Digital Ind

The
‘Digital First’
journey
How OTT platforms can
remain ‘on-demand ready’
October 2017
KPMG.com/in
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3
Table of contents
Foreword
06
07
Executive
The Indian
11
summary
OTT market:
Key themes
Road map to a
new digital world 27
53
Key
45
Pivoting
traditional IT considerations
function to for digital
digital implementations
4
5
Foreword
The era of on-demand content as the preferred platforms for
is here. Consumers are consumers. To achieve a
increasingly accessing media market leadership position, an
outside the confines of their internal organisational
couches and within the transformation initiative,
comfort of their personalised which aims to harness the
Girish Menon
5+ inch screens. Moreover, collective energies of all
Co-Head
that screen is no longer stakeholders towards a single
Media and Entertainment
restricted to the elite as video minded ‘Digital First’ cause, is
KPMG in India
is going mass at a rapid pace of critical importance.
and as the consumption
It is this journey towards a
grows, the OTT consumers
digital organisation that we
will demand seamless access
are outlining in this document.
to services, compelling stories
Right from telling the digital
and value for money. To
story to the internal
deliver the same, platforms
stakeholders to implementing
would require an intuitive Himanshu Parekh
the digital architecture on
understanding of what the Co-Head
ground, each step holds the
consumers want, without the Media and Entertainment
key to survival and potentially,
users having to ask for it. KPMG in India
success in the market.
As the OTT landscape gets
hyper competitive,
organisations which are able
to tick all the above boxes
may stand a chance to emerge
6
Executive
summary
7
The ‘Digital First’ journey 8
The ‘Over the top’ (OTT) video consumption in

India has rapidly evolved over the last year,
There are about ~200 million online
given the advancements in digital
video viewers in India currently,
infrastructure and efforts by platforms to
which is set to exceed 400 million in
create compelling content for consumers at
the next couple of years. Although
price points which provide value.
the catalyst for online video boom
was Reliance Jio, the trend now has
Market potential wings of its own. With data set to be
Growing internet penetration and data the dominant source of revenue for
consumption is likely to help increase digital the telcos, and possibly home
advertisement spends in India at 30.8 per cent broadband seeing traction in the
CAGR between 2016 and 2021 with mobile future, the video consumption
advertisement spends and social media aided growth is here to stay.
digital video advertisement spends expected to
grow at 50.9 per cent and 40 per cent CAGR – Gaurav Gandhi
between 2016 and 2021 respectively. Chief Operating Officer
Viacom 18 Digital Ventures
Growth of digital advertisements in India and its
constituents
Further, other enablers such as Government of
350 294.5 India's 'Digital India' initiative, growing usage
300 of affordable smartphones, rising internet
250
INR billion
penetration in rural India and rapid growth of

200 digital payments has further strengthen India's
132.5
150 digital infrastructure. This has resulted in video
100 76.9 74.4
dominating data consumption, which is
50 16.9 13.8
expected to continue to grow in the near
0 future.
Digital Mobile Digital video
advertisement advertisement advertisement
spend spend spend OTT content consumption and
2016 2021
evolving trends
The OTT content consumption is evolving from
Source: KPMG in India’s analysis, 2017 niche to mass based content and long form
content is gathering traction. The increased
popularity of large screens and investments in
The OTT landscape in India is punctuated by original content creation is further driving the
the following key enablers, around which both consumption. Live streaming has emerged as a
the growth of the segment as well as potential focus area for OTT players, with the sports
success of platforms are woven. genre especially attractive from a viewership
and monetisation point of view.
Digital infrastructure
The mass launch of 4G services by Reliance Jio OTT distribution
in H2, 2016 and subsequent launches by The OTT distribution landscape is dominated
incumbents was an inflection point in India’s by own platform players, although social
data story. This disruption led to a rapid surge media platforms YouTube and Facebook still
in data usage on the back of promotional offers constitute a major chunk of video viewership in
by all leading telecom operators. India. With telcos betting big on data,
partnerships with telcos is also emerging as an
important medium to reach a fairly large, and a
mass user base.
9 The ‘Digital First’ journey
Monetisation models and

associated challenges
While Advertisement Video on Demand Being passionate or even finicky
(AVOD) remains the primary source of about user experience is the key to
monetisation for the OTT players in the building a successful digital platform.
country, the Subscription Video on Demand In this age of hyper competition, it is
(SVOD) and Freemium models are seeing imperative to focus on building a
traction, largely on the back of compelling strong brand which is differentiated.
content, including sports. Sponsored content With over 200 million people in India
has also emerged as an important every month and millions globally
monetisation tool, with brands baking in the on the platform we think deeply on
advertising messages into the content itself. the best user experience we can
provide and Instant Articles,
The growth in monetisation though, is partially LIVE etc. are such examples.
held back due to challenges around digital
viewership measurement and rampant content – Saurabh Doshi
piracy which must be addressed in order to Head - Media Partnerships
realise the true potential of OTT platforms and Facebook
build a sustainable model in the future.
Further, digital video businesses require high
investments, and returns are currently not
commensurate given the still evolving
business models. Media organisations are Building a successful digital video business in
currently attempting to bridge the gap between the long run requires sustained commitment to
market share acquisition and economic the digital transformation process and a ‘digital
viability, as they attempt to build long term first’ mindset.
sustainable digital video businesses.
Digital transformation
Changing consumer demands rests on four pillars
mandate companies to The path to digital transformation
encompasses a holistic approach including;
transform digitally clearly defining the organisation’s digital vision
When users stream videos on their mobile and strategy, thorough understanding of the
phone through an OTT platform, little do they customer proposition, accurately assessing the
know the entire digital infrastructure that is set business design and, finally, carefully
in motion to ensure that the content streams designing the execution plan.
flawlessly. It is this internal infrastructure that
defines the ‘OTT player of today’, and is a key
ingredient for ensuring continue success in the
competitive OTT landscape.
Execution
The adoption of digital infrastructure has planning
evolved from resistance towards digital Business
technologies to their mass adoption. Success design
in the digital world is dependent on various
factors such as time to market, customer Digital
experience and the will to constantly innovate Technology transformation
and change with the relevant developments in integration Fundamental not a one-off
the market. This requires OTT platforms to across change in project
Customer
identify and design digital solutions front, mid organisation
proposition
and back DNA
comprising strategies to predict, influence and
respond to customer behaviour. office
Digital
vision and
strategy
• Data analytics: Data has evolved in type,

volume, and velocity with rapid uptake of
The tools, culture and training that digital technologies. It has become a new
people require to know what content currency and key for OTT players to
to create, and create it at scale are a understand the consumers and decode their
different breed, even though they viewing patterns. Big data technologies
borrow from the way traditional along with advanced analytics help answer
television companies or creative
agencies operate.
z key content and engagement questions,
enable quick reaction and draw meaningful
and actionable insights to fuel the customer
facing productivity and enhance overall
– Sameer Pitalwalla performance of the platform.
CEO • Data protection and IP security: With OTT
Culture Machine Media Pvt. Ltd. business models inherently digital in nature,
data and content security has become even
more paramount. It is vital for the platforms
Key drivers for successful digital transformation: to protect data and content across systems,
• Innovation focussed mind-set: Innovation has devices and the cloud.
become hygiene for OTT players, given India’s
crowded platform market. For a fruitful digital A successful transformation
transformation, it is critical for the leadership
to evaluate their business through a number needs a strong technology
of facets and set up in-house labs to drive foundation
both internal and consumer focused A strong technology foundation acts as the
innovation. Companies could also look to set backbone of any digital transformation
up incubation centres in the form of initiative.
accelerator programmes, or partner with
third-party innovation labs. The pivot from a traditional IT to ‘today’s’
digital function is underlined by an architecture
• Integration across organisational DNA: that is agile, flexible, and is able to deploy
Digital transformation requires a holistic technology frameworks to give quick insights
strategy that permeates across the entire for decision making around customer
organisation including front, middle and back behaviour and content strategies.
offices. The OTT organisations should move
past silos that have a traditional media (for eg: The ‘all-in’ commitment of the entire
TV) bias and adopt a ‘Digital First’ mindset. organisation to the cause is a non-negotiable
and is a precursor to embarking upon the
technology deployment.
In conclusion, the digital transformation
journey of a media company comprises a
As we transition into the new era
marked strategic shift, with customer centricity
where there is big focus in building
at the core, and an internal thinking process
direct to consumer digital businesses,
that needs to change the organisational DNA
one can derive substantially better
into ‘Digital First’ mind-set.
results if one uses the power and the
collaboration of the entire organisation
– particularly the established broadcast
businesses. Successful businesses will
be built when both units (digital &
broadcast) synergistically operate and
when one ensures participation of
maximum number of people in
the organisation in this
digital journey.
– Gaurav Gandhi
Chief Operating Officer
Viacom 18 Digital Ventures
The Indian
OTT market:
Key themes
11
The Indian M&E sector is poised Mobile advertisement spend (INR billion)
to reap the digital dividend
With increased digital media consumption, CAGR 50.9%
stakeholders across the M&E value chain are
embracing the change and experimenting with
newer models of media consumption. This has
led to a marked shift in advertising spends with
marketers increasingly apportioning a larger 132.5
piece of their advertising budgets to the digital 90.6
64.5
media platforms. Globally, the share of digital 28.4 44.2
16.9
advertising spends is estimated to supersede
2016 2017P 2018P 2019P 2020P 2021P
television advertising spends by the end of
2017 and account for around 37 per cent of
total advertising spends1.
Source: KPMG in India’s analysis, 2017
Digital advertising is expected to contribute
nearly 27 per cent to the total advertisement
spends in India by 2021, reaching a size of
INR294 billion, up from INR76.92 billion in
2016, translating into a CAGR of 30.8 per cent Social media driving
over 2016–21.2 With mobile phones being the advertising spends
primary mode of digital consumption in India, Advertisers are innovatively leveraging social
mobile advertising spends are expected to
media channels, such as networking websites
grow faster, projected to reach INR132 billion
and blogs to connect with their target
by 2021 from INR16.9 billion in 2016, at a CAGR
of 50.9 per cent.2 audiences. Digital ads on social media
platforms registered a 28 per cent contribution
Although search and display advertisements to global digital ad spends, with Facebook
remain the largest component of digital accounting for 15 per cent of the digital
advertising spends with a 47 per cent share,3
advertising spends.3
this segment is relatively mature and is
expected to grow at a slower pace when In India, social media’s increasing traction
compared to video advertisements2. amongst consumers is largely linked to
However, video advertisements, which is platforms such as Facebook and Twitter, which
currently about 18 per cent of the digital ad have also tasted success by attracting the
spend, is expected to grow at a CAGR of 40 per country’s marketers. Monetising social media
cent by 2021. Non-metros now account for is becoming lucrative and brands are allocating
almost 30 per cent of YouTube watch time, increasing digital budgets to social media
backed by regional content, better devices and promotions.4
increasing internet access.2
Digital advertisement spend (INR billion)
CAGR 30.8%
294.5 1. Advertising Expenditure Forecasts, Zenith Optimedia Group

226.5 Limited, accessed on 21 Sep 2017
174.3
101.5 134.0 2. KPMG in India’s’s analysis and estimates, 2017
76.9 3. Digital advertising in India, 2016, Dentsu Aegis, March 2017
4. Google and Facebook duopoly in the consumer attention and ad
2016 2017P 2018P 2019P 2020P 2021P space, The Economic Times, 15 February 2017
Digital video advertisement spends (INR billion) With improving digital infrastructure and
falling data costs, digital consumption is
expected to become more mainstream. The
90 CAGR 40%
80
ensuing growth in investment by advertisers,
70 buoyed by evolution of the audience
60 measurement technologies are likely to
50 continue to drive growth in digital ads over the
40 74.4 next five years.
30
20
10
13.8
0
2016 2021P
India’s OTT landscape – Key players
Content creators Content aggregators Digital platforms Customers

AVOD Voot
OZee
TVF Culture Machine
SVOD Amazon Prime
Scoop Whoop
Qyuki Netflix Hooq
AIB Sun Nxt

One Digital
Arre Entertainment Freemium YouTube
Alt Digital Hotstar Sony Liv
Veqta Viu Ditto TV
Sponsored content
Nirvana Digital Smart
could co-exist with any of
TV
the other three models
Technology/ infrastructure enablers
Vidooly RecoSense Preksh Purple Stream
The pillars of an OTT platform

