Does TVOD hold a new promise for the OTT universe?

Last week, Amazon launched Prime Video Store, its transactional video-on-demand (TVOD) movie rental service in India to enable customers to get early access to the latest Indian and international movies. This is set to expand Prime Video’s customer footprint as the pay-per-movie service will be available to all Prime and non-Prime members.

“In tune with our vision to become the most-loved entertainment hub, we have steadily innovated in the way we offer movies to our consumers, from offering films in a post-theatrical early-window to direct-to-service premieres bringing the most anticipated movies to consumers’ living rooms and preferred devices…we are super excited about the launch of our TVOD movie rental service, that will not just give even more expanded reach to these films but also give customers more choice in how they want to access and watch content,” said Gaurav Gandhi, country head, Amazon Prime Video India.

While pay-per-view is an established model in the US and the UK, it is a relatively new concept in India. Platforms like BookMyShow, Zee5 and Eros Now have already offered this model. The entertainment and ticketing platform offers TVOD through BookMyShow Stream and launched with Tenet and Wonder Woman 1984. Eros Now debuted with Greenland and Zee5 offered the Salman Khan-starrer Radhe.

According to a Statista report, revenue from India’s pay-per-view or TVOD segment is estimated to reach USD 245.50m in 2022. The average revenue per user (ARPU) is projected to amount to USD 2.55 this year. To put this in context, revenue from the subscriber video on demand (SVoD) segment is estimated to reach USD 1.31bn in 2022 and the ARPU is projected to amount to USD 16.76.

Clearly, TVOD may not contribute significantly to Amazon Prime’s revenue. So why has the platform launched it?

Karan Taurani, senior vice president, Elara Capital, says this is more of an experimentation.

“It could be just one of their strategies to test customer behaviour and maybe adopt that as a lesson for other strategies. There may not be any huge plans to scale up. But it is definitely one of the growth drivers. So even if they're able to get a small customer base through this, it can contribute to their overall subscription,” he says.

Nikhil Dalal, director, Redseer Consulting, sees some potential in this new offering. Since the Prime Video store is accessible to non-Prime members as well, it is targeting everyone who is registered on the Amazon website.

“Prime Video is a completely different medium compared to the ones who have introduced TVOD earlier. Amazon has many ecommerce users shopping on it. So there is a huge addressable market they can tap. They would be able to divert a lot of users from its ecommerce offering,” he says.

The TVOD model allows fans to watch a film as soon as it releases rather than wait for it to appear on their subscribed OTT platform. The theatrical window for Hollywood films can sometimes be as long as 8-12 weeks. The model has also brought several niche films to the Indian audience. This model is apt for such films. For the filmmakers, this new window forms an additional revenue opportunity.

Taurani doesn’t see much scope for TVOD as it hasn’t picked up in the country.

Citing the example of bouquet-based services on television, he says that people want to get more out of their payment. “90 per cent revenue comes from bouquet based revenue, and only 10 per cent comes from ala carte. People don’t pay per channel. It is the same with OTT. When a movie like Radhe didn’t do well on the model, it's hard to say what will. TVOD is not a sustainable model.”

Last week Amazon launched Prime Video Store to enable customers to get early access to the latest Indian and international movies on a pay-per-view basis.

Ashish Saksena, COO – Cinemas, BookMyShow says, “Our initial success reflects this model’s potential in a diverse country like India with the right content mix for a targeted audience. This has instilled confidence within the market on the TVOD format, resulting in more players joining the bandwagon which will, in turn, aid the growth of the content format in India. We hope that with multiple players working towards creating awareness about this model, it will also influence the culture of ‘Pay for what you want to watch’ rather than having multiple subscriptions. With global and large-scale players now joining the TVOD bandwagon in India, we expect the TVOD model to grow 20-25% on an annual basis.”

35% of the users that transacted on BookMyShow Stream were first time users to the platform, significantly widening its customer base. While awareness of the TVOD model is stronger in Tier I and tier II cities, it has also seen consumers from markets beyond the metros such as Pune, Kochi, Vizag, Ahmedabad, Trivandrum, Chandigarh, Lucknow, Bhubaneshwar, Coimbatore Thiruvananthapuram and Jaipur.

While many Hollywood studios including Warner Brothers, Sony Pictures, Universal Pictures and Paramount Pictures have partnered with BookMyShow Stream to release their content, very few Indian studios are experimenting with this format. This is largely because the Indian movie ecosystem is driven by the theatrical revenue model.

“If a window exists between a theatrical run and the SVOD model that makes economic room for all stakeholders, there is no reason why leading filmmakers and Indian studios should not make use of it. It is a matter of time before Indian content makers and content owners appreciate the revenue that this unutilised window offers and what they could potentially make by tapping into varied audience segments,” adds Saksena.

Just as Prime has launched the TVOD model, Netflix recently announced its plans to introduce advertising-based video-on-demand (AVOD). What does this say about the SVOD model, which has been these platforms mainstay?

Taurani says in a fragmented and highly competitive market like India it's important to move to SVOD. But so far platforms have not been able to scale it. “Apart from being value sensitive, India is also very price sensitive. So it becomes tougher to scale up SVOD. The India market is in that phase of transition, wherein it is a challenge to scale up SVOD,” he adds.