Punit-Goenka-Zee
In a market with no paucity of video streaming apps, Zee Entertainment’s Ditto TV has cut its subscription fees to just Rs 20 per month, from around Rs 150 per month. The service includes over 100 TV channels, including from its parent network Zee, and others like Colors, Sony, SAB, Zoom, MTV, BBC, Times Now, MTV and Aaj Tak.

The choice for pricing at Rs 20 per month is an interesting one, since it mirrors the ARPU (Average Revenue Per User) that Ditto TV made for the quarter ended 31st March 2016. “Because the pricing was dynamic today, the consumer chose between a daily, monthly and quarterly pack. That’s why the ARPU comes to Rs 20”, Punit Goenka, MD and CEO of Zee Entertainment Enterprises Ltd told MediaNama. “Once we drop the monthly subscription to Rs 20, as opposed to Rs 150, that itself would increase the number of subscribers for us. In four years we reached 2 million subscribers, and our target for the next year is to double that to 4 million subscribers, with the price point we’ve taken at Rs 20.” 

This reduction in pricing is a bold move for Ditto TV, since it means that while the ARPU is likely to remain (at least) around the same mark, the lowering of pricing is likely to help it gain new customers, and entice those who were buying Rs 5 packs to pay a little more for the whole month. This might, and the price of Rs 170 per year, might also help improve stickiness for the service, which has seen a fluctuation in its subscriber base: from 3 million a couple of quarters ago, it dropped to 2 million last quarter. 

Edited excerpts from our conversation with Goenka:

On Rs 20 as a price point

Goenka: We’re looking at this as an alternate platform, not your primary TV platform, therefore, we believe that the delta of Rs 20 is an affordable price point, even if you look at today what happens with the (memory) cards that people put in their phones, they cost between Rs 15-20 rupees for loading movies, music on their phone. This will make it more affordable for that segment to come in.

Editor’s Note: Only relatively so. On the earnings conference call last month (page 16), Goenka himself had pointed towards the prohibitive broadband costs in India, saying “it is going to be much more expensive than watching it on your regular television”…”In India if you were to watch half an hour episode on your 3G or 4G connection, if your 4G works for that matter, you will end up paying probably couple of thousand rupees just for the bandwidth cost, forget what you paid me for the episode.”

On the decision between advertising and subscription as a revenue stream

Goenka: Content needs to be paid for on a subscription basis. We will continue to charge for content, but advertising will continue to be a driver. That’s an add-on from regular television advertising, so it’s a value add we give to the advertiser which goes on to the platform as well. Because it’s linear on-demand service, the same advertising that runs on the TV network will also run here, and we will be giving that as a value add to start with to the advertiser.

On the impact of crosselling on advertising yield?
Goenka: The delta of that will depend on number of penetration that we achieve. Today at 2 million, the number of advertisers will not be significant. Unless you achieve significant penetration, that’s when you can charge delta to the advertiser going forward.

On Zee content on YouTube
Goenka: What we’ve done over the last couple of years is that we’ve taken off all long form content from YouTube. Longform content is only available on Ditto.

On Telecom operators like Reliance Jio launch their own video streaming services
Goenka: At the end it’s the consumers choice of which platform they want to choose. As a content provider, I will offer my content to not just Ditto but also to these platforms. My objective as content creator is to have maximum eyeballs. We have partnered with Idea to start with on this platform itself. They will be bundling Ditto along with their broadband service. I think even telcos appreciate the fact that we as an aggregator of content have over 100 premium channels which we have signed up, and this would be a good proposition for them as well.

Editor’s note: Idea is offering Ditto TV free (from a subscription perspective) with some 3G and 4G packs.

On Net Neutrality and Zero Rating
Goenka: We are definitely working on the fact that the telco should not be able to create preference for their platform vis a vis a third party platform. At the end the consumer must have the choice of what they want to consume on which platform. This Net Neutrality thing, while the regulation is being worked upon, we’ll see how it plays out. It’s for the entire industry to see how that plays out.

On why users consume video on mobile
Goenka: The audience is very different from TV. India is a predominantly single TV household and the younger generation and the male audience do not really get access to the remote control. Therefore we expect that the alternative screen, which is their personal device, will become the alternate for content consumption. Definitely for short form, if not for long form.

On cord cutting in India
Goenka: Cord cutting syndrome is happening in the western world where the ARPU is at $50. In the Indian scenario, where the ARPU is at $3, what cord cutting are we talking about? The broadband cost will far exceed the cable cost. In India when the ARPU exceeds $10-12 will we see cord cutting happening. But yes, in the western world, cord-cutting is a reality.

What we’re seeing with NetFlix is that what brought them success was original content. Are you…
Goenka: I completely disagree. If you look at content consumption on NetFlix, they produce a few shows which brought them marketing hype, but the actual consumption on NetFlix is for content produced by broadcasters, who create hundreds and thousands of content a year, not just a few series. Orange is a New Black and House of Cards will get them a lot of marketing in terms of marketing hype, but the actual consumption in terms of number of hours still belongs to the traditional creators of content.

Our proposition for ditto is only linear on demand, live TV and catch up TV, and nothing beyond that. We will see once the market develops and critical mass is available for us to look at original content for the platform.

Don’t we have critical mass for video consumption?
Goenka: C’mon, we are 900 million mobile connections in the country and how many of them are accessing broadband? You can do the math. The number is miniscule.

Most of the video consumption is happening on social networks, not the true content platforms. I think that is yet to take off in our country. We know when cricket happens, video consumption on the Internet boosts up. I think that going forward, the youth and the kids generation is going to drive this proposition of video consumption on video platforms, not just on social media. It’s difficult for me to give you the right number for critical mass, but we’re investing in the hope that there will be a huge impetus for this business going forward for the entire industry.