02 Distribution
• Build own platform
01 Content strategy • YouTube/Facebook presence
• Niche vs. mass content • Third party licensing/
• Original content strategy syndication
Enablers
Digital ad
• Regional content focus • Partnerships with telecom measurement
operators and safety
• Live content
03 Monetisation
02 • Advertisement
01 03 based
• Subscription based
Distribution
• Freemium Curbing
Monetisation piracy
Content • Sponsored content
Key success
factors for an
OTT platform
Digital and payments Digital India – Taking ‘Bharat’ online

infrastructure leading to The government’s ‘Digital India’ vision
rapid growth of VOD services envisages a ‘connected’ India, right up to the
villages, democratising information availability
India is currently in the midst of a data
for all.
consumption boom triggered by a growing
and deepening digital infrastructure The BharatNet project under the ‘Digital India’
initiative aims to deploy high speed optical
• The launch of Reliance Jio in September
fibre cables in rural areas to provide
2016 has been a watershed moment, which
connectivity to 2.5 lakh Gram Panchayats and
disrupted the telecom data landscape and
deploy 25,000 Wi-Fi hotspots at rural telephone
significantly contributed to the growth of
exchanges by 20195. Though the rollout has
internet usage and penetration.
been slower than originally planned, the
• The government continues to make efforts project has managed to connect 1 lakh Gram
towards its long-term focus of creating a Panchayats and lay down nearly 2,20,000
digital economy with emphasis on mobile kilometres of optical fibre cable as of August,
governance through the ongoing ‘Digital 2017. The budget allocation for BharatNet has
India’ and ‘Smart Cities’ initiative coupled been increased to INR100 billion in FY18 from
with the ubiquitous Aadhaar as the INR 60 billion in FY17 to further expedite the
backbone of digital addressability in India. project.6
• Another critical long-term trigger is the Public Private Partnership (PPP) models are
evolution of the digital payments also evolving, with Google in partnership with
infrastructure, on the back of growing usage RailTel as backhaul provider to enable 400
of mobile wallets, Unified Payments railway stations in India with public Wi-Fi
Interface (UPI), Bharat Interface for Money hotspots; and BSNL partnering with Facebook
(BHIM) in addition to the traditional digital to set-up community public Wi-Fi hotspots in
payment instruments. Currency rural India.7
demonetisation in November 2016 acted as
a catalyst to push digital payments into the
5. Centre asks states to follow Andhra Pradesh plan for BharatNet
mainstream. project, Economic Times; accessed on 18 September 2017
6. BharatNet project gets 10000 cr boost, The Hindu Business Line,
accessed on 15 September 2017
7. Future of public WiFi hot spots in India, The Mint, accessed on 15
September 2017
4G – Fuelling the digital economy Video - Driving the data traffic

The entry of Reliance Jio has led to a An average consumer spends about 3 to 5
fundamental shift in the way subscribers hours on media per day, of which, ~35 per cent
consume data. As on March 2017, 70 per cent time is spent on digital media consumption on
of all wireless internet subscribers in India mobile phone. Video currently accounts for
were consuming data at broadband speeds. almost 50 per cent of the data traffic and is set
Average data usage per subscriber took a huge to increase to 75 per cent by 2020.13
leap from 147 MB/month in March, 2016 to 1
Consumers are starting to spend more time
GB/month in March, 2017 backed by falling
viewing media on the go, given the changing
data costs, a trend triggered by Reliance Jio
lifestyles. While sharing online videos on social
and followed by the incumbents. The average
media and consumption of short-form video
user outgo per GB of data for GSM
content has been the first wave of data
connections declined sharply from ~INR 200 at
consumption, long-form content consumption
the end of June 2016 to INR 6.4 at the end of
is now seeing rapid growth on the back of
March 20178.
improved connectivity and lower data costs.
The same has also led to surge in wireless The consumers are moving from ‘what’s on
internet connections, with India forecasted to TV’ to ‘what do I feel like watching’ mind set.
have 730+ million wireless internet users by
FY219. It is expected that high speed data
connections (4G+3G) would comprise of 88 per Rural internet – Growth 2.0
cent of all wireless internet users by FY21, As growth in urban internet penetration
increasing from a base of 260 million in FY17 moderates, rural India is set to drive the next
to 690 million by FY219. phase of growth in India. Better digital
Another positive contributor has been the infrastructure and entry of affordable
steady growth in mobile device penetration, smartphone segment is set to change the
resulting in the smartphone becoming the internet landscape in the years to come. As on
primary device for media consumption. March 2017, 34 per cent of all internet users in
Number of smartphones crossed 300 million in India were from the rural areas14. However, at a
2016 and are expected to cross 650-700 million 16 per cent internet penetration, the rural base
by 2020.10 The average selling price of internet- holds significant growth potential. By 2020, 50
enabled mobile phones is currently just below per cent of India’s internet users are estimated
INR9,000, which is half of that in China11. to be from rural India15.
However, with the launch of 4G enabled
feature phone at INR 1,500 by Reliance Jio, and
Airtel’s proposed 4G smartphone at INR
2,50012, the market is set for the next wave of
disruption, and the number of video enabled
devices could go much higher than 650-700
million by 2020. Lower smartphone prices
bundled with 4G data plans is set to create a
ripple effect increasing the smartphone
penetration, 4G consumer base and data
consumption.
Wireless data subscribers by technology (million)
900 8. TRAI Performance Indicator Report March 2016 and March 2017,
788 Telecom Regulatory authority of India, accessed on September
800 731 18,2017
675
700 9. KPMG in India’s analysis and estimates, 2017
604 313 10. India to lead global growth of smartphone connections – GSMA,
600 521 285 The Mint, accessed on September 18, 2017
259
500 429 234 11. India pips china in smartphone sales pace but lags in volume,
400 180 Economic Times, accessed on 13 September 2071
100 12. Bharti airtel plans to launch bundled 4g smartphone at rs 2500
300 342 376 before diwali to counter jio, Economic Times; accessed on 17
161 198 241 300
200 September 2017
13. VNI Mobile Forecast Highlights, 2016-2021, Cisco, accessed on
100 168 143 14 September, 2017
129 116 104 99
0 14. TRAI Performance Indicator Report, March 2017, Telecom
Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Regulatory Authority of India, accessed on 18 September,2017
15. 50% of India's internet users will be rural & 40% will be women
2G 3G 4G by 2020: BCG , Times of India, accessed September 24, 2017

Digital payments - The key enabler Digital content consumption

The government’s initiatives to usher in an era evolving due to changing
of a cashless economy, have achieved a big demographics
boost through the demonetisation drive that
The Indian media consumer, young Indians in
was carried out in November 2016.
particular, spend nearly 4 hours watching
Digital payment methods such as mobile television per week as compared to 28 hours
wallets, UPI and card payments achieved on mobile, of which 45 per cent of time spent
significant growth post demonetisation. There is dedicated to entertainment19. There is a
was a surge in wallet transaction volumes by
continuous shift towards convenience based,
over 250 per cent16. India currently has more
on-demand viewing. Further, given that most
than 50 million active wallet users, and is
expected to reach 350 million by 202217. The households in India are single TV households,
introduction of UPI and incentive by the there is a growing trend of solo viewing
government for promoting the usage of BHIM particularly among the younger generation.
is likely to bring the masses on board the The OTT video viewing is likely to continue
digital payments ecosystem. increasing by 32 per cent annually through
202020, with half of the consumer population
Availability of seamless payment options is
expected to increase the acceptance of digital expected to follow solo viewing methods.
payments amongst consumers, resulting in However, until recently, OTT video viewing
positive implications on the monetisation of was seen to be a niche play, targeting the
digital assets. Further, direct carrier billing is youth, upwardly mobile, early adopter
also gaining traction especially among
segment. However, 4G data wars have
SVOD/Freemium players and will aid
disrupted the consumption patterns with data
monetisation through integration of
subscription costs with mobile bills. Players consumption widening and deepening across
such as Ditto TV, Hooq and ALT Balaji have the length and breadth of the country,
integrated carrier billing to offer unified demography and socio economic classes.
payment options to their potential SVOD
subscribers18.
16. Mobile wallets see a soaring growth post demonetisation, 19. “Internet Trends 2017- Code Conference”, Mary Meeker,
Hindustan Times, accessed on 18 September,2017 accessed on 18 September,2017
17. KPMG in India’s’s Analysis, 2017 20. “How advertising in OTT will play out”, Financial Express,
18. Altbalaji goes global partners with boku for carrier billing to accessed on September 18, 2017
stream original video content, Pymnts, accessed on 18
September,2017
From niche to mass Long form content seeing traction

Historically, OTT could not capture eyeballs in The VOD content was initially seen as being
the mass consumer segments, and thus the consumed largely during transit/travel, and
content was being produced keeping in mind thus short form content traditionally gained
the niche target audience. Global players such immense popularity. Short comedy clips (5 to
as Netflix are largely restricted to English 10 minutes) from producers such as AIB and
speaking audiences located in urban areas and webisodes (15-20 minutes) from the likes of
even Amazon Prime Video’s and Hotstar’s TVF were the mainstays of OTT platforms.
content play is currently largely urban focused.
With the continual improvements in internet
However, the next 200 to 250 million VOD
data speeds and technology enabling quality
users are likely to come from the middle class,
streaming with low data consumption, long
the masses and regional languages.
form content has started to see greater
Once known for niche content such as select traction. One of the most popular global series,
movies and catch-up TV, the OTT market is ‘Game of Thrones’, has each episode greater
now creating content for the mainstream than 50 minutes 21, and resulted in Hotstar
audience, with shows such as ‘The Timeliners’ gaining immense popularity amongst viewers.
(a new YouTube channel) the ‘Aam Aadmi ‘Big Boss’, with an average episode size of
Family’ which is aimed at appealing to the around 50 minutes, is one of the biggest draws
average middle-class Indian household. OTT on Voot, with the platform also airing extra,
players are recognising the importance of the unedited content to attract viewer interest22.
well-tried Indian formula of family drama with Heavy spends by Amazon Prime Video and
comedy and clean language to attract the Netflix for acquisition of Bollywood movie
masses. The content strategy of ALT Digital rights also points to the potential of long form
media, by Balaji Telefilms, a platform providing content viewing on OTT platforms23.
original Indian, family content targeting the
masses, a positioning somewhere between Growing popularity of large screens
Netflix and prime time Hindi soaps.
The device ecosystem has also helped long
Major platforms such as Hotstar, Netflix, and form content consumption, with the likes of
Amazon are also investing heavily in building Amazon Fire Stick and Smart Televisions
local movie libraries and original content helping video streaming on large television
designed with a wider and more mass appeal. screens. Sale of Smart TVs has increased to
The recent high levels of bidding for IPL digital 18- 20 per cent from 12 -14 per cent of the
rights also follows the same trend. entire TV market owing to strong urban
demand (65 to 70 per cent of the entire
market)24. Further, ‘High Definition’ (HD)
content on large screens provides a much
better viewing experience than the smartphone
screen.
In the long run, the success of OTT platforms
would be a direct function of increasing user
stickiness, which in turn would be helped by
adoption of long form content on bigger TV
screens.
21. Game of Thrones, HBO, accessed on September 22,2017

22. Voot to stream Bigg Boss Season 10's 'Unseen Undekha'
moments, Afaqs, accessed on September 21, 2017
23. New OTT Players Are Investing In Creating Original Content,
Business World, accessed on September 18,2017
24. Low data tariffs push smart TVs, Times of India; accessed on
September 14, 2017
Investments in original content

The significance of content for an OTT player For instance, Voot offers extended ‘Bigg Boss’
has led to the blurring of lines between content clips which include content that is not
creators and platforms. Players such as Netflix otherwise aired on TV, though at no extra cost.
and Amazon, which started out by licensing On the back of this exclusive content, Voot
content, branched out to commission their generated more than hundred million views
own original programming with ‘House of for ‘Big Boss’ in the first two months of its
Cards’, ‘Orange is the New Black’, ‘Mozart in launch in 201626.
the Jungle’, ‘Transparent’ etc.; the success of
Additionally, with original content, the
which has been a major factor in driving
platform owns all the essential intellectual
consumer adoption and stickiness on their
property rights from the outset. In addition to
respective platforms.25
granting exclusivity, owning the underlying IP
Original content primarily enables platforms rights gives access to the potential for future
to create differentiation and drive user licencing revenue opportunities.
engagement and stickiness. Additionally, for
broadcast networks, original content enables
cross platform user engagement and retention.
Announcements regarding original content investments by OTT video platforms in India
Original content Tie-ups with Shows in the

