in ALT Digital Media Entertainment.

The premium video-on-demand (VOD) sector, fuelled by advertising and subscriptions, generated $1.04 billion in revenue during the first half of 2024, marking a 38% increase from $760 million in the same period in 2023, according to Media Partners Asia (MPA).

Local content made up 86% of premium VOD engagement, with live sports, along with local drama and romance, driving the highest demand, it added.