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Netflix and OTT Platforms Slowly but Steadily Eating Cable TV Business

The potential reasons for this decline were non-renewal of subscriptions, the transition of subscribers to alternate sources of entertainment

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Netflix, Cable TV, Business
While the C&S universe was reported to have expanded to 197 million households by the end of 2018 with digital cable gaining the most, there was an erosion in the active subscriber base in the last quarter. Pixabay

Netflix and other over-the-top (OTT) platforms are slowly but steadily eating the cable TV business, a new KPMG report has said, adding that there was a decline of nearly 12-15 million active subscribers for the cable & satellite (C&S) universe in the fourth quarter (Q4) of the financial year 2019.

Subscription revenues grew at a modest 8.1 per cent in FY19 to reach Rs 463 billion, with the NTO implementation hiccups costing growth in the last quarter.

“While the C&S universe was reported to have expanded to 197 million households by the end of 2018 with digital cable gaining the most, there was an erosion in the active subscriber base in the last quarter with a decline of nearly 12-15 million households in the overall C&S household base,” said the KPMG report titled “India’s Digital Future: Mass of niches”.

The potential reasons for this decline were non-renewal of subscriptions, the transition of subscribers to alternate sources of entertainment such as OTT and certain blackouts owing to the implementation of the the New Tariff Order (NTO).

Netflix, Cable TV, Business
Netflix and other over-the-top (OTT) platforms are slowly but steadily eating the cable TV business, a new KPMG report has said, adding that there was a decline of nearly 12-15 million active subscribers. Pixabay

“As a result, subscription revenues took a hit in the last quarter with subscribers facing multiple issues, including higher cable bills, while transitioning to the new regime,” the report mentioned.

The Average Revenue Per User (ARPU) was relatively flat for both DTH and cable operators in the first three quarters before seeing an increase by 10-25 per cent in the last quarter.

“While the active subscriber base declined, growth in ARPUs covered up a large part of the decline in subscription revenues, leading to overall growth of 8.1 per cent for the year FY19,” the findings showed.

While the English watching audience is relatively smaller in India, the widespread availability of English content on OTT platforms has been one of the key factors for a shift in consumption from TV to digital for English content.

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Netflix has planned to invest Rs 6 billion per year in originals, whereas Amazon Prime had committed Rs 22.3 billion (in 2017) over 2-3 years in India.

For some original series, global platforms like Amazon and Netflix are spending in the range of Rs 10-20 million per episode.

For example, per episode cost of original series, including ‘Made in Heaven’ and ‘Mirzapur’ on Amazon Prime, was Rs 10-20 million.

“From the subscription-only Netflix and Amazon Prime Video to hybrid models of Hotstar and Zee to new multi-format models like MX Player, OTT players are striving to differentiate themselves,” said the report.

Netflix, Cable TV, Business
Subscription revenues grew at a modest 8.1 per cent in FY19 to reach Rs 463 billion, with the NTO implementation hiccups costing growth in the last quarter. Pixabay

There could be close to 11-14 million direct paid subscriptions in FY19, including Amazon Prime subscriptions, said the report.

Owing to the relatively higher price points and the wider e-commerce appeal associated with Netflix and Amazon Prime, respectively, these two platforms accounted for a bulk of the direct subscription revenues.

Owing to a robust slate of live sports, the international library and live TV content, Hotstar also contributed significantly to the overall direct subscription revenues of the industry in FY19.

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“We expect the direct subscriber base in India to rise to as much as 55-65 million by FY24, driven by the availability of high-quality content curated for different audiences and continued growth in the digital infrastructure and the digital payments landscape in the country,” said the report. (IANS)

Next Story

Handy Tips To Quickly Scale Your Business

It may also mean jumping into managing sales and marketing

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Tips, Business, Fund
It means going through various laws and compliance-related issues. Pixabay

Starting a business is hard, considering all the fund arrangements and the effort that goes into bringing it to life. However, scaling and maintaining optimum growth is, in many ways, even harder. It means going through various laws and compliance-related issues. It may also mean jumping into managing sales and marketing. However, there are ways in which you can grow your business at a faster pace. Here are a few pointers.

1. Build a sales funnel

To automate business and quickly scale it, it is very important to build a sales funnel. While there is a lot of efforts involved, especially on the end of the developers, it can help in streamlining the process and improve sales and thus, revenue. If you do not have a sales funnel, do not wait for too long to create one. Also, before settling on one, analyse the data carefully since each funnel has a different effect on the business. 

2. Use a CMS (Customer Management System)

Tips, Business, Fund
Starting a business is hard, considering all the fund arrangements and the effort that goes into bringing it to life. Pixabay

Once your business takes off, it is hard to maintain a manual record of transactions and then spending a ridiculous amount of time tracking them. Not only is it a tiring process, but it also weighs your business down. Investing in or developing a customer management system can take you a long way in reducing the time and efforts required to crunch the numbers and churn the data. 

3. Competitor Research

You should always research what you are walking into as soon as you start looking to scale your business. There might be some companies already offering something similar to what you have, making it all the more necessary to test the waters before diving. Platforms like SimilarWeb and Adbeat help in gathering information on market competition. Adbeat also helps you understand the marketing and advertising strategy of the said competition. If it is working for them, it most likely will work for you too. 

4. Launch Loyalty Programs 

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Whichever way you look at it, getting new customers to buy from you is expensive. In fact, it is said that it takes thrice the amount of money to acquire a new customer than it takes to sell your products to an existing customer. In some cases, and industries, the numbers can go up to an outrageous 10 times. This is where customer loyalty programs come into the picture as they help you in retaining customers and keep the sales steady. 

5. Build a list of email subscribers

Sending routine emails is a great way of making sure your customers know what is new and how they can benefit from the latest developments. However, this is not be done by spamming, but by making an email list. Once you have your lead magnet in place, all you have to do is place it right. Once prospective customers start subscribing, you will have enough user base to send out routine emails and spread the word out. 

6. Licensing and partnering

Tips, Business, Fund
However, scaling and maintaining optimum growth is, in many ways, even harder. Pixabay

If you have the type of product that may be licensed, then it can help your business grow without any hassles. The revenue share that you will receive from licensing deals can help you make it big, especially if larger, well-known brands are involved. This can also be done in the case of the hospitality industry, as suggested by Ryan Hibbert of Riot Hospitality Group.

Even if you do not have a product such as this, you may partner with companies with similar interests or target audience in order to increase your outreach. Spotting and closing such partnerships may be a challenge, but if done right, can reap loads of benefits. 

7. Leverage global platforms

Depending on the type of business you are running, you can capitalize on the popularity of certain other sites to boost your sales. For example, if you are in the eCommerce business, you can use Amazon’s FBA services or use Airbnb if you have a vacation home rental service. Simply, using a saturated platform to boost your business can help you a lot.

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Scaling a business can certainly take a toll on you. However, instead of getting hassled by short term issues, focus on the long term outcomes of your work. Putting in time into understanding the behind-the-scenes operations can also give you an insight into what out to be done.