Platform
budget companies/individuals portfolio/pipeline
Amazon INR 20 billion, spent • Excel Entertainment • Inside Edge

Prime Video about INR 5 billion of • Phantom Films • Mirzapur
the same27 • Anurag Kashyap • Made In Heaven
Sony Liv <INR4 billion • Vikram Bhatt • Hadh
• Web Talkies • CM CM Hota Hai
• Arré • Maid in India
Voot <INR4 billion • Turner India • It’s Not That Simple
• Colosceum Media • Yo Ke Hua Bro
• Shaadi Boys
Eros Now <INR4 billion • Sanjay Leela Bhansali • Salute Siachin
• Rohan Sippy • Flesh
• Anil Kapoor • Smoke
ALT Balaji INR 1.2 billion • Vaishnave Media • Boygiri
Works • Romil and Jugal
• Karrle Tu Bhi
Mohabbat
Netflix NA • Phantom Films • The Sacred Games
• Selection Day
• Again
Hotstar <INR4 billion • AIB • Tanhaiyaan
• 4 Lions Films • On Air with AIB
• Cineplay
Source: Amazon spends top dollar to win prime spot in digital content race, Economic Times, accessed on 19 February, 2017
25. Golden globes 2016 best TV comedy - Mozart in the jungle; The 27. Amazon spends top dollar to win prime spot in digital content
Verge, accessed on 17 September 2017 race, Economic Times, accessed on September 19, 2017
26. OTT services landscape in india is getting more competitive;
Broadcast and Cable Sat, accessed on September 18, 2017
Additionally, the ‘reality show’ genre is also revenues via a new distribution medium Global
being explored by the OTT players, with brands, such as Target and BMW, have started
Amazon announcing three reality shows for the using live streaming to launch products and run
Indian market including, Jestination Unknown, marketing campaigns29. Recently, the launch of
Comic Kaun and The Remix, slated to be aired Vivo V7+ phone in India was streamed live on
in early 201828 . various social networking and OTT platforms.
Other phone makers such as Xiaomi, Samsung
However, investments in original content needs
also streamed the launch of their new models in
to be balanced with economics given the
India on Facebook and YouTube respectively30.
dependence on AVOD models. Considering the
fact that a 20–30-minutes fiction content on Hotstar also streams live news from Republic
digital can cost between INR1.5 to INR2.0 TV amongst other channels such as Fox News,
million, higher than the content cost on Fox Business, and the UK’s Sky News31.
television; monetisation only through an Traditional players such as Times Now and
advertisement (AVOD) based monetisation NDTV are using their digital presence for events
model could be challenging and such as the Budget speech, election results
SVOD/Freemium models would need to be among others.
explored for long-term sustainability.
However, the Sports segment has a significant
value for the consumer when viewed live and
‘Live’ streaming – Emerging genre lends itself well to potential monetisation. Live
Live streaming over digital platforms is on the sport broadcasts garner high advertiser interest
rise. Major sports events, news, high-profile and ad rates both on linear television broadcast
entertainment events, concerts and product as well as live streaming, case in point being ad
launches are beginning to see traction in terms rates on OTT platforms, which have nearly
of being streamed live. Social networking doubled y-o-y for the IPL and Champions
websites like Facebook, Snapchat, Instagram, Trophy. The potential of this sub-segment could
and YouTube have activated live streams where also be gauged by the recent IPL auctions where
users can share their real life experiences. Facebook bid a substantial INR39 billion for
digital video rights for five years.32
Live streaming helps event organisers get
access to a larger audience and incremental
Platform Key live sports properties Reach
Hotstar  Cricket - Indian Premier League (IPL);  IPL – 80 million

– Live telecast - Subscription based unique users in 2016,
– 5 minute delay - Free up from 35 million in
 Hockey – Hockey India League (HIL) 2015
 Football – English Premier League (EPL); INR 999 for
entire season; Bundesliga, Indian Soccer League
 Kabaddi – Kabaddi India League
 Motorsports – Formula 1
Sony Liv  Cricket – Live cricket (Sri Lanka, West Indies, Zimbabwe,  Sports – 30% of the
South Africa, Pakistan, Caribbean Premier League) platform’s overall
 Football - Live UEFA Champions League, Ligue 1, Serie A viewership
 Wrestling – World Wrestling Entertainment (WWE)  UEFA Champions
 Golf – European and Asian Tour, Ryder Cup, US PGA tour League – 20 million
hits and 90 million
interactions in 2016
Veqta  Boxing - Floyd Mayweather – Connor McGregor fight33
 Baseball - Major League Baseball (MLS)
Facebook  Football – Asian Football Federation (AFC) Cup matches34
Live
Source: Websites of Hotstar, Sony Liv, Veqta ; accessed on September 21, 2017
28. Amazon Prime Video bets on reality shows in India, The Mint, 32. Star India beats Facebook others wins IPL media rights with Rs
accessed on September 22, 2017 16347 cr bid, Financial Express; accessed on September 18, 2017
29. Brands begin to see marketing benefits in livestreaming ,FT, 33. Sports OTT service Veqta bags India streaming rights for
accessed on September 18, 2017 Mayweather vs McGregor bout, Economic Times; accessed on
30. Vivo v7 plus launch price in india specifications features, Indian September 17, 2017
Express, accessed on September 18, 2017 34. Facebook live to show AFC cup games in India, SoccerEx,
31. Republic TV to launch on hotstar, The Hindu Business Line, accessed September 15, 2017
accessed on September 18, 2017
Regional language content The government is also undertaking several

emerges as a key focus area for initiatives to promote digital literacy with the
aim of reaching 60 million rural households
OTT platforms with an investment of INR23 billion by March
The growth drivers 2019.36 The government’s ‘Digital Saksharta
Abhiyan’ (Disha) mandates handset
For a nation with 1,600 dialects, 30 languages manufacturers to add support Hindi text
and over 234 million language internet users, support in addition to at least one more official
content in their own language holds significant Indian language.37
value for consumers. Regional language users,
usually face difficulties in accessing English
keyboards and have not had too much of a The regional potential
choice when it comes to accessing local
Nearly 60 per cent of regional language based
language content online.
internet users prefer to consume regional
news, with 32 million language users
Limitations of Indian language internet users35
consuming news exclusively on digital media.
Further, the video viewership in India is
70% dominated by the regional language user base
60% 60% which is gradually increasing. Consumers
30% today spend time about 50 to 60 per cent of the
average time on Hindi videos, followed closely
by 35 to 43 per cent on regional content videos
Challenges in Limited local High cost of Limited comfort with only 5 to 7 per cent on English38. The OTT
using the English language internet and in accessing the players are recognising the regional
keyboard enablement of limited internet content on the opportunity and thus are planning investments
content access users's internet in creating original regional content.
and platform device
Hotstar has a large regional content library
with more than 50,000 hours of content in 8
languages39 and has now launched an original
Tamil web series. Voot envisages offering
However, with the continued increase in content in Kannada followed by Marathi and
regional language user base, this is one Tamil in the latter half of 2017. Sun TV also
segment that digital companies cannot afford recently launched its OTT platform Sun Nxt
to ignore. The Indian internet language user which offers 4,000+ movies, live TV channels
base is expected to grow steadily at a CAGR of and TV shows in four South Indian languages
18 per cent to reach 536 million by 2021. namely Tamil, Telugu, Malayalam and
Roughly 9 out of 10 new internet users in India Kannada40.
are likely to language users over the next five
years. By 2021, Marathi, Bengali, Tamil, and OTT players launched original series offering
Telugu internet users are expected to form ~30 regional content
per cent of the total Indian language internet
user base and the number of Hindi internet Tamil web series - ‘I’m Suffering from
users is expected to surpass the number of Hotstar
Kadhal’
English users35.
Marathi web series – ‘YOLO’ and
Sony Liv Gujarati series – ‘Kacho Papad Pako
Internet user base (in million) Papad’
9 out of 10 new internet users in ALT Tamil web series – ‘Maya Thirrai’,
India are likely to be language users 199 Balaji Bangla series – ‘Dhimaner Dinkaal’
over the next five years Bilingual Telugu and Hindi series –
Viu ‘Social’, Telugu series – ‘Pelli Golla’
175 and ‘Pilla’
536
68 234 Source: KPMG in India’s analysis, 2017

42
2011 2016 2021P
Indian language internet users English internet users 37. India Union Budget – 2017, released March 2017
38. Nokia Mbit Report, Nokia, released March 2017
35. India languages defining market – KPMG in India’s and Google 39. Hotstar launches premium subscription at Rs 199 per month,
report, April 2017 Star TV, accessed on September 14, 2017
36. Govt mandates Indian language support in phones from July 40. Sun TV network launches digital content platform SUN NXT,
2017, Indian Express, accessed on September 17, 2017 Economic Times, accessed on September 17, 2017
Effective distribution strategy platforms usually withholding a substantial

