FICCI-KPMG-Report-13-FRAMES

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106 The power of a billion: Realizing the Indian dream Themes for 2012 Monetization of digital content online Media content remains under-monetized on the online/ mobile platforms There has been a significant increase in the internet user base, with the number of unique monthly visitors online at 125 28 mn in July 2012. The reach of new media (across desktop internet and mobile), is now significant compared to traditional media platforms. Reach of different media platforms in India Revenues through consumer spending on content are minimal, barring in select areas such as gaming and on-deck mobile. While paid music platforms and e-book platforms including Flipkart’s Flyte, Amazon’ Kindle Store and Apple’s iTunes have been launched in the past 12 months, these are in initial stages. While these services are reporting good traction, total revenues from paid content is estimated to be less than 5 percent of the ad revenues generated online currently. Even globally, barring for music and games, digital sales have accounted for a very small share of overall media content sales. Reach of different media platforms in India Source: KPMG in India analysis, Comscore ‘Rise of India’s Digital Consumer’, IRS Q2 2012 © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Further, audiences online tend to have higher purchasing power, making them more attractive to advertisers. However, while digital ad spends have been growing significantly, monetization is still limited. Ad revenues generated online (across desktop and mobile) in India account for only around 6.7 percent of total the ad revenues across media platforms. Digital Advertising in India is dominated by aggregators, limited monetization by content owners Source: KPMG in India analysis 28. Comscore – “The Rise of India’s Digital Consumer” August 2012 29. IRS 2012 Q3 weekly audiences for General Entertainment Channels - Hindi Source: International Federation of Phonographic industry, Digital music report, 2012 Reasons for under monetization Advertising Traditional media has well established and respected measurement metrics, historically high rates and a natural constraint on inventory (number of channels and ads per hours, number of print pages). Ad rates online are significant lower than that for traditional media. This is driven by the availability of significant ad inventory online (that expands significantly every year) and advertiser concerns around ad engagement and effectiveness as compared to traditional media. Further, audiences are heavily fragmented online, limiting the ability to raise revenue on individual properties. For example, while leading GEC channels on television may reach a weekly audience of over 70 mn 29 , In comparison, barring Youtube (31 mn unique vistors in Jan 2013) and Facebook (15 mn unique visitors in Jan 2013), leading video sites online generate unique monthly viewership of only 1 to 3 mn. Even on Youtube, leading channels such as Tseries and Vevo generate only 12-13 mn video views a month (Likely to translate into less that 1 mn unique viewers) 28 .
“ With brand advertising gathering momentum in digital, creating real engagement with users is imperative. Content is slated to play a larger role in creating meaningful experiences. Innovations like branded content offer a great opportunity for brands to not just reach, but also engage deeply with their audience – and are in turn significant monetization opportunities for the platform provider. “ - Nitin Mathur Sr. Director and Head of Marketing (India & South-east Asia), Yahoo! Direct user payments for content Over the past few years, user payments on digital platforms in India have been largely limited to on deck sales on mobile feature phones. However, this model has its limitations. The high revenue share charged by mobile operators makes it prohibitive for content owners. Further, the on-deck model has its limitations in terms of the kind of content that can be pushed through, and is typically limited to content such as games, caller tunes, wall papers etc. Finally, with the increasing proliferation of smartphones, the on-deck user base is becoming small and less relevant. Globally, there have been successful models of generating content payments on digital platforms as outlined below: Sector Leading Players Digital Sales Penetration Willingness to Pay Success factors E-books Newspapers/ Magazines Source: KPMG in India analysis Amazon Kindle, iTunes, Barnes & Noble Financial Times, Wall Street Journal, New York Times In India, these off-deck platforms are still relatively new and immature. However as some of the structural issues around content portability, micro payment platforms, IP, MEDIUM HIGH • Creation of reading experience similar to physical • Integrated device and content ecosystem • Aggressive pricing LOW LOW • Higher willingness to pay for tablet editions • ‘Freemium’ model starting to work for some players, particularly those with differentiated content Music iTunes, Amazon HIGH HIGH • Single songs at low price point • Quick search and check out facility • Micropayments Video on Demand NetFlix, Hulu, Amazon Instant Video LOW HIGH • Large content library; low cost content • Subscription model • Aggressive pricing compared to Cable penetration and ease of use get sorted out, the potential for the industry to generate revenue is far greater than the current ad spend in digital © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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42 Print Regional to the rescue 58
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Acknowledgement We acknowledge the
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