The streaming landscape of India is going through a rapid transformation. Seems like it is no longer about raking in subscribers by showing value at but wooing them through advertisement monetisation.
It has recently been found out that Amazon Prime Video will soon offer a free ad-funded advertising video-on-demand, aka AVoD, tier to Indian consumers with exclusive and original content. This will allow users to signup for Prime Video subscription without making any payment and access any content that is made available to users of the free tier.
According to people in the know, this will allow Bezos’ streaming giant to offer ‘Premium Content’ only for the users subscribed for the current standard subscription plan which is price tagged with Rs 999 a year currently. The current plan also lets users access to speedy Amazon deliveries, Prime Music, e-books, games and so on, which will not be available for subscribers opting free plan.
But, as you must have guessed it already, there is a catch involved.
Turns out the AvoD tier users won’t be able to access the shows and movies from the standard subscription of Prime Video. Taking a page out of Hotstar’s playbook, Amazon will be offering new shows under the banner Amazon Originals for the ad-tier – something for which they have already started reaching out to production houses.
People in the know have revealed that the e-com giant is currently in negotiations with several production houses for acquiring new shows and are considering various ad-revenue options to expand its video offerings in India. These include – a Live TV tab within the Fire TV Stick and monetising sports as well.
Amazon Prime Video: End of Subscriber Chase
Up until now, Amazon Prime Video, much like all other OTT players in India, remained highly focused on competing for paying subscribers. It included a 30-day free trial, low annual subscription rate coupled with other benefits and even a mobile-only plan which is being rolled out in collaboration with Bharti Airtel.
So, what would change? Why is the streaming giant suddenly diverting focus on building an ad-fueled VoD tier?
Well, as most people already know, only a fraction of online users out of the 560 million in India currently pay to access digital subscriptions. Thus, one could say the fight to acquire paying customers in a complex and price-sensitive country like India is proving to be too much of a challenge for Amazon Prime Video – especially when there currently exist more than 30 OTT players competing for real estate on consumers’ devices.
Therefore, in such a situation, advertising quite naturally gets pitched for a crucial consideration. Now, if one looks at the long-standing strategy of Disney+Hotstar (formerly Hotstar), having an AVoD tier besides the SVoD tier has been working out pretty well. 60% of its revenue from operations is generated from advertising revenue – most of which is raked up by their offering to display ads during the IPL and other sporting event streaming besides Hotstar Originals.
As India is also known as a market of consumers ready to trade in their personal information with financial gains, pushing advertisement in between the streaming content would not annoy a majority of users as far as they get access to such content at a very low price.
All in all, it is very much likely that the hybrid model is the way of the future not only for Amazon Prime Video but other OTT players in India as well. The strategy, apparently, is to get users habitual of OTT platforms and then slowly start increasing the price of the monthly subscription. But until then the advertisement is the best possible model to fill in the loss that would occur due to low-price subscription that would be offered by OTT players.
Looks like, India market is yet not ready for total ad-free experience yet. Users need to realise the real cost of their personal data that ad servers squeeze out in order to show relevant ads.
Hotstar’s strategy has paid off and now Amazon is all set to follow the same. It would be interesting to see how Netflix and other OTT players respond to the growing challenge in the market.