critical to reach the target chunk (~50 per cent)43 of the CPMs as platform
access fee.
audience
However, this distribution model poses major
Effective distribution of content is among the
challenges around content discovery and brand
critical factors that determine the performance
dilution, as these platforms have a large library
and long term monetisation potential of a VOD
of similar, competing channels; with the
service provider. The selected distribution
possibility of declining CPMs as bargaining
model also impacts long term brand equity,
power of platforms grow.
viewership levels and consumer stickiness.
Indian content producers such as Chu Chu TV
(Kid’s rhymes), AIB and TVF (Comedy) have
Creating own platform registered immense popularity on YouTube
Setting-up an own platform allows content platforms by adopting this model.
creators to establish their brand, retain IP
rights, control user experience and identify key Third party licensing/syndicating
user touch-points. Usually, own platforms are
content
best suited for a Freemium monetisation
model, as ‘for-digital’ content entails a high Hosting content or syndication deals with third
production costs which needs to be suitably party OTT platforms provides content producers
recovered through subscription revenues. avenues to reach a ready user base with no
investments in infrastructure. The revenue
However, platform owners have to contend
models in such cases are usually on the lines of
with high customer/traffic acquisition costs and
minimum guarantee or fixed fee basis.
limited opportunities around content
syndication with rival platforms. However, such partnerships do not result in any
brand equity creation, nor user loyalty
Global majors such as Netflix and Amazon
pertaining to a particular channel. Further,
have built their own platforms and a resultant
revenues in such models would be strictly
brand equity and customer recall associated
dependent on the success of the content, which
with them. Disney has recently announced an
is a bit of an unknown.
end to its association with Netflix in 2019 and
roll out its own platform for both television and Eg: Arre, a content focused player, has tied up
movies, as well as ESPN41. BBC has also tied with Yupp TV; has a presence on the Amazon
up with ITV to launch a SVOD based service, Fire Stick as an App; and tied up with Facebook
BritBox in the US42. to premier its comic series ‘The adventures of
Abbaas’ in February 201744.
Looking at the Indian market, Broadcaster
backed platforms such as Hotstar, Sony Liv,
Ozee and Ditto TV (Zee), global players Telco partnerships
Amazon and Netflix; and others such as Eros
Now and ALT Balaji, have created their own As a result of the rapid data uptake over the last
platforms, backed by library content and are 3 to 4 quarters, coupled with commoditisation
now moving towards creating originals. and falling revenues on voice, content has
become extremely important for telecom
service providers to engage with and retain
Building a presence across social their customer base.
media based video platforms While operators such as Reliance Jio have some
Hosting content on YouTube has been one of captive content (as a result of its stake in
the simplest and effective distribution models, Network 18), others are trying to build out their
especially for pure play content players with content library through partnerships with other
limited resources to create an own platform. Of VOD platforms and content producers.
late, Facebook’s video platform has also gained
traction with many producers distributing
content through dedicated Facebook pages.
41. Netflix should be afraid of Disney’s OTT play, Tech Crunch,
These platforms provide producers with access accessed on September 21, 2017
to a large audience, at a fraction of the 42. BBC Worldwide and ITV partner to bring new SVOD service
associated customer acquisition costs. The BRITBOX to the US, BBC UK, accessed on September 18, 2017
43. KPMG in India’s analysis, 2017
revenue models are AVOD based, with
44. Arre experiments web series launch on Facebook,
Bestmediainfo.com, accessed on September 21, 2017
Such partnerships allow platforms and However, given the costs associated with
creators to access the 400+ million wireless original content that most platforms are
internet user base45, with minimal costs to gravitating towards, AVOD models may not
acquire that traffic organically. The revenue even lead to a breakeven on every video. As an
models usually followed are a combination of illustration, assuming a CPM of USD1.5 to 2.5
advertisement based revenues, with a potential with You tube’s share at 50 per cent; and cost
fixed fee component. While the content of producing an original, ‘for-digital’ episode of
discoverability on a telco platform could be 23-25 minutes at around INR 1.5 million, the
better than a YouTube, a plethora of video would need to touch more than 20
competing content, would make brand million paid views47 for the content producer to
recognition and user stickiness difficult in the achieve a breakeven. Further, the lack of third
long run. party digital measurement makes the ROI
visibility for a campaign challenging.
Netflix in India intends to partner with Airtel,
Vodafone and D2H (DTH platform), while
Hotstar allows Jio Play users to access its
Subscription based (SVOD) models
premium content at zero cost. Amazon India is The SVOD models have traditionally been
reaching out to customers through multiple deployed by global platforms such as Netflix
avenues of distribution like cab aggregators for and Amazon Prime Video, owing to their
in-car entertainment (Ola), fixed broadband original content strategy right from the outset.
providers for VOD services along with telco The model has seen tremendous success,
partnerships (Vodafone)46. especially in markets such as the US, where
OTT platforms emerged as alternatives to
television, rather than the complimentary
Monetisation models evolving to presence in India.
a mix of advertisement and
Unlike global markets, India has a robust cable
subscription based revenues TV landscape, with a wide array of channels
The rapid growth of OTT consumption in India available for INR 100 and above, and in some
has seen the platforms continually evaluate the cases, free of cost through the DD FreeDish
monetisation models adopted by them. The platform, which makes the SVOD play
Indian market is characterised by four major challenging for operators. However a SVOD
monetisation models – Advertisement based play is essential for long-term sustenance of a
(AVOD), Subscription based (SVOD), Freemium platform, one which is especially focussed on
being a mix of AVOD and SVOD; and original content.
Sponsored content which could co-exist with
Netflix has seen some traction on its SVOD
any of the other three models.
platform in India, with the focus only upwardly
mobile, English language speaking
Advertisement based (AVOD) models subscribers. The platform is estimated to have
The advertisement based (AVOD) model around 200,000 subscribers, up from 50,000-
essentially aims at monetising the 70,000 a year ago48. Other operators such as
traffic/impressions on a particular video by Balaji Telefilms and Sun NXT have also gone
showcasing advertisements, which may be in the SVOD way through their own platforms.
the form of video or text. One of the most
viewed video on demand platforms in India, Business Subscription price
Platform
YouTube, is based on the AVOD model. model (INR/month)
500 to 800
The AVOD model has also been adopted by
Netflix SVOD (depending on
some broadcaster backed platforms in India,
number of logins)
owing to their in-house library that forms the
bulk of content available on the platforms. Sun NXT SVOD 50
VOOT and OZEE currently depend on
advertising for revenue realisations from their Amazon First year - ~42
platforms46. For small content producers, the SVOD
Prime Video Second year - ~85
AVOD model helps them realise revenues
without any investments in the underlying HOOQ SVOD 89
platform.
45. TRAI Performance Indicators, March 2017, Telecom Regulatory 47. KPMG in India’s analysis, 2017; paid views defined as when an
authority of India, accessed on September 21,2017 advertisement is watched for a threshold limit
46. KPMG in India’s analysis, 2017 48. Based on industry discussions
Freemium models Digital measurements and

Freemium models are a mix of AVOD and piracy remain significant
SVOD, with a strategy around fostering monetisation challenges
customer engagement on a platform through a
critical mass of library content and eventually
Third party digital measurement
looking to convert customers to a pay model The digital medium, by the inherent virtue of
through original programming. its addressability in terms of the user accessing
it, is built towards targeted customer
The model is useful from the point of view of
advertising. However, the industry at large is
recovering a portion of operational costs
facing a significant challenge in terms of
through advertisement based monetisation
consistency amongst measurement metrics
from the library content, with subscriptions
and third party validation of the viewer data.
helping the platform turn profitable in the long
run. Major global advertisers have expressed
concerns around the same, citing an inability
The leading OTT platform, Hotstar, follows the
to arrive at a measureable ROI from digital
Freemium model, with television dramas and
advertising. In January 2017, Procter and
serials largely available for free, while latest
Gamble (P&G) cut its digital advertising spends
movies, Live sports and global series such as
by USD140 million50, due to concerns around
Game of Thrones etc. available for a monthly
brand safety and ineffectiveness arising from
subscription.
the digital campaigns.
Business Subscription price The large global networks like Facebook and
Platform
model (INR/month) Google are actively engaging with the Media
Rating Council (MRC) to undergo audits and
Hotstar Freemium 199 work around defined standards for viewability
and engagement51. In August 2017, GroupM
Viu Freemium 99 rolled out their global viewability standards52;
which streamlined the way video ads are
measured.
Eros Now Freemium 50
In India, currently no third party digital
standards exist for validating ad measurement.
Sony LIV Freemium 50
However, Broadcast Audience Research
Council (BARC) in India has teamed up with
dittoTV Freemium 20 Nielsen to launch an integrated advertisement
measurement systems across TV and Digital
Source: KPMG in India’s analysis, 2017 under the brand name ‘EKAM’ around the last
quarter of CY’1753.
Sponsorships – An emerging and Digital advertisement fraud

effective monetisation tool
Fraudulent clicks on digital advertisements is
Content producers are also realising the one of the major challenges being face by
benefits of branded/sponsored content, which players globally, with such ‘malvertising’
is emerging as an effective means of estimated to cost marketers 16.4 billion54. India
monetisation. The same helps in partially is worse off with mobile advertising click fraud
recovering the content production costs, while 2.4x higher than the global benchmarks, and
the advertiser benefit by having the brand stands at around 31 per cent55.
message baked into the content, without the
risk of losing customer attention due to 49. KPMG in India’s analysis, 2017
intrusive advertising. 50. Procter gamble cut 140 million in digital ad spending because
of brand safety concerns, AdWeek, accessed on September
18,2017
Arre follows the Sponsored content model for
51. Google follows Facebook with Media Rating Council audit of
some of its content, and has roped in sponsors YouTube metrics, M and M Global, accessed on September 21,
series like Gillette sponsoring ‘A.I.S.H.A’; while 2017
52. GroupM rolls out expanded viewability standards, GroupM,
TVF’s (The Viral Fever) ‘Permanent accessed on September 18,2017
Roommates’ had Ola Cabs as the anchor 53. Broadcast Audience Research Council Website
sponsor49. www.barcindia.co.in; accessed September 18,2017
54. Businesses could lose 164 billion to online advert fraud in 2017,
CNBC, accessed on September 18,2017
55. Mobile ad fraud in India 2.4x higher than the global average,
Tune, accessed on September 18,2017
Google reported issuing refunds to hundreds Game of Thrones, one of the world’s most
of advertisers in August 2017, after detecting a avidly watched shows, is considered to be the
large amount of bot generated fraudulent most pirated content globally, with many
traffic. Although the refunds were around 7 to leakages dotting its 7-season history58. Star
10 per cent of the monies spent by these TV’s Hotstar, responsible for broadcasting the
brands, the same was intended to build long- show in India famously spearheaded a
term trust with advertisers56. However, smaller campaign ‘Torrents Morghulis’ after recent
platforms are currently not technologically piracy incidents with the show59.
equipped to handle the bot behaviour. The
Across mediums, piracy not only damages
need of the hour for the industry is to come
revenues and market shares, but also deters
together as one body, and implement
content creators from investing in new content,
consistent technology across digital platforms
and thus the impact can be severe on SVOD
to ensure sustained growth.
platforms.
Brand safety Industry initiatives to curb the menace

The concept of brand safety is still at a nascent
Stakeholders in the OTT value chain need to
stage in India. However, with growing
ensure 360 degree approach to security and
consumption on digital media, the concept will
anti-piracy to prevent loss or leakage of
be one of the critical challenges to tackle going
original or acquired content.
ahead.
Although the illegal distribution of pirated
Platforms like Google are globally trying to
content is punishable under the Indian
address this issue through effective filtering
Copyright Act 1957, the same along with the
basis the brand guidelines. YouTube has put
Information Technology (IT) Act and The
measure in place to ensure no advertisements
Cinematograph Act, 1952, need to be updated
are served around ‘hate speeches57’. In India,
taking into account the mass proliferation of
organisations are coming up with algorithms
digital videos.
which monitor content across digital platforms
before letting an ad being served next to In June 2017, global content creators and on-
content. demand platforms launched an industry
coalition called Alliance for Creativity and
Digital piracy – The menace continues Entertainment (ACE), with memberships from
the likes of Amazon, Netflix, BBC Worldwide,
Digital piracy is quickly becoming a serious
Sony Pictures Networks, Star India, Warner
threat to the OTT platforms, especially SVOD
Bros etc. to protect and foster the market for
based models as it provides viewers with free
legal content60.
alternatives to otherwise paid content with no
loss in experience or quality. Moreover, due to Closer home, a step in the right direction was
the current unregulated nature of OTT content, taken with the Internet and Mobile Association
piracy has emerged as a real concern for the of India (IAMAI) constituting a working group
industry players. to safeguard the interest of the digital
entertainment businesses. The committee
Easy access and universal reach of the digital
consists of key stakeholders from large M&E
world allows individuals to set up peer-to-peer
players such as Hotstar, HOOQ, SET India, Star
(P2P) sharing networks, generating a multitude
Plus, Digivive, Radio Mirchi, Shemaroo,
of links to the same content and in effect,
Viacom 18, Netflix, Arre, Eros, among others61.
distributing it to the masses for free. These
The group aims at fighting online piracy and
individuals, in turn, earn revenues through
establishing best practices for the digital
advertisements on their websites- more footfall
content industry.
leads to more clicks. The shutting down of
some of these torrent websites has proven to
be ineffective as with the closure of one, many
more emerge, as has been the case with sites
58. Game of Thrones is the most illegally downloaded TV show for
such as KAT, Pirate Bay, Rapidshare, the fifth year running, The Independent, accessed on September
Megaupload, etc. 21, 2017
59. Hotstar declares war on torrents, Game of Thrones style!,
Business Insider, accessed on September 18,2017
56. Google refunds ad companies after detecting fraud, Times of 60. Global Entertainment Companies Join Forces to Launch the
India, accessed on September 18,2017 Alliance for Creativity and Entertainment to Reduce Online
Piracy ; Alliance4creativity, accessed on September 21,2017
57. Google Begins Biggest Crackdown on Extremist YouTube
Videos, Bloomberg, accessed on September 21,2017 61. IAMAI sets up committee to work on fighting online piracy,
Economic Times, accessed on September 21, 2017
Industry bodies such as Motion Pictures platform and their resultant engagement, while
Association of America – India arm (MPAA for others, building a profitable business from
India) and Federation of Indian Chambers of the outset defines their long term vision.
Commerce and Industry’s (FICCI) media arm,
While the customer engagement focused
have been actively engaging with the
platforms are likely to see rapid growth in
government to fight online piracy. Focused
terms of active users and time spent on the
units such as MIPCU (Maharashtra Intellectual
platform, the traffic/customer acquisition costs
Property and Crime Unit) and Copyright Force
and investments in content would imply a long
(a joint initiative of Telangana Intellectual
gestation period before profitability kicks in.
Property and Crime unit and MPAA India) are
Such platforms however, may have more
mandated to exclusively work towards curbing
leverage, when it comes to cashing in on the
the online growing piracy menace in the years
large potential that online video holds.
to come62.
The above does not imply that a focus on
Scale and economics – A profitability is a flawed strategy. Recovery of
balancing act for OTT platforms operations and content costs to build a long-
term sustainable business is probably the most
The year 2016 saw OTT platforms proliferate critical focus areas for media organisations.
with the video on demand segment in its However, platforms would need to be
infancy. However, with increasing maturity cognisant of the benefits that customer loyalty
around distribution and content strategies by and continuous engagement bring in, and the
stakeholders in the industry, the segment has revenue potential that operations at scale can
reached a stage, where current decisions will achieve.
have a significant impact on which platforms
survive the VOD race in the long-run. Business that can delicately balance the above
considerations, along with compelling and
The key indicators for some platforms today discoverable content would eventually be the
are not around profitability margins, but more likeliest winners.
around the critical mass of customers on the
Road map to
a new digital
world
27
Digital is the new normal and As a result, organisations need to be flexible,

