Ajit Mohan has no qualms dissing the web series format, something his competitors in the video-on-demand space are gung-ho about. For him, it's TV shows, movies and live sports that will spell success for Star India's VOD platform Hotstar, which he has been at the helm of since its launch in 2015, and was subsequently named CEO of.
Soon after the launch, the network took a leap of faith by making one of its popular properties Star Guild Awards available on Hotstar before airing it on television. More recently, the same was done with a show called 'On Air With AIB'.
A year back, Hotstar strengthened its offering by making content from Disney, HBO, and Fox part of its portfolio. That was also the time some of its content was put behind a pay wall.
Mohan, a former McKinsey consultant, has been with the Star network for five years. We spoke to him about Hotstar and the business of online video. While he was candid about a lot of topics therein, he dodged our questions about Novi Digital Entertainment's ROC (Registrar of Companies) filings that show a whopping revenue of Rs 186 crore and an equally alarming loss of Rs 409 crore, in 2016, as reported by Financial Express in a recent article. Novi Digital is a subsidiary of Star India that runs Hotstar.
Let's start with a basic question: If you compare the digital video business with the TV business in India, what are the fundamental similarities and differences?
Today, people, on an average, spend two and half hours a day, watching TV. In more mature media markets - because there are two to three TVs in a single home - the number is close to seven hours a day. The second and third screen in the house is going to be a mobile medium - we're betting on it. People will gravitate towards high quality, long-form, curated content. It will be about TV shows, movies and sports, across mediums.
When satellite TV was new in India, music dominated consumption. But later, when entertainment channels started producing daily soaps and airing movies and sports, the share of music reduced. We are seeing a similar trend when it comes to online video - the early years of online video were characterised by UGC (User Generated Content), short skits, comedy and movie trailers, but as people are getting less data- conscious, we're seeing an increased consumption of high quality TV shows, movies and sports.
On the other hand, the difference is - on digital, people are not constrained by the phenomenon of appointment viewing, like they are on TV. The second and third screen is a personal screen, where people are not constrained by who controls the remote. These are becoming the primary screens for the youth. Previously, these screens were incremental to television, but going forward, in the urban market, the bulk of the consumption will happen on such mediums and TV consumption will be incremental.
Everyone is obviously excited about the surge in mobile video viewing but what will happen when Jio goes pay post March 31? What percentage of your viewers come from Jio?
I think there is a bit of 'data tyranny' that happens. Variable pricing, uncertainty... all these make the consumer hyper-conscious, there is always a fear...Our observation is - when people have unconstrained access to data, they gravitate towards online video, long-form content and platforms like ours. If telcos assure people that they won't be charged for every minute, we'll continue to see the growth we have seen so far, even if data isn't free.
There is no particular number. The good part is, we've seen growth on Jio, on wi-fi and on other telecom operators. The competition has given consumers better options at cheaper rates.
To what extent is the fate of Hotstar tied to bandwidth quality and pricing?
As more people have access to data, platforms like ours will benefit disproportionately. Yes we are excited about the growing access to - and falling cost of - data, but it is not a linear story. It's not just about data. Social media has grown by about 60 per cent in the last six months; Hotstar has grown by 400 per cent.
Over the last two years, we have invested heavily in our content and technology. Also, we have India- relevant technology, an example of which is the 'download' option. We were among the first to make TV shows, movies and sports content available for download, right from the beginning. Over the last few months, we have seen our international peers catching up with us.
From being totally free, you went partially pay in April 2016. Could you run us through the logic of why you took the step - and at that particular time?
When we launched Hotstar we made a conscious effort not to charge consumers. We were acutely conscious of the fact that people pay a lot for data. Three years ago, the cost of data was $8 (Rs 521) an hour - that's more than most cable and satellite packages cost in a month. Given how expensive data was relative to income, and relative to what people are used to paying for content, we decided to offer our services without charging for it. We wanted to unleash the power of on-demand consumption in India.
A year and half ago we thought - 'Let's offer differentiated content for discerning consumers who won't mind paying for a differentiated service'. That's when we launched our premium service with sports, movies and TV shows in the portfolio. It was a natural evolution; I don't think it was linked to a particular show.
What's the difference in the profile of your paid subscriber and free viewer?
There are no stereotypes that can be applied here. We see all kinds of content combinations - there are people who are watching Hindi TV shows and Premier League (football), for instance.
One thing has stood out, though - a lot of premium consumers come to us through the large screen. So while most of our free users come through the mobile, most of our premium users are enjoying the large screen experience (via Chromecast and Apple TV).
Three years ago we were a very 'metro' phenomenon, but over the last two years Hotstar has gone fairly deep into the country. In fact, in cities with a population of over a million, cricket on Hotstar is more or less at par with cricket on TV.
You like to say you don't distinguish between the mobile screen and the TV screen. But advertisers and agencies do...
Yes, the advertising world still separates TV and digital. Over the last decade, most of the money advertisers spent on digital has been on display ads, Google or Facebook, because online video was yet to take scale. Platforms that had scale were purely subscription-based, like Netflix. So most brands never had the opportunity to advertise on high quality TV content, online.
