Who moved my OTT?
Streaming was supposed to free people from the stifling boundaries of film and TV. Now, it’s turning into TV too.
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January 2016 was when everything first changed. Not that we didn’t have online entertainment. But early in January, Netflix launched simultaneously in nearly every country in the world (pdf), including India. Hotstar already existed, a handy alternative to watch cricket on the go (for free), but India did not yet have a streaming industry.
It’s been seven years since that winter of change. We have more streaming services big and small than we can count, and there are countless businesses built atop them—from content studios dedicated to web series to aggregators that sell subscription bundles for cheap.
But the events of 2023 mark the end of Indian streaming’s first phase. Rapid growth, the endless appetite for content, and a sort-of ‘wild west’ creative freedom marked the first seven years of the business.
What’s changed? And how will the next seven years look?
The Lost Promise of Indian Streaming
Netflix’s January 2016 announcement was only the beginning of a stupendous seven-year run for India’s streaming or ‘OTT’ industry. In that relatively short period, there’s been a significant shift in consumer behaviour. According to data from consulting firm EY (pdf), 45 million households pay to subscribe to at least one premium OTT service. Another 77 million viewers access streaming platforms for free (funded by ads) or through ‘sachets’ or bundles priced lower than full-fledged subscription plans. That’s from a total 167 million households with a TV, as of 2022. Besides these, streaming platforms have 45 million more free TV consumers and over 152 million more households with no TV to tap. The market opportunity is enormous, and we’re just getting started.
For creatives working under the restrictions of the films and TV business, streaming was a golden opportunity. There was good money to be made: platforms were endlessly hungry for content and willing to pay well for it. And finally, filmmakers had freedom to explore their craft and express themselves: streaming was free from the censorious laws governing films and TV.
All this is ending.
There is a glut of low-cost online entertainment and not enough Indians willing to pay (see more in this edition of The Impression). Large media firms are pushing for mega-mergers, reducing the fierce competition among platforms. And the government is keen to control OTT platforms where, away from the eagle eyes of censors, creators could freely broadcast their views.
Censorship as Damocles’ sword
It is now common for filmmakers to self-censor scenes and dialogues much before written material reaches producers or streaming platforms’ legal teams. Apart from avoiding obvious political and religious references and anti-establishment plot points, people in the industry are also simply scrubbing references to current affairs.
That even includes steering clear of innocuous references to ‘Bharat’, given the recent controversy over a reported government proposal to rename India as ‘Bharat’, a writer in the streaming business told The Impression requesting anonymity. Creative artists working in the streaming industry say they’re beginning to see an old, familiar enemy from the TV business – ‘S&P’ or standards and practices, the definitive handbook of everything the law prohibits from films and television programmes.
This self-censorship is likely to get more intense. The government has introduced a draft broadcasting bill (pdf). Among other suggestions, the bill proposes that all streaming platforms set up independent content evaluation committees to certify every piece of content before it airs. These mini-Censor Boards are unlikely to ever get through the millions of hours of content already streaming in India. Besides, while Indian studios may have little choice, their foreign counterparts aren’t likely to make cuts to their streaming exclusives to please Indian authorities. As per Reuters, Netflix, Amazon Prime Video, and Disney among others, are formally lobbying against the proposed legislation.
The Washington Post wrote this detailed piece last month on the casualties of self-censorship among Indian streaming platforms. Even high-profile director-producers such as Anurag Kashyap are facing establishment and majoritarian hostility.
For now, producers and corporate legal teams are leaning on familiar S&P dos and don'ts to cut scenes and dialogues with even the slightest potential to ‘hurt sentiments’.
Whither the cash?
Add to this cuts in streaming budgets and the impending mergers of Reliance and Disney-Star (JioCinema and Hotstar) as well as Sony and Zee (SonyLIV and Zee5). What was once a cluttered market with numerous platforms competing fiercely to commission content is now consolidating into a few main players that are conservative with cash and focused on profitability. As these mergers conclude (although the Zee-Sony deal is uncertain), there may be some job cuts to avoid duplication of roles. In Reliance’s case, there are already two competing teams commissioning content – the folks at Voot (part of Viacom18) and those running the show at JioCinema.
This, coupled with the impending merger with Hotstar, has led JioCinema to cut back on commissioning content (Mint also reported in this story). That’s a big reversal from just a few months ago when JioCinema was aggressively courting filmmakers to fill up its vast content slate. For production houses, JioCinema had become a safe haven for content that would not sell elsewhere (see this edition of The Impression for more details).
Post-IPL, the platform has been releasing one original show or film every Friday. Now, it seems to have gone slow on that strategy. Instead, it is looking for buyers for content instead of releasing it on JioCinema.
Just like in the US, streaming platforms in India have to find a way to make money. Disney, Warner Brothers Discovery, and even Netflix have spent the last few quarters cutting costs aggressively, hiking subscription prices, and rolling out cheaper, ad-funded tiers to grow the business.
If platforms don’t make profits in the long run, nobody else in the ecosystem will. Consider the example of two of the most successful production houses dedicated to making shows for streaming - TVF and Applause Entertainment.