requires a fundamental mind nimble and develop strategies to predict,
influence and respond to customer behaviour
shift to be able to optimise the digital opportunity
With online video consumption gaining and combat ever evolving challenges. This
traction and becoming ‘mass’, traditional value requires organisations to modify their DNA
chains and business models are facing from their business and operating strategy to
widespread disruption. Players across the internal structures, processes and also the way
value chain are exploring the digital universe employees think and perform their jobs across
with some players embracing the shift while the front, middle and back offices.
the others are still testing the waters.
Major operators in the OTT domain in India are Digital transformational journey
traditional companies ranging from broadcast requires a digital first mind-set
networks, telcos and content producers.
However, operating and business models in The road to digital transformation is an
the digital environment is very different to ongoing journey with iterative processes and
what traditional businesses are used to with evolving goal posts. However, we have
continuously evolving technology, unclear attempted below to categorise the
business models, customer experience centric transformation process into four broad phases
approach, evolving consumption patterns and i.e. defining a digital vision and strategy,
rapid response time. building customer proposition, developing
business design and planning execution.
Phase 2
Phase 1 Phase 3 Phase 4
Customer
Digital vision and strategy Business design Execution planning
proposition
Operating
constraints
Digital
Strategic Customer technology
context research strategy
Digital Digital
Digital strategy strategic
capability
and business road map
model
plan
Current state Strategy
Customer and Operating
and digital execution
staff model
maturity programme
proposition impacts
design
Technological,
cultural and
operating change
management
Source: KPMG in India’s analysis, September 2017
28
Phase 1 – Digital vision and strategy

‘Digital vision and strategy’ phase is the backbone on which digital transformation projects are
born. The same encompasses
To determine the macro and micro trends covering digital infrastructure and access,
1. Strategic context
demographics, technology, consumption patterns, content, etc.
2. Current state and To determine the organisational capabilities and positioning around digital, the gaps and skills
digital maturity required to operate in a digital environment relative to peer and industry benchmarks
assessment
3. Operating
constraints Is critical to determine a balance between what is feasible given the financial and operating
assessment limitations of an organisation and the optimal desired end state
4. Digital strategy and To determine the approach to a digital play, the business potential and the related business
business plan economics
5. Technological,
cultural and operating To identify the organisation wide changes required to operate in a digital environment
change management
Strategic context – what is happening around you

While digital and OTT is at the top of the mind for many media organisations, it is critical to
gain an in-depth understanding of the real digital opportunity and the role/positioning that is
best suited for each organisation. This would require a thorough assessment of various
elements such as:
• Evolution of digital infrastructure, digital penetration and access
• User demographics and evolution of consumption patterns
• Content trends and evolution
`
• Monetisation trends and potential `
• Distribution models
• Technology evolution and `
• Competitive landscape and strategies
`
`
`
29
Scan and map Derive key threats

Prioritise impact Prioritise
emerging digital and opportunities
using profit pool data mitigation responses
players and innovations (including themes)
• Assess emerging • Identify overarching • Build quantification • Define potential

disrupting technologies in themes across players model to size potential interventions to mitigate
media space and business models impact of selected risks, e.g.,
• Link themes to specific themes – Re-allocation of
• Analyse the competition
products and revenue • Assess impact over investment
and gauge the revenue drivers short-term, medium-term
potential for a new entrant and long-term horizons – Small ticket
in digital space acquisition
• Identify profit lines/areas
• Define framework and facing significant threats – Partnerships/equity
conduct scan of emerging or opportunities stakes
business models • Take into account
• Recognise the well- balance sheet impact,
rounded and adaptive costs, and risk
skillset evolving in the
market
• Review previous work
related to digital and
current beliefs about digital
Current state and digital maturity assessment – An honest look inwards

A clear understanding of how the organisation performs today and its level of digital maturity
would provide clear direction as to where the organisation should focus its attention and strategy.
Timescales and action plan can vary significantly based on maturity of an organisation’s digital
capability and buy-in from senior executives. Organisations need to be brutally honest in terms of
assessing their digital maturity, as the tendency is to overestimate the level of digital maturity and
a misdiagnosis would have severe repercussions on the digital rollout.
Existing business insight New VOB insight
Functional
Organisational Current state
KPI Channel Financial richness Maturity
operating
SWOT performance volumetric KPIs compered to assessment
model
competition
Immature digital organisations Mature digital organisations
Educate, inform and win support
Market protection, remaining competitive, innovation
Note: VOB refers to Voice of Business

30
In less mature organisations, there is a need between the desired end state and the
for extensive stakeholder management and operating and financial constraints of the
pitching of digital as a credible investment area organisation. While media companies can opt
compared to traditional, which is a more for a high investment model focussed on
comfortable investment. Ultimately, if market share acquisition and high customer
investment in digital goes up, it is likely to engagement, this is likely to require significant
reduce investment in other business areas. levels of investments. Additionally, OTT
business models are still evolving and as such
A number of traditional media organisations
current economics and returns may not
underestimate the challenges around a shift to
compensate for the investments required. An
a digital model, most of which stem from lack
organisation needs to have a clear sense of its
of true understanding of ‘what is digital’ for
state of digital maturity, capability to invest,
their organisation and overestimation of their
expectations on returns and calibrate its
state of digital maturity.
desired digital end state accordingly.
It is also essential to define the KPIs to
Operating constraints – dream vs measure the success of digital transformation
reality process since the strategy to achieve different
Combining the ‘outside in view’ of the market metrics would need to be different i.e. revenue
with the ‘inside out view’ of the organisation vs market share, customer experience vs
will enable a company to identify the gaps profitability, etc.
Digital strategy and business plan – the way ahead

An integrated view of the strategic context, current state and operating constraints will enable an
organisation to determine its overall digital strategy.
Strategic The objectives represent the goal that the

context
strategy will be designed to achieve. The more
clearly they are defined, the better is the
Current state Inputs
and digital chance of producing an effective strategy.
maturity
The principles underpin and inform the

development of the strategy
Operating
constraints
While evaluating the desired digital end state, key aspects that should be addressed are
• Platform play vs licensing models
• AVOD vs SVOD
• Market share vs economics
• Brand building and mindshare
Once the overall digital strategy is designed, the related business case along with the core
components such as timeframe, approach, investment requirements, etc. needs to be determined.
31
Cultural and behavioural change management – change in DNA

Culture development plays a determinant role in the success of digital transformation. The company
cannot bring transformation without addressing the human element. Culture is intrinsic to any
organisation and has to be addressed before embarking on to the journey of digital transformation.
Thus, effective change networks and elaborate communication plans are essential to disseminate the
change efforts as digital affects all areas of a business.
Strategic Senior leadership alignment critical to success of any change

alignment programme
Systemic Behavioural change is complex, impacting the whole

approach organisation
Employee
People perform well in an environment they have been
involvement part of designing
Sustaining change is the primary objective of any

change program. Measuring the impact of change
Sustained
benefits enables a sustainable approach
Communication
Communication is a strategic lever to
strategies enhance awareness, buy-in and ownership
across the organisation
The leadership needs to understand the can deliver and align these technologies to
required changes that are crucial for digital drive business value. According to a recent
transformation, including new skills, employee survey, more than half of the surveyed IT
behaviours, organisational structures and services firms said that innovation and critical
corporate culture. With the adoption of new thinking are the key shortcomings both
technologies such as artificial intelligence (AI), amongst fresh engineers and existing
augmented reality (AR), virtual reality (VR), workforce, as they look at digital
cloud, machine learning, big data and Internet transformation.1
of Things (IOT) into business operations,
organisation would require a workforce with 1. AI dominates: Indian IT stares at talent shortage in digital,
specialised skills that cloud skills, Business Standard, 9 January 2017
32
Phase 2 – Customer proposition Four categories of customer research

relevant to digital strategy
Customer experience and engagement is at the
core of a digital media offering. Traditional Listening to what customers tell about quality
media businesses typically have a ‘one to of service and what is really important to them
many’ content strategy which needs to be provides great insight, but the approach also
completely pivoted into a ‘one to one’ content needs to focus on customer behaviour.
proposition in a digital environment. Ability to Ethnographic research methods, such as
identify a user’s content tastes and engage shadowing and diary studies, are proven to
with the user on a one to one basis is both a successfully augment tried and tested
significant opportunity and challenge for qualitative and quantitative research methods
media organisations. and provide valuable insight when thinking
about the products and services of the future.
Key trends which have a significant implication
on content consumption patterns are:
• Change in user demographics from digital
savvy youth in top cities to a more mass
abc 123
demographic across geographies and socio Qualitative Quantitative
economic classes research research
• Increasing data speeds leading higher usage

of long form content 01010101010
10101010101 Data Ethnographic
• Growing regional consumer base 01010101010 analytics research
10101010101
• A mobile first consumption model 01010101010
10101010101
It is therefore imperative for companies to
understand their target audience, discover and
recognise the importance of transforming A customer’s journey very often
digitally to avoid losing their existing crosses multiple channels and this
customers to more-engaging competitors. should be considered when carrying
However, having said that, content alone can out customer research for digital
no longer determine exclusivity or strategy
differentiation, the overall packaging and
services would build a compelling product for When customers interact with companies, they
viewers. often interact with a range of channels to
execute what they need to do. Thus, even
when designing a digital strategy, the
Customer research – the foundation of customer research should encompass all
digital businesses possible channels including digital, to ensure
alignment with the organisation’s overall
When designing a digital strategy, it is
distribution strategy.
important to understand the following from
customers:
• What are the current customer journeys
when interacting with the organisation?
• What do customers think are the ‘critical
interactions’ or ‘moments of truth’?
• Do customers have appetite to be digital?
• How do customers behave in the context of
digital
• What are the latest digital trends affecting
existing and target customers?
33
Phase 3 – Business design

Once the customer proposition is created, it is important to evaluate internal capabilities and
modifications to the current operating model.
Operating model
Digital capability model
Digital capability model Operating capability model

