An analysis of the structural changes that TV as a device, content made for TV and broadcast networks that feed content into TV, are going through.
Yes, TV is dying.
Does that mean that people have stopped watching TV? No, but TV viewing is on a sequential decline and in certain countries, services like Netflix have already surpassed cable. But this article is not about the obvious. It's about the structural changes that TV as a device, content made for TV and broadcast networks that feed content into TV, are going through.
India has many dichotomies. Parallel universes exist and often grow in a parallel manner too. India, today, has about 165 million C&S households and some 200 million TV households (depending on which report you pick). Contrast this with a billion mobile phones. But India has overtaken the United States to become the second largest smartphone market in the world, trailing China, according to independent tech analyst Canalys (Q3 2017) adding 40 million smartphones in Q3 2017. I would take the luxury of saying we are the only country on this planet to add that many smartphones a month! On a side note, as per Cisco's projection, the number of video-capable devices and connections in India is expected to grow 2.2-fold between 2016 and 2021, reaching 800 million. My belief - we would reach 800 million by 2019.
With mobile data growth spearheaded by telcos in India, the forefront of which is Jio, the ability to consume video has grown exponentially. YouTube, the largest common denominator in India, has some 200 million MAUs of which mobile devices contribute 80 per cent of the platform's total watch time. That watch time is growing at a staggering 400 per cent y-o-y. And, by the way, English language content contributes just about 12 per cent of the total consumption. The majority is Hindi and other Indian languages.
Now, from a content perspective, TV has always had constraints (not discussing regulatory issues here): finite inventory, dependence on ads (at least in India), content suited to households rather than the individual, fixed length formats (30 minutes or 60 minutes), and one episode a week, add to that place or time shifting (appointment viewing). But on mobile and OTT platforms (as these are called), we could do a 22 minute-long episode and show stories that are made for both individuals (mystery around the life and death of Bose or women in combat roles in the army) and households (TV's favourite couple Ram Kapoor and Sakshi Tanwar).
Original programming, as it is called, is gaining momentum and is the driver for these OTT apps. Netflix did 100 hours of original content in 2014 and homegrown, ALTBalaji, would exit 2018 with over 100 hours of original shows. No wonder Netflix announced an additional billion in its Q3 2017 earnings call, taking its spends on developing and producing original television and films next year to an eye-popping $8 billion. It targets 50 per cent original programming content on its platform.
Does it mean traditional TV content would also work on these OTT platforms (famously known as catch up TV)? If that was the case then one of the largest networks in India, that also has an OTT business, wouldn't have bid and won the rights for just one particular format of cricket played for a few weeks each year, for a huge sum of $2.55 billion. Was that an existential issue rather than just a bid for a piece of content?
On OTT platforms, it's possible today to create a show in Bengali and take it to an audience that speaks Bengali in India and abroad. This ability never existed with TV; networks had to launch a channel dedicated to that language and get the right programming while doing the balancing act with ad sales. Also, if you really invested in your content then who knows, Bengali shows may be liked by audiences of other dialects too. (I watched 'La Casa De Papel' in English in India). The linguistic diversity of the Indian population (there are 13 languages in India with more than 10 million native speakers) creates tremendous opportunities for content and business creation. As my dear friend Sameer Nair propounded, India is a wide chasm between Naagin and Narcos.
These OTT platforms have also built a humongous appetite for viewing all episodes in one go, famously known as binge-viewing. While Bose became India's first show to be the 'most binge-viewed', Netflix in the US coined the term 'binge racers' (accomplishing in a day what takes others weeks to achieve, binge racers strive to be the first to finish by speeding through an entire season within 24 hours of its release) and has over eight million of these individuals on its platform. Does it mean that all the hullabaloo around short-format content is humbug? Or that the six-second ad debate was just to suit Facebook's interests? No wonder Facebook and Apple have already announced their entry and key appointments into 'original shows'.
And if 'The Cloverfield Paradox' is any example, 'movies as content' is going through a major structural shift too. In our daily lives, we only have so much time for entertainment, so those two-three hours of movie-going are two-three hours of not watching TV. That's even truer in the US, where Netflix was directly counter-programming against NBC. Hats off to the vision of the man who said, "Our biggest competitor is sleep".
It's almost as if OTT platforms are fighting a war the networks aren't even aware is happening! As per nScreenMedia, Netflix has already taken between $3-6 billion worth of TV ad time off the table in the US. But that is way too small for these networks to worry about, isn't it? Of $72 billion worth of TV advertising in the US in 2017, Netflix viewing has removed just 4-8 per cent. But remember "who moved my cheese"...
So what's the future of TV!? Would it just become just a display device on which you would stream content through OTT apps (you don't know what you are missing if you haven't tried 4K, OLED, DolbyVision)? Netflix's own data suggests that the largest growth is in TV as a device for streaming... go figure!
(The author is CMO, ALTBalaji, OTT platform from the stable of Balaji Telefilms)