Applause Entertainment is the production house behind some of Indian streaming’s biggest hits including Scam 1993, the show that turned Sony LIV from a repository of TV reruns to a competitive streaming platform. Applause holds the rare distinction among production houses of owning its IP. Unlike the norm, Applause does not simply produce a show commissioned by a platform in exchange for a fee. Instead, it invests its own capital to create a show and then licences the rights to it, retaining ownership of the IP.
Another production house that does this is TVF, the production house behind a wide range of streaming hits, including Panchayat, Aspirants, Gullak, and Kota Factory. TVF only licences its shows.
Despite all this success, last financial year hasn’t been easy on them. Company filings show that in FY23, TVF’s parent firm made a relatively thin 10% profit margin (after tax) on revenues of just over ₹157 crore (~$18.83 million). Meanwhile, Applause made just under ₹70 crore (~$8.39 million) in losses, also on revenues of about ₹160 crore (~$19 million).
Although filings for streaming platforms aren’t available, the largest, Hotstar, is bleeding money. In FY23, it made nearly ₹750 crore (~$90 million) in losses, double than that of the previous year.
The next phase
This isn’t a eulogy for the streaming business. But the gold rush is over, and there may be little to differentiate between films, TV, and online entertainment except the mode of access. In the “early” days, when Netflix launched Sacred Games and Amazon Prime Video debuted Mirzapur, streaming came to be associated with ‘dark’ and ‘gritty’ shows, a fresh alternative to tired tropes of family films and TV soaps.
Without that differentiator, will Indians still pay for streaming subscriptions or seek out ad-funded free OTT platforms? Some of those 45 million households, 2 million of which are estimated to have abandoned cable, will probably continue to do so. For the rest, India’s streaming industry will need to script a brand-new pitch to sustain itself for the next seven years.
Note: A previous version of this story said India has 300 million households with no TV. The correct number is 152 million.
Last Scroll Down📲
Scan the big media headlines from the week gone by
Look-see: We finally have data on Netflix’s most-watched titles. The platform released a half-yearly ‘engagement report’ listing its most viewed titles in the first half of this year (by number of hours). Big takeaways: most of the top 20 are Netflix originals and hardly any are fronted by a big movie or TV star; Korean shows and Spanish telenovelas are driving huge viewership globally.
Hide your kids’ (iPad): The budget cuts are coming for the kids’ favourites too. Moonbug Entertainment, which makes the hugely popular CoComelon show, is cutting back on production costs, expansion plans, and the number of episodes it will make next year. In October, it laid off about 5% of its staff. Note: CoComelon is among Netflix’s most-watched shows.
Restructured: To comply with the 26% cap on foreign investment in news, BBC India has found a unique solution. Four senior staff members – Rupa Jha, Sanjoy Majumder, Mukesh Sharma, and Sara Hassan – are leaving the company’s payroll to form a new firm called Collective Newsroom. This company will produce all content that BBC commissions in India.
(Un)leashing AI: A labour union for a Microsoft-owned video game studio has reached a tentative agreement with the company on the use of AI. That includes six guiding principles on AI-related decisions and a promise to inform workers in advance when AI is used in game development.
Separately, the New York Times has hired Quartz co-founder Zach Seward to set up newsroom rules on how to use generative AI.
Epic win: Literally. Three years ago video games developer Epic Games sued Google, accusing it of running an illegal monopoly on the marketplace for mobile apps. It won. What helped Epic’s case was evidence that Google routinely cracked secret sweetheart deals with app developers (including Epic’s rivals), showing that its Play Store wasn’t a level playing field for anybody.
Dissecting this week’s viral ‘thing’
A few months ago, I wrote a note (scroll to the ‘Trumpet’ section) on creators pretending to be ‘non playing characters’ or NPCs on TikTok/Instagram to gather likes, views, and virtual gifts.
Beauty influencer Nyane Lebajoa has found an impressive innovation on the trend. If you ever played makeup video games from the late 1990s or the early 2000s (like this one), you’ll recognise the concept instantly.
Nyane invites the viewer to do her makeup, following a series of makeup items to create a look layer by layer. The trick is that she responds to each makeup item like a video game character, letting you feel like you’re playing a game and doing her makeup for her.
It’s extremely hard to turn a one-way medium like short video into something more interactive but Nyane has cracked one of the few ways to do it.
Her videos take a lot more effort to make other NPC creator trends. Not only does she have to film every layer of makeup of a complicated final look, she must also record herself with the wrong lipstick shade or incorrect eyeliner for that moment when she says ‘No’ to the viewer, asking them to try something else. That is what makes the seemingly interactive experience feel real, just like a ‘90s girly video game.
It’s only a matter of time before Nyane’s format gets copied if it hasn't already. But she’s a step ahead, extending this to interactive wardrobe videos where the viewer can pretend to dress her up. All these NPC trends in short video prove one thing: retro-gaming nostalgia is so strong, even the beauty queens are picking it up.
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