In order to proceed with the digital A holistic digital transformation encompasses
transformation journey, assessment of existing implementation of an organisation-wide
infrastructure capabilities and requirements is operating strategy that links the capabilities
a must. Considering OTT players are working across the front, middle and back office of a
in tandem with technology players to enable company as well as create experiences that
seamless access to their products and satiate customer demands. However, digital
offerings across multiple touchpoints, a operating strategy cannot be developed in a
number of options need to be evaluated and silo-ed way, but shall rather talk to the existing
shortlisted across the below categories at this systems and processes. This makes it critical
stage: for the leadership to evaluate:
• Device support • How business organises around digital
• App/web development • Alignment to customer segmentation
• Digital enterprise • Operating model design to realise required
capabilities
• Social media
• Channels/products/services
• Customer, operational analytics
• Insource/outsource/partner options
• Optimise/grow/defend/acquire
• IT architecture impacts
• People capabilities and skills
• Potential cannibalisation of the traditional
business
34
Phase 4 – Execution planning state. Based on the definition of success, it is

critical to also identify the appropriate KPIs to
The final phase before execution is developing
measure success. For example, if viewership is
a detailed rollout plan for the digital
one of the key determinant of success for an
transformation process. This phase can
OTT player and rather than focusing on KPIs
broadly divided into two components -
such as video views, repeat views, user
Programme design and execution plan
experience, feedback, resolution time, the
A core element to assess before rollout is to company only stresses upon financial matrix
determine the measure of success. The such as cost to serve, then the end outcome
definition of success varies based on the expected will not be achieved.
overall digital strategy and the desired end
Programme design
Burn rate
Scoping
• Problem statement
• Solution options
Product risk
• Benefit case Target

operating model Programme
• Shared vision architecture
of future • Org, People, Process,
working model controls, Information,
Application,
Technology
Risk management
Execution and outcome risk
rollout planning
management
Execution/outcome risk
Reduction of uncertainty due to

risk management through programme design
Source : KPMG in India's analysis
Prior to embarking on the digital • Ensuring a common understanding of

transformation rollout, it is critical to think requirements and solution by structured
through the following elements to enhance walk-through at an architecture level.
success potential of the:
• Planning the detailed delivery mechanisms
• Identifying the areas of uncertainty in the of the engagement.
project in terms of open questions, implicit
assumptions and prerequisites, and
planning how to address them.
• An explicit verification of the project risk
register against predetermined categories to
provide a standardised registry of open
questions.
35
Designing successful digital Execution plan

programmes is about getting three In order to ensure effective execution of digital
elements right: strategy, special emphasis needs to be laid on
When a digital strategy reaches this point of the following:
maturity and funding is approved to mobilise a • Risk identification, mitigation, proving and
change programme, it follows the same control: A company shall identify and
programme design disciplines as other assess key business risks that might emerge
programmes of change in an organisation i.e. owing to business transformation, and a
getting the foundations in place for a proper risk mitigation and control plan
programme to be set-up for success. should be put into action.
• Customer impact assessment: All the use
case shall be considered to avoid any
adverse impact on customer experience
owing to the company-wide changes.
• Delivery, flexibility, speed, governance: To
build a sustainable digital business,
Digital Foundation
capability programme organisations not only need a digital
design strategy but also require a cultural shift,
agile operating model and flexibility for
driving continuous innovation.
Digital
methods
Key pillars of digital transformation
Digital first
01 02 Organisation-wide change
Innovation focussed mindset Integration across organisational DNA
Innovation is not a choice anymore. Strategy to transform that need to be
For digital innovation to be holistic and inclusive of all business
successful, it is pivotal for the segments and functions, including the
leadership to assess their business front, middle and back offices.
through a number of lenses —
technology, business strategy, future
gap analysis, and digital road map
Content security Analytics

Data protection and IP security Data analytics
With companies embracing digital Data analytics is paramount for

transformation, security has become even understanding customers and
more critical. It is important to safeguard data improving portfolios and cost
across systems, devices and the information structures
on the cloud.
04 03
36
Digital first and innovation 2. Accelerator programmes: Accelerators

focussed mind-set assist early stage start-ups with financing
and mentorship in a fast-track mode,
Innovation for a digital company is not a providing intense, immersive education to
choice any more but perhaps is the only help them accelerate the life cycle of young
‘business as usual’ way to go forward. It is companies within a few months.5 While
imperative for business owners to carve out some start-up accelerators operate in India,
specific teams focussing on this impending global M&E conglomerate Disney also runs
change and drive transformation across the an accelerator ‘Disney Accelerator’ that
organisation. According to the survey of 131 provides select companies the access to
CEOs in India in 2017 conducted by KPMG the creative expertise and resources of the
International, 60 per cent organisations plans Walt Disney Company to help them
to make significant investments towards develop innovative products and services.6
innovation led transformation over the next It is a lucrative situation for both media
three years.2 companies and start-ups, as the former
gains access to innovative ideas and
Setting up incubation centres to drive solutions, while the latter gets the much-
innovation needed guidance and financial support.
Being a comprehensive activity requiring 3. Government-funded incubation centres:
significant changes to a business, digital The Indian government has launched
transformation has driven many organisations several initiatives to support and incubate
to set up or seek support for their incubation budding start-ups in the country to help
centres to focus on turning innovative ideas them scale up their businesses up to a
into viable business models. According to the certain required level, in addition to
National Business Incubator Association, 88 providing them space to operate from.7
per cent of organisations that have graduated For instance, the Government of Telangana
from incubators remain in business after five is supporting AVGC sector; it is planning to
years, while only 20 per cent of start-up set up an incubation centre called
businesses, generally, survive in the real ‘Innovation in Multimedia, Animation,
world.3 Gaming and Entertainment’ (IMAGE) in
The objectives of these incubation centres Hyderabad, which would provide an ideal
include helping an organisation achieve a environment for businesses in the
vision for the future, a culture of innovation, an animation, visual effects, gaming and
agile operating model, an appropriate trade-off comics industry.8 The Government of
between foundational investment and short- Gujarat is also pursuing investments to
term wins, and an appropriate use of emerging launch an AVGC lab in the state, aimed at
technologies to improve customer, employee providing a technological boost to the
and business partner experience. Incubation sector.9 Under the Start-up India Action
centres can exist in multiple forms. Plan announced in early 2016, the central
government would provide funding
1. In-house incubation centres: In-house support and incentives such as tax
incubation centres perform the same tasks exemptions, in addition to incubation
as any other external incubation centre; assistance through industry–academia
however, they are typically set up as an partnerships.
independent unit entrusted with
developing innovative solutions to specific
business issues. For example, in 2013,
Arena Animation, the animation, web
designing, VFX and multimedia education
arm of Aptech Limited, launched its in-
house incubation centre to identify industry
needs and adapt its trainings accordingly.4
5. What Start-up Accelerators Really Do, Harward Business
Review, March 2016
2. Disrupt and Grow – India CEO Outlook 2017, KPMG in India, 6. https://disneyaccelerator.com/, as accessed on 15 September
August 2017 2017
3. ‘Central tech opens new business incubator’, Central Tech, 12 7. Government certifies 20 companies as incubators under Startup
February 2017 India, Economic Times, July 2016
4. Arena Animation, Bangalore launches in-house incubation and 8. Image Policy 2016, Government of Telangana, 2016
outhouse production studio, Vedatma Animation studio, 9. Development of an AVGC Lab, Government of Gujarat, January
Animation Xpress, April 2013 2017
37
4. Third-party innovation labs: An innovation The core of the philosophy is based on

lab is a space where partners from the defining ownership and establishing a
private sector, NGOs, academia, stewardship model to implement the plan.
government ministries, civil society and Stewardship is the key to successful
youth come together to co-create solutions implementation and stewardship is the guiding
for the most pressing challenges.10 These process that bridges business and users;
innovation labs help organisations to — executives and technology. The stewards
cultivate ideas into commercially viable oversee the implementation of the tools,
products, profile new capabilities, solve manage the data integration and provide the
business challenges in new ways, gain training and management for the introduction
awareness of the marketplace and gain of new workflows and business processes.
access to technology, people and skills,
Organisation-wide digital operating strategy
and specifically developed smart assets
and capabilities. To fully realise the potential of a digital
solution, bringing a paradigm shift just in the
In 2017, Paypal launched two innovation
way viewers consume content is not enough,
labs in India, in Chennai and Bengaluru, to
however an organisation wide change is
support innovation across multiple areas
required. According to KPMG in India’s CEO
including machine learning, artificial
Report 2017, 65 per cent organisations have
learning (AI), Internet of Things (IoT) and
aligned their middle and back office processes
virtual reality/augmented reality (VR/AR).11
to front office operations to reflect a more
customer-centric approach.12
Integration across organisational
DNA
Organisation structure and reporting
Established traditional media companies need
to carry out internal changes so as to craft
structures that can support digital
transformation. The organisational structure
needs to be flexible to promote cross
pollination and to drive synergies. The
governance structure should be such that it
establishes the principles and policies from the
hierarchy of stakeholders. It should clearly
identify the homeowners of the information,
map the wants of every owner, define the
performance KPIs, establish collaboration and
communication between teams, and manage
dependencies.
10. Innovation Labs, UNICEF, October 2012

11. PayPal launches two tech Innovation Labs in India, Economic
Times, August 2017
12. Disrupt and Grow – India CEO Outlook 2017, KPMG in India,
August 2017
38
Digital transformation disrupting the capabilities across

• Mobility
• Consumer analytics
• Payments • Support functions – IT, HR, etc.
• Advertising and marketing • Process automation
technologies • Digital labour
• Customer journey mapping • Content centres
• Personalised products and • Talent acquisition and
experience development
Front-office Middle-office Back-office
• Content development
• Content management
• Content supply chain
• Content processing and
sharing
• Transforming the front-office • Transforming the middle-office

Companies cannot get by just on the back of Improving efficiency and reducing time-to-
good content, and thus media companies market are key focus areas of today’s CEOs.
and content providers have been striving to Thereby, media companies have been
nurture superior relationships with integrating technology solutions —such as
audiences by investing in a number of front- content delivery networks (CDN), content
office technologies. While mobility management systems (CMS), cloud
technologies are being leveraged to allow platforms, mobile video optimisation, video
viewers’ access to content across devices compression and encoding, supply chain
such as smartphones, tablets, gaming virtualisation, etc. — across the value chain.
consoles etc., players are also using These solutions are benefiting media
analytical tools to capture real-time businesses by allowing them to integrate
customer data. With the evolving digital production management, digitally share
payments ecosystem, companies are also assets across locations, automatically
trying out innovative business models, archive data sets, centrally controls
leading to new avenues of revenue versions, process content on the fly, digitally
generation. In addition, ad technologies package and catalogue content. This in turn
such as geo-targeting and programmatic allows media companies to offer an
ads are also being used for added value to enhanced user experience through higher
the advertisers. picture quality at a much lower bandwidth
across different sized screens. Digitisation of
On the whole, continued investments in
the entire content supply chain simplifies
digital front-office technologies would form
the efforts of content owners, thus
the road map to innovation, leading to high-
maximising the monetisation opportunities
quality user experiences through tailored
for media companies.
content, improved viewing
recommendations, more personalised and
pertinent advertisements, better viewer
engagement and new possibilities of
distributing and monetising content more
efficiently.
39
• Transforming the back-office: associated with legacy systems and processes

cannot be ignored either. The businesses have
The gaps in back office operations could
invested a lot of time, money and manpower
question a company’s ability to fulfil
to develop these systems and processes,
demand or offer desired consumer
which, till date, are delivering value and
experience. The back office transformation
creating a differentiation/niche for the business
—involving digitalisation of core functional
in the market. It is critical for businesses to
departments, process automation, digital
identify how best the legacy systems can be
labour, digital contact centres, etc. — helps
leveraged.
companies reduce expenses, improve
compliance, and increase overall
productivity. While robotics process Data analytics
automation (RPA) is helping media
companies to automate repetitive Analytics is one of the most important pillars
processes, cloud is enabling easy for a digital OTT organisation
processing and inter-department movement The consumers and their engagement on an
of data. Cloud allows companies to design OTT platform essentially defines the long-term
and standardise innovative business success of the players. To drive very
functions for their existing back office engagement, it is imperative to understand
products. Data as a service along with every facet of the consumer, right from how
mobility solutions enable employees to he/she navigates through the platform and
access data anywhere anytime, which in what he/she likes watching to eventually
turn enhances employee productivity and predicting what category of content will appeal
helps company scale its back office to the target audience. The role of data
operations. Further, the integration of analytics to answer these questions is
technologies such as artificial intelligence paramount, and organisations need to
and cognitive computing are helping with effectively leverage the mountains of
costs. consumer data to arrive at actionable insights.
Technology integration Data analytics – Insights across the OTT

