Christine McCarthy, Disney’s Chief Financial Officer, in an Investor Day presentation on December 11, 2020, said, “We don’t believe that the consumer experience would be a particularly good one if we had advertising on Disney+.”
Last week, Disney said that it would roll out a cheaper, ad-supported Disney+ subscription in the U.S. beginning late 2022.
That leaves Netflix and Apple as the only 2 OTT players with no advertising whatsoever. It’s clear that the OTT industry has hit a wall in the quest for growth. But it is not restricted to OTT alone.
Tata Play (Tata Sky), which has 19 million active subscribers in India, announced last week that it would voluntarily downgrade the subscription plans of almost half of its subscribers! The company said that Tata Play subscribers will start receiving messages informing them about dropping certain channels or bouquets from their monthly packs and the overall savings. Tata Play’s MD is quoted in The Economic Times saying, “Lot of our subscribers are being erratic in their recharges. Some are only recharging when they have compelling content.”
From one State-owned TV channel, to a few free TV channels, to hundreds of TV channels via a cable operator, to thousands of TV channels via a satellite dish and set-top box… we seem to have completed a full circle of going back to a few streaming channels (but with endless, on-demand content).
But, from a few streaming channels to now… we have an odd problem: many streaming channels and all of them are charging us separately, or offering ad-supported versions that we need to deal with individually.
The streaming platforms started with premium, ad-free models when the concept was new, but eventually, most of them started to offer ad-supported versions when new subscriber addition plateaued.
How did this work with satellite channels? We called the cable operator and they took care of adding or removing TV channels. Then, on DTH services, we helped ourselves through the service’s website or app.
Now, the experience is one-on-one – you go to the streaming service’s website and cancel the subscription. But unlike the cable operator who came to your home to collect the subscription money or Tata Sky that you ‘recharged’ month after month (with Tata Sky creating many advertising campaigns to help people with how to recharge through multiple methods), with a Netflix or a Disney+, it is up to you to remember to cancel the subscription if you thought you are not getting enough value.
But as I had written in another post, the entire catch with subscription services is to remember what you have subscribed to and remember to evaluate the value offered/gained from time to time. This is not something we consciously do at this point with OTT services. We are doing this with Tata Play (DTH), and I see a near-future where this may plague OTT platforms too.
So the most obvious question: what next?
Would we head to OTT aggregation too, the way TV channels were aggregated? There are already a few services that offer aggregation (like Apple Channels or Amazon Prime Video Channels) but almost all of them seem to be merely offering a unified platform to discover OTT services and each of them needs to be subscribed to separately. In a way, it is like a platter that has many items, but to eat each item, you need to pay separately to that items’ chef! The aggregation seems to be at a superficial level.
And the less said about TV interface options the better! We have an older Sony Bravia at home and we have made it smarter using the Amazon Fire TV dongle.
TV manufacturers like Samsung and LG have their own Smart TV ecosystem, while a whole lot of dongle-based options have taken the early lead. And then there are 3rd party operating systems that the TV makers opt into, like Google’s Android TV.
The usage for these interfaces varies wildly from region to region!
But, these services make the user experience that much more complex since they merely show the users what are available. Each streaming platform still needs a direct subscription and ongoing management from the viewers’ side. It’s not as seamless as paying a single cable operator or a Tata Sky to get a bouquet of streaming services.
So, are we likely to get real aggregation?
For instance, consider how Google Play Pass operates. The global service was rolled out in India last week, incidentally. Google Play Pass offers a curated collection of 1000+ titles across 41 categories from developers across 59 countries (including India) without ads, in-app purchases, and upfront payments. A user can subscribe for Rs. 99 per month or pay Rs. 889 for the year. And with the Google family group, family managers can share their Play Pass subscription with up to five other family members as well!
Imagine a service where you can pick and choose the assorted streaming services you want and subscribe to just one single entity for the whole selection! Is that a good model?
Or, should it be even more sliced? A single service that helps you discover the kind of content you want to watch no matter which streaming service it is part of and you just pay a single monthly fee?
Both these options seem reasonably distant at this point since most streaming services have built their own walled gardens. Ideally, the experience owners are probably best placed to bring such true aggregation to the market.
This is what happened with the mobile app scene. The app ecosystem is a 2 horse race between Apple and Google and every single app must choose to be part of both ecosystems if they want the widest window of users. Because of this control, services like Google Play Pass become possible.
It is far more cluttered in the OTT space, however. Every streaming platform has its own user interface, some better than others. It’s like visiting individual websites to read content and each having completely different designs. And you need to subscribe to individual platforms too.
The biggest casualty of this is perhaps content discoverability and user experience. There is so much money being lavished on content creation, with the biggest stars headlining them. And yet, people are on a constant race for ‘what to watch, next?’. Once we solve the ‘what to watch?’ question, we then have to answer the ‘where is it available?’ and ‘am I a subscriber?’. To avoid the complications, we simply resign to ‘what is available to watch in the service I have already subscribed to?’.
I picture a service on the lines of Amazon Prime in terms of pricing; one where I can surf for content recommendations based on my interest (science fiction, or murder mysteries?) and mood (mindless action, or thrillers?), and the system pulls up the best content from any and every possible streaming service regardless of whether I have a subscription or not. And then, instead of breaking the flow and asking me to subscribe to that service first for a month or a year, the overall platform offers me a 30-minute free preview and then shows a QR code on screen so that it offers that series or movie alone for a smaller fee of say (just for an illustration), Rs. 25 (because I have bought the overall platform’s monthly subscription, like the Prime’s annual fee, for say, Rs. 499 per month) with ads, and a mildly larger free without ads. I scan the code, pay via UPI, and start watching.
Even better would be just a single monthly fee to a single platform that has deals with all the streaming services and a single interface for me. This seems highly unlikely in the current scenario where each streaming platform is building its own brand and moat. But going by the TV channel experience, aggregation of streaming platforms is also perhaps just around the corner.
The more pertinent question is this: who will likely be the one to bring assorted services together and hence own the user?
Google? Going by their larger share of the smart TV ecosystem, that is a possibility.
Amazon? It has its own streaming platform unlike Google, so that may make other streaming platforms wary of joining an Amazon-led aggregator (also going by what Amazon eventually does to sellers on the shopping platform).
Who else?
One form of industry player that is currently aggregating the OTT platforms now is the pipe that offers internet to users. Jio Fiber, for instance.
