It was reported in Variety Asia last week that Eros International, a major producer and distributor of Bollywood films, would be launching a new VOD platform that would offer a proportion of its 1,300 title film catalog for free over the internet. I think it’s a smart move by the visionary folks at Eros, given the following:
1. High levels of internet piracy of Bollywood content make it difficult to implement a subscription model based on scarcity/available of most content.
2. The video quality of streams on the internet cannot yet compare with television viewing, charging a subscription for an inferior service already enjoyed on satellite or cable will be a tough sell to the value conscious Desi (Hindi term referring to "South Asians").
3. Consumer psychology has yet to shift, most Desis still consume their TV as a "lean back" experience rather than a "lean forward" experience (which today is dominated by DVDs and does not necessitate interactivity).
4. Other attempts at the subscription model have not yielded great success, vis-a-vis JumpTV, Watchindia, NumTV, Planetvu etc. (more on the competitive landscape another time).
In an Eros controlled brand environment, with the promise of decent quality streams and the prospect of leveraging Eros' celebrity relationships for promotions, there’s ample reason to believe that Eros will be able to generate significant traffic. It seems to me that Eros is a step ahead of UTV and IFC once again.
“This is a pioneering model for the Indian film industry and we strongly believe in advertising supported business models. This initiative will give our plans to offer free online content a tremendous boost and benefit consumers,” said Manu Kaushish, senior VP, New Media, Eros Entertainment.
Pioneering it is indeed but the question is whether there is sufficient ad spend out there allocated to online video advertising to make this a profitable venture anytime soon. Arguably the bulk of the ad spend out there will end up in the hands of a handful of dominant video properties, namely the Google and Fox properties (see Comscore Video Metrix). While the cost of distributing branded video over the internet is declining, it is still formidable.
I would guess given the nascence of the Bollywood internet TV market that any player would be best served adopting a flexible hybrid revenue strategy blending advertising revenue with “freemium” content (coined by Fred Wilson) until consumer behaviors stabilize. Ken Naz, President of Eros USA, and I discussed this matter recently and I know he shares a similar view.
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