Digital technologies are changing the business journey
landscape, however some organisations fall With the rapid growth in OTT video
behind compared to others owing to consumption, companies have to contend with
challenges pertaining to legacy systems. multiple challenges around what to do with the
Legacy systems do pose a number of data. Some of the key considerations are
challenges, including: outlined below:
a. Migrating older data and processes from • Data capture and integration – Integration
legacy system to a new system of massive amounts of data generated
b. Integrating new technology functionalities across the platform starting from customer
such as security demographic data to activities likes clicks,
views, shares.
c. Testing digital technologies or third-party
APIs on legacy systems • Platform reach – With multiple distribution
models and touch-points through which a
d. Involving big data analytics in business consumer can interact with the OTT value
decision-making chain, an integrated view of which modes of
For a digital start-up, the probability of scaling reaching the customer are proving to be
up business operations is quite high as against effective will help improve the long-term
traditional businesses that have been operating prospects of the platform.
in the industry for decades now. This is for a • Consumer acquisition – To effectively
simple reason that the legacy processes and acquire target consumers while effectively
systems of the latter define the extent of utilising costs is something that the
plausible business transformation rather than platforms are looking to find ways around.
the other way around. However, the value
40
• Knowing the consumer – In an environment Data analytics - Technology framework

where a consumer wields the absolute
The typical data analytics framework across an
power when it comes to the choice across
organisation encompasses the following:
competing platforms, companies need to
have a clear understanding of consumer • Quantify – Upload and segregation of data
behaviour, preferences along with into identifiable patterns
institutionalising advanced analytics around
• Understand – Insights on ‘why’ a particular
demographic and channel segmentation.
behaviour is being observed, using
• Content insights – Amongst the most advanced big data and machine learning
important aspects of any OTT platform is techniques
content strategy, and understanding the
• Model – Identify target groups and
motivations behind a consumer watching a
predictive modelling of potential behaviour
particular category of content. The insights
i.e. ‘How will the consumer behave’
thus derived could potentially be used as
inputs for future content creation decisions. • Implement – Put hypothesis into practice
• Dynamic revenue models – OTT and capture actual consumer behaviour
monetisation models are continuously • Measure and refine – Validate hypothesis
evolving with even ‘traditional digital’ and refine outcomes through a virtuous
mediums like YouTube advertising likely to cycle.
see stagnation in terms of CPMs. With
migration of consumers towards mobile
and other online platforms, identifying the
right set of consumers for potential upsell
and providing advertisers with insights for
their spends is of paramount importance.
3
2 4 5
1 Subscriber/
Machine Recommendations Tracking and
Data upload Audience/
learning and campaigns reporting
Programme scoring
Structured and unstructured

formats Campaign 1 (TG1)
Campaign 2 (TG2)
Campaign 3 (TG3)
Raw media Algorithms analyse The algorithm calculates a A target group + control Results of implementation
data is loaded vast amounts of score on each viewer at group is made available for and integration for target
in real time to data, detect patterns Individual/Household retention or up-sell activities. and control groups are
platform. and automatically level based on multiple tracked automatically.
learn from criteria. Timely update of
experience. scores
Measure &
Quantify Understand Model Implement
refine
Source: KPMG in India analysis, September 2017

Note: TG refers to Target group
41
Data analytics evolution across an • Level 3 – Early adoption – Insights around

organisation ‘why’ something has happened (descriptive
analytics) and teething issues around
Media companies have varying levels of company wide deployment of analytics
adoption of data analytics, which defines the tools
‘data maturity’ level they are at
• Level 4 – Corporate adoption –
• Level 1 – Nascent stage – Characterised by Operationalisation of big data, predictive
minimal awareness and importance of data; analytics and emerging mind-set of
and basic issues around collection and analytics being essential to gain a
warehousing of data competitive edge with respect to the
• Level 2 – Pre-adoption – Starts off with competition
understanding the need for analytics and • Level 5 – Maturity – Digital first mind-set
involves initial investments in analytics institutionalised across the organisation,
infrastructure and education across the decision-making driven by data insights,
organisation human capital buy-in and a continuous
culture of data driven innovation
Nascent Pre-adoption Early adoption Corporate adoption Maturity
Pre-big data environment Educate and explore Engage Execute
Knowledge gathering developing Ad Hoc and End users get results of adoptions and Highly tuned infrastructure +
strategies and roadmap Foundational Analysis can start operationalizing big data established programme
Low awareness of value + No real
executive support
Involvement Use of all types of data

(Including real-time)
Issues with data warehousing Restricted to what has

Homework phase
happened Gain insights
Basis of decision making
Investment in Using predictive
Departmental scope
technology analytics
Departmental scope
Lack/outdated analytics Precise product
Incorporated into
Level 5
recommendations
Level 3
Level 4
Level 1
Level 2
Determine top business business processes

Varied forms of data used,
problems but lack of integration
Decisions yet to be
data-driven Realization that analytics is a
Participation of Lack of inter competitive differentiator
CIO team Department Infrastructure, data and analytics
deploym intertwined completely
• Improper data warehousing • Usually the longest phase
ent • Commercialization distribution
standards, storage structures • Experimentation mindset
• Initial database established • Functionality as per enterprise standards
• No data management • Stage for collection of data Building of innovation teams
strategy from big data sources • Operationalization of unified • Big data ecosystem robust
architecture with backup/recovery
• New infrastructure support • Efforts required for data procedures Data shared across departments of
governance • Analytics approach in place maybe
organization
• Lack of analytics - basic hybrid in nature • Unified architecture
analytics insufficient • System installation,
configuration and maintenance • Data not well managed • Data quickly analyzed and streamlined
Analytics seen as competitive
• Usually within marketing and compliance into logical infrastructure
department • Lack of meaningful and weapon and collaborative factor
• Support for analytics strategy/ insightful analytics • Analytics integrated with business process
• Untapped unstructured data advanced analytics
Ad hoc Foundational Competitive Differentiating Breakway
Organisation Infrastructure Data management Analytics Governance Strategy
Source: KPMG in India's analysis, September 2017
Data protection and IP security experience for consumers, broadcasters-run

and pure-play OTT platforms are opting for
The importance of content security the highest levels of content security
Viewers are looking for a fast and secure online incorporated within the core of their business
media viewing experience irrespective of the operations and across several delivery
devices and location, protecting online media platforms.
content is a multifaceted challenge for digital
media platforms. With technology opening up OTT platforms facing challenges around
new avenues of content delivery to consumers,
control over consumer endpoints
the threat of digital content piracy is a major
concern. As the OTT space expands across The rise of digital viewing has rendered the
demographics, organisations need to be more conventional measures that companies have
diligent about protecting their intellectual relied upon to contain piracy, obsolete. In
property and content. contrast to networks managed by broadcasting
companies, the digital space lacks centralised
The frequency and intensity of cyberattacks in
control over the security of endpoints, such as
India has increased, due to which content is
set-top boxes.
under a constant threat. This has made it
mandatory for companies to address and
manage cyber-risks. To ensure a smooth
42
Consequently, the service provider’s control apps, peer-to-peer file transfers, through cloud
over the devices used to decode, distribute and storage, and sharing and access allowed on
consume content is significantly reduced. In social networks.
addition, the shift from operator controlled
endpoints to user-selected devices reduces It is thus important for OTT platforms to
companies’ involvement in important security leverage technology that delivers content
decisions. securely to users’ devices so that not only the
authorised viewers can access the content, but
To control and manage a multi-platform and
multi-service space, digital content providers to also ensure that the content cannot be
must embrace a holistic security approach to downloaded or shared illegitimately.
address the security requirements on any type
of content (live or on-demand) on any device. Watermarking and pirate monitoring
Different approaches can be employed right
from the source of content origin to the means While dealing with content piracy at the server
of distribution. The idea is not to resort to just and the application level could be effective, it
a defensive tactic but also search for ways to may not be a fool-proof method of protecting
implement an end-to-end framework of content. For instance, stream and screen
content security. capturing tools help pirates capture the video
that is played on the screen. Insertion of digital
watermarks to video content can be used to
Content security interventions required across narrow down on the source of the content
all touch-points leakage which feeds the redistribution
Securing content at source helps limit the streaming servers.
instances of security breaches. Hence, Another important element around cyber
adopting end-to-end content protection security technology is to monitor pirate
technologies such as intrusion detection services. Companies can employ cyber-security
systems, audit trails as well as technologies vendors that work with the rights owner,
that control physical access to server facilities national authorities and ISPs to take down
become critical for organisations. illegal servers.
Further, a major chunk of users prefer to It is also critical for companies to address the
stream OTT content on smartphones and timing of rights windows. Companies must
tablets. However, natively installed apps on control concurrent access to streamed content
such devices come with a number of risks such at the subscriber account level and exercise
as sensitive content leakage, insecure content control over offline content access and
transmission and unprotected data storage. downloads.
This poses the risk of data sharing between
The elements of content security framework
43
Phase 1 – Context setting • The physical security layer –

Operationalisation of physical security is a
The first phase revolves around a review of the
critical element which helps guard against
content acquisition and monetisation strategy
unauthorised entry into secure areas for a
along with the content management model, to
digital OTT organisation. The elements
identify areas where content security policy
around the physical security layer are
design is to be enforced. The tools and
methodologies to be enforced are centred on – Asset Tagging and Labelling, Transport
access rights management, security controls, and Facilities security systems, Alarms
and content storage and archival procedures. and Keys implemented at vulnerable
locations, Access controls, Systems and
Phase 2 – Content security realisation
area authorisations and installation of
This is a critical phase which defines the set of monitoring systems
processes governing the content security
• The digital security layer – While physical
across a typical OTT platform. The processes
security is the first layer of security control,
comprise of:
implementing security measures across
• Core content processes electronic devices helps build a second layer
of digital security, making the systems
– Content Acquisition and Development,
robust in nature. The digital layer comprises
Transfer and Broadcast, Distribution and
of the following elements
Sales, Access and Rights management
and Content Storage and Archival – Firewalls and Network security, Input and
Output device security, Digital content
• Content security processes
library security management, Content
– Content Control and Exception tracking and transfer, Authentication
Management, Vulnerability assessment servers, Server connections to outside
and security process design to address vendors and partners.
the same
• IT processes Conclusion
– Media Inspection and Classification, We are now in a constant change environment,
Media storage assessment, Security which compels organisations to rethink their
Monitoring, Business Continuity processes and strategies frequently. Digital
management processes in the case of transformation is not a one-off project. Any
content breach eventualities and Content business contemplating digital transformation
Backup strategies would have to regularly assess the digital
evolutionary path and desired digital end state.
• Incident management processes
The success of digital transformation is
– Response to Security incidences and
ascertained in large measure by the company’s
command chain for response, risk
ability to keep pace with technological
management procedures encompassing
innovation, changing customer expectations
detection, assessment and mitigation
and last but not the least top management’s
ability to drive a fundamental change in the
Phase 3 – Content security operationalisation organisation’s DNA. Digital can no longer be
treated as an additional function, but digital
The last phase is about putting into practice
strategy is rather intrinsic to business strategy
the processes outlined in Phase 2
• Management systems – Content security
Management Systems are put in place
which define the entire security
organisation, right from awareness at
executive levels to incident teams and the
protocols to be followed in case of security
breaches and kicking in the business
continuity and disaster recovery procedures
44
Pivoting
traditional
IT function to
digital
45
The execution planning exercise for a digital governed and managed. A well governed IT
transformation is the final activity for organisation synchronises the business and
operationalisation of the actual pivot of a technology aspirations while a well-managed
traditional technology organisation into its IT environment ensures consistency in delivery
digital avatar. The digital transformation for via reference architectures (business, data,
OTT platforms while being a business
application & technology) and leverages both
prerogative, has inherent technology
IT & OT (operating technology). The objective
underpinnings. The digital transformation
process for an OTT player is a strategic shift is to ensure visibility and interdependencies of
with customer centricity at the core realised via each IT component (process, application,
persona profiling, on-demand digital content, services, data and infrastructure) across the
and personality/demographics based landscape.
suggestions, provisioned smoothly across a
multitude of devices in an omni-channel
environment. Delivering such a tailored
Two nodal frameworks for digital
experience necessitates a technological
enablement
architecture that is agile, flexible and scalable Digital enablement is not accidental in nature
on demand and technologies that are easy to and hence mandates careful planning and
implement and that give quick insights for course correction. Therefore, to ensure that the
decision-making, especially around content organisation is digitally enabled it is imperative
strategies. that the CIO/CTO draft a Digital Strategy in
conjunction with the Enterprise IT strategy with
For the enablement of such an orchestration, it
dedicated budgetary allocations.
is imperative to have an IT environment that is
• Internet of Things • Customer analytics • Workplace of future
• Digital distribution • Digital/Social/Mobile • Millennial disruption

enterprise
• Digital content • User experience
management • Sales transformation
• Journey based digital
• Unified media ERP • Customer experience strategy
Digital
optimisation
• AI based content curation • Enterprise mobility
• Operational reporting
• Big data and analytics
• Digital strategy
Technology • Product/service positioning Digital Enable the
driven and extension driven internal and
disruption transformation external
• Scenario-based planning
customer
• Workforce • Enterprise architecture • IT strategy

analysis/optimisation
• Technology business • Target operating model
Enterprise IT
• Offshoring/ management design