While watching TV, the consumer is immersed in the content and is 'tuned in' enough to receive a brand message. But on social media, while scrolling up and down, or while watching a 30-second-long comedy video, one is not engaged to that extent.
Marketer and agency unhappiness with the way digital media is measured is building up, globally. Do you think we need a third party body to measure performance?
It is extremely important for us to have a third party measurement body. There's clutter in the advertising space on digital, especially with banner and display ads. There is very little consistency in terms of what exactly is being delivered.
There are platforms that claim you have watched an ad if you have watched three seconds of it. Platforms have come out and said, 'Oops, we got our analytics wrong...' I don't think digital platforms have done any service to anyone in the country by creating so much confusion around what they are delivering.
Given the clutter of display ads, the uncertainties of measurement and the lack of confidence about exactly what they are delivering, I am not surprised with the skepticism of marketers and agencies. Many platforms got away with it because they are guised as 'technology companies'. Its high time advertisers and brands got back to the basics and held everyone accountable for delivery in an old fashioned manner.
Is BARC the answer, then?
BARC is making an effort... and there are efforts driven by the advertisers. This should shed some light on what's happening in the industry. We need to move towards non-intrusive ads where brands pay only for ads that are being watched fully.
Everyone - advertisers included - is talking about original web series. Why has Hotstar kept away?
We don't believe in web series. I think the whole language of web series or 'originals' came from streaming platforms that did not have access to high quality content. So they said, 'Let's create something cheap and quick. We don't have much content to show so let's create some hoo-haa with web series and originals...'
As we have seen in last two years, a web series does nothing for consumers, for storytelling or for the platforms. When you have a portfolio which includes live sports, movies and international and local shows, you don't need to resort to quick and dirty answers to solve your content problem.
IPL is around the corner. You've made statements "When like 'Viewing of IPL in one million plus cities would be much bigger on Hotstar than on Sony" - What kind of revenue are you expecting from the event?
This is the fourth year we are streaming IPL (on StarSports.com in 2014; on Hotstar in 2015-16). From leveraging mobility (getting people to watch the game on-the-move), we've now moved on to saying we want to be the screen of choice even when people have access to television.
We want the experience of watching IPL on Hotstar to be much better than the linear broadcast on television. For this, we're working on re-imagining the community experience of cricket. Our 'Fan Graph', for instance, shows a viewer the moments during which a match got maximum engagement.
Brands are using Hotstar to launch many of their products and services for summer. We have got advertisers and sponsors. This clearly signifies that advertisers believe the affluent, the ones who can pay, are on Hotstar.
There are three creatures out there: OTT platforms that have emerged from the TV space (Hotstar, Voot, SonyLIV), international players (Netflix, Amazon Prime), and born-online players (Viu, ALT Balaji, TVF). How do their odds of success compare? Does it all boil down to who has the deepest pockets?
I think the key to success is thoughtfulness. International or local, every player needs to figure out its space, proposition and consumers. Technology and awareness of data are also important. We're as much a technology company as we are a storytelling company.
What has been the biggest challenge in Hotstar's journey so far?
Before we launched (in 2015) there was a lot of skepticism from naysayers. We were building the category from scratch. We recognise that we have the DNA of a storytelling company, but our future is that of a technology company. We are open to learning; we are not declaring victory. There is no single model or single answer.
Do you believe in the philosophy of bundling in ad sales? How much of Hotstar's revenue comes from solus advertising and how much comes from combination deals with the Star TV network?
We are offering Hotstar to advertisers independently. There's enough opportunity.
This interview was first published in our magazine afaqs! Reporter on March 15, 2016.
A Note From the Editor
"In January, Ajit Mohan, boss man of Star India's video-on-demand platform Hotstar, made an interesting statement: "When it comes to one million plus cities, IPL on Hotstar will be much larger than IPL on Sony..."
When we interviewed this intense, Wharton-and-John-Hopkins-educated, McKinsey-bred executive for the Cover Story of this issue, he elaborated on his statement: "We want the experience of watching IPL on Hotstar to be much better than the linear broadcast on television... we're working on re-imagining the 'community experience' of cricket..."
Another striking part of this interview is the bit where he makes his opinion on the concept of web series known. While the world around him, archrivals included, is going berserk with this format - with good reason; after all, it helps pull in precious advertiser money through brand integration - Ajit has no qualms rubbishing it. He goes so far as to call web series a "cheap", "dirty", "quick" way of fixing the problem of content bankruptcy.
In April last year, around the time content from Disney, HBO, and Fox was brought onto the platform, some of Hotstar's content was put behind a pay wall. In conversation with us about the psychographic differences between the viewer who pays and the one who doesn't, Ajit shared an interesting snippet of information: While most of his free users access the content on Hotstar through the mobile screen, most of his subscribers prefer doing so on the big screen, through Chromecast and Apple TV.
Given the growing sense of dissatisfaction among marketers and agencies, all over the globe, with the way digital media is being measured, we asked Ajit to talk about measurement, the gaps therein and the role of BARC in this regard. Without taking names - (Facebook, anyone?) - he lamented over the disservice platforms have done themselves by allowing confusion around analytics to prevail.
By the way, Ajit worked as columnist for the Wall Street Journal in his pre-Star days.