FICCI-KPMG-Report-13-FRAMES

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110 The power of a billion: Realizing the Indian dream Similarly, Hungama.com has reportedly seen 22.5 mn paid transactions on its mobile site, through its INR 5 per day micropayments model 33 . Customers are charged INR 5 a day to download five pieces of content including ringtones, videos or songs. However, to build a sustainable model and substantial scale, the industry will have to focus on a few critical success factors: • Quality of catalog and search experience • Quick payments/ check out (Including one click purchase, storing card details etc.), given the low ticket size of songs • Micropayments, including models such as Flipkart’s wallet and telco billing • In the absence of a hardware player such as Apple willing to lead losses through low prices to push hardware sales, Music companies and Platform owners need work together to enable low price points and share risk Print Globally, the print media (Newspapers/ Magazines) has lagged on the monetization front. While publications have been experimenting with combinations of free and paid models online, it is only with the emergence of the tablet (and smartphone) platforms that we are seeing meaningful monetization online. Given the print like reading experience on Tablets, willingness to pay for content is much higher. For example in the US, 90 percent of magazines of AAM magazines 34 now have a digital presence, up from 51 percent in 2009. 80 percent of the revenues made by these magazines are because of consumption on the iPad. 34 As a result, while pressures on ad revenues are sustained, many leading publications are beginning to see an increase in digital subscriptions from tablets. How successful publishers are at exploiting this trend remains to be seen. Implications for Indian players: • Based on recent developments in the west, it appears that customers are willing to pay for print content on the Tablets, as long as the quality of experience and content is differentiated • Build niche, special interest and hyper local content which have higher monetization potential as compared to general news. For example financial / special interest publications such as the Financial Times and Economist have been much more successful at charging for content on digital. • Explore hybrid models, using free content to generate scale for advertising, while keeping premium/ analytical content behind a payment wall • Magazines and newspapers are valuable properties for branding. Focus on higher revenue potential brand/ rich media advertising and innovative ad formats such as sponsored sections to enhance ad revenue potential As it stands, most Indian publishing houses are experimenting with the above to some degree. However, user paid revenues are yet to become significant. Video on demand Video online is broadly divided into two categories, short and long format video. Short format video has so far been the predominant category online with a large share of user generated content. Google’s Youtube has been dominant in this space, through an ad funded model. Globally and in India, video is one of the fastest growing advertising categories online. Advertisers see similar benefits to Television in Online Video, in terms of its utility for high impact brand advertising. As a result, there is increased focus on professional content (As opposed to User Generated Content), given the higher potential for ad revenues. Ad rates for online video can be 5 to 10 times higher than that for basic display ads. Hence, through good quality, low cost, made for digital content, meaningful advertising can be achieved for short format video online. © 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. Share of digital subscriptions for leading global print players Source: Company Annual Reports, KPMG in India analysis 33. Live mint & The Wall Street Journal, December 11, 2012 34. Alliance for audited media; formerly the Audit Bureau of circulations “ The world is flat on digital platforms and they provide entrepreneurs an unparalleled ability to experiment, innovate and reach out to an audience beyond the traditional Indian diaspora. We see this as a huge opportunity and are working towards producing compelling content at low costs for a global audience. In a first of its kind, we have just launched ‘Indono Daidokoro’, a Japanese language Indian food channel on YouTube and other platforms. If we love sushi, I’m sure they will love samosa! Scan the QR code to hear more from Rajjat “ - Rajjat Barjatiya Managing Director & CEO, Rajshri Media
The power of a billion: Realizing the Indian dream 111 The second category, long format video, includes more traditional television and film content. Given the relatively low penetration of high speed broad band in India, the penetration of long format digital video content is still low in India. However, as broadband penetration increases, such services are expected to grow. There have already been a few launches of VOD services for India, many of these focused on the mobile platform. However, these are still in initial stages, and are yet to see any significant amount of traction in terms of the paid user base. Globally, video on demand is more mature, and provide valuable insights for Indian players. Video on Demand follows several business models globally: Business model Description Leading Players Maturity TV Everywhere Enables on demand viewing for Pay TV subscribers across devices Comcast, Dish LOW Subscription Video on Demand Allows access to a content catalog for a fixed subscription fee; May include ad funding Netflix, Hulu, Comcast/ Streampix, Redbox HIGH Transaction Video on Demand Allows access to content on a pay per transaction basis Apple, Amazon, Google MEDIUM Electronic Sell Through Pay per transaction model where user downloads file for storage Apple, Amazon, Microsoft, Walmart (WUDU) MEDIUM Source: KPMG in India analysis © 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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Acknowledgement We acknowledge the
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