Nearshoring
• Service management • Application
• Outsourcing rationalisation
• Application/Infrastructur
• Continuous e rationalisation • IT governance and
organisation change oversight
Next-Gen A modern • IT asset management Technology
target • Managed governance innovative integration • Tools enablement and
integration
operating • Tech-biz management platform
model (TOM)
46
Digital operationalisation
Digital operationalisation for a VOD platform could be realised via key themes based on the
customer experience, digital interventions (niche products), content creation, advertising
automation and enabling architecture. Enterprise and digital architectures are the core building
blocks of the ecosystem. The themes in unison provide an engaging experience to the customer.
Key themes for digital transformation
Digital architecture
• Digital architecture definition
• Digital intervention operationalisation
via transition architectures Customer experience
• Personalised customer experience as per
Enterprise architecture personas
• Consistent omni-device experience
• Business architecture definition • Intuitive UI/UX
• Data and BI architecture definition
• Application architecture definition
• Technology/infrastructure architecture
definition
• Architecture governance Next-Gen Digital
architecture Digital interventions
• Selection and prioritisation of key
customer experience enabling
digital interventions
Ubiquitous data exchange
• Device agnostic, service based data Automation Digitisation
transfer and exchange
• Governed data environment Workflow digitisation
(customer centric)
• Use-case definition and prioritisation
Business workflow automation
• Core business process automation Logic and asset digitisation
• Architecture governance process • Asset inventory digitisation
automation • Logic digitisation and decentralisation
47
Digital strategy and architecture It is critical to remember that digital

realisation transformation impacts not only the
technology landscapes but the traditional and
The digital vision for OTT platforms and its supporting business units as well; and as such
consequent digital strategy is at the core of any it entails business process reengineering
transformation exercise. Based on the digital activities that impacts the key stakeholders,
strategy and its needs, business, digital and KPIs and the very cultural fibre of an
data requirements are determined which organisation. So a change management
translate into respective views. Each of these exercise is indispensable to ensure that the
views constitute approach building blocks and changes are understood and assimilated by all
in unison get translated into the respective the stakeholders of the transformation.
architectures.
Change management Change management
Digital
vision
Data/information requirements
Information and data views
Exchange package and model architecture
Data/information organisation design
48
Key technology components disrupting the media industry

04
• Highly scalable systems to manage
peak loads smoothly 05
• Cost effectiveness
• Tapeless workflow management • Customer 360
• Collection, storage and analytics 05 • Advertising opportunities
across large datasets Big data • Operational efficiency
analytics
• Dynamic content
monetisation
04
Cloud
computing
03
01
Digital content Content 03
management curation • Hyper customised content
• AI/machine learning
driven content
01 suggestions
Content
• Coherent content creation, storage, review and discovery
approval, and broadcasting workflows 02
• Integration with disparate sources of content via
a self-service platform from external sources 02
• Ability to interact with centralised and/or
• Dynamic metadata tagging
decentralized media
based on content
• Support and integration with niche content
shown/spoken
processing platforms
• Support for digital and traditional distribution
• Deep search capability
• Dynamic content restructuring based on the
device, bandwidth and granular user
preferences
49
Digital realisation architecture

The typical media value stream
Media asset flow
Media life
Pre- Post- Multiplatform Experience
Production cycle Consumption
production production distribution integration
management
Workflow Collaboration Metadata Distribution Customisation/

Rich indexing personalisation Consumption
planning enablement analytics orchestration
Information flow
In a rapidly evolving digital environment, Meanwhile, the media trade is reworking,

consumer behaviour is shifting from traditional making the most of the employment of
TV based scheduled programming to an OTT business IT-based functions and infrastructure
based on-demand viewing, creating new that modify media services to be delivered as
necessities for tomorrow’s media design cloud-based services instead of as options of
revolving around digital consumption. vertically integrated systems.
Infrastructure
Wireless
Fixed Line Mobile Cable Others
LAN
Broadband transport (web protocols)
Services
Video Voice Music Gaming Messaging Others
Content owners, aggregators, service providers
The media services design allows an extremely streams and VOD content to consumers
climbable, robust, secure and economical connected via mounted or mobile IP networks.
atmosphere for the delivery of live/linear
50
Key interconnects with enterprise but it does not interfere with the physical
OT/IT world. While communications has always been
a part of scope for IT, traditionally OT has not
Operational Technology (OT) acts in real time been considered a networked technology. OT
on physical operational systems to manage is now getting modernised through converging
media life cycle, i.e., from pre-production to with IT with required considerations for
consumption. Whereas, Information maintaining security for critical infrastructure.
Technology (IT) is the whole technology stack, This convergence provides multiple
including the hardware infrastructure and advantages as set out below:
software applications used to transform data
Lower cost of ownership for

technology through standardisation Greater automation with effective
 OT and IT integrate multiple digital governance extended across IT and OT
channels and provide smooth omni- domains
channel experience to end users.  Technology governance creates a structure
 The framework is completely modular in for aligning business strategy with digital
order for multiple tools and technology to strategy and helps in identifying opportunities
work together reducing the operation cost and prioritising activities
and providing increased scalability of  It facilitates ways to measure the
solutions based on actual business needs. performance and the business benefits being
delivered, and establishes clear and
Increased speed of consistent standards for people, process and
technology to follow
implementation for digital projects
 Companies need to become skilled at faster
More effective asset management through
delivery of digital projects to meet changing
customer expectations
predictive, condition based maintenance
 Core IT project delivery principles such as  Effective asset management needs
well-defined reusable micro services, API- monitoring of actual condition of the assets to
based interfaces, interoperable data, spot upcoming failure and decide when and
services and processes, metadata, etc. are how maintenance needs to be done, also
leveraged to achieve faster implementation known as Condition Based Maintenance
and deployment of digital solutions. (CBM) using certain indicators and metrics to
identify signs of decreasing performance or
upcoming failure
Increased project effectiveness
through a coordinated
Increased productivity through
approach across the whole
integrated planning and scheduling,
organisation
 With lesser time allocated for project
data to support leading practices and
development, geographically spread advanced process controls
project teams and involvement of multiple  The workflow includes the processes of
parties, communication and coordination is channel planning, scheduling,
critical segmentation, rights management, etc.
51
52
Key considerations for
digital implementations
53
Digital transformation can be a two edged Execution

sword – if not implemented right then it can
Digital initiatives are seldom unified across the
lead to low return on investments or even
organisation. In a number of instances,
losses. Below are some of the key learnings
organisations adopt a modular approach to
while implementing digital initiatives.
digital transformation and do not commit the
entire organisation to the process. While in the
Leadership involvement
short-term, this may be cost effective and
More than 50 per cent of the time, digital minimise operational disruption, in the
transformations are driven by executives other medium to long-term, this is likely to be highly
than the CEO or the CDO and do not get top inefficient as it can put the organisation at risk
leadership support . of missing the market opportunity, due to the
lack of a collective organisational digital
Digital transformations typically cut through
transformation focus.
various functions (eg. sales, marketing, etc.)
and stakeholders both internal and external. If
Adoption
a C-level leader is not involved, then typically
collaboration between functions and groups Several digital implementations lack a change
becomes difficult and the digital management plan due to which the investment
transformation process is disrupted due to the in the digital initiative turns sour. It is critical to
deadlocks on decision-making and lack of have a 100 day plan to start with and a
strategic view. continuous programme and governance
structure to make the change stick.
Planning
Expectations
Lack of digital planning creates multiple
version of truths. In an ideal scenario, with It is important to define the expected outcome
digital planning carried out from an from a digital initiative at the beginning of the
organisation’s perspective right from the implementation process. The KPIs identified
outset, the organisation would not need to rely should be measurable and continuously
on multiple sources of partly automated data. tracked to measure the performance of a
particular digital initiative.
2. Based on industry discussions
54
Acknowledgement
We would like to thank the entire team at KPMG in India
for their efforts in developing the report.
Apurva Dixit
Dev Khandwala
Jasleen Taneja
Karan Dasaor
Neha Pevekar
Priyanka Agarwal
Radhika Goel
Raahul Gautam
Rasesh Gajjar
Sahil Koul
Sameer Hattangadi
Sanjeev Bhar
Sharon D’silva
Shilpa Taneja
Shveta Pednekar
Sutirth Dasgupta
Vibhor Gauba
KPMG in India contacts: FICCI contact:

Mritunjay Kapur Leena Jaisani
Partner and National Head Asst Secretary General & Head
Strategy and Markets Media & Entertainment
Leader – Technology, Media and Telecom FICCI Media & Entertainment Division
T: +91 124 307 4797 T: +91 11 2373 8760/70
E: mritunjay@kpmg.com E: leena.jaisani@ficci.com
Girish Menon
Co-Head
T: +91 22 6134 9200 LA India Film
Council contact:
E: gmenon@kpmg.com
Himanshu Parekh
Co-Head
T: +91 22 3989 6000 Lohita Sujith
E: himanshuparekh@kpmg.com Director
Corporate Communications
Aditya Rath T: +91 22 6139 7000/02
Partner E: lohita_sujith@mpaa-india.org
Digital
T: +91 22 3989 6000
E: adityarath@kpmg.com
KPMG.com/in ficci.in
Follow us on:
kpmg.com/in/socialmedia
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to
provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the
future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
The views and opinions expressed herein are those of the interviewees and do not necessarily represent the views and opinions of KPMG in India.
© 2017 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.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
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The

The ‘Over the top’ (OTT) video consumption in

penetration in rural India and rapid growth of

Monetisation models and

• Data analytics: Data has evolved in type,

Digital advertisement spend (INR billion)

294.5 1. Advertising Expenditure Forecasts, Zenith Optimedia Group

Source: KPMG in India’s analysis, 2017

Source: KPMG in India’s analysis, 2017

India’s OTT landscape – Key players

Content creators Content aggregators Digital platforms Customers

AIB Sun Nxt

Technology/ infrastructure enablers

Vidooly RecoSense Preksh Purple Stream

The pillars of an OTT platform

Digital and payments Digital India – Taking ‘Bharat’ online

4G – Fuelling the digital economy Video - Driving the data traffic

Source: KPMG in India’s analysis, 2017

Digital payments - The key enabler Digital content consumption

From niche to mass Long form content seeing traction

21. Game of Thrones, HBO, accessed on September 22,2017

Investments in original content

Announcements regarding original content investments by OTT video platforms in India

Original content Tie-ups with Shows in the

Amazon INR 20 billion, spent • Excel Entertainment • Inside Edge

Platform Key live sports properties Reach

Hotstar  Cricket - Indian Premier League (IPL);  IPL – 80 million

Regional language content The government is also undertaking several

68 234 Source: KPMG in India’s analysis, 2017

Effective distribution strategy platforms usually withholding a substantial

Freemium models Digital measurements and

Sponsorships – An emerging and Digital advertisement fraud

Brand safety Industry initiatives to curb the menace

Digital is the new normal and As a result, organisations need to be flexible,

Source: KPMG in India’s analysis, September 2017

Phase 1 – Digital vision and strategy

Strategic context – what is happening around you

Scan and map Derive key threats

• Assess emerging • Identify overarching • Build quantification • Define potential

Source: KPMG in India’s analysis, 2017

Current state and digital maturity assessment – An honest look inwards

Existing business insight New VOB insight

Immature digital organisations Mature digital organisations

Educate, inform and win support

Market protection, remaining competitive, innovation

Note: VOB refers to Voice of Business

Digital strategy and business plan – the way ahead

Strategic The objectives represent the goal that the

The principles underpin and inform the

Source: KPMG in India’s analysis, September 2017

Cultural and behavioural change management – change in DNA

Strategic Senior leadership alignment critical to success of any change

Systemic Behavioural change is complex, impacting the whole

Sustaining change is the primary objective of any

Source: KPMG in India’s analysis, September 2017

Phase 2 – Customer proposition Four categories of customer research

• Increasing data speeds leading higher usage

Phase 3 – Business design

Digital capability model

Digital capability model Operating capability model

Phase 4 – Execution planning state. Based on the definition of success, it is

• Benefit case Target

Reduction of uncertainty due to

Source : KPMG in India's analysis