OTT

Disney+Hotsar, Amazon, Netflix: Can

SonyLiv work its way to become the fourth
dominant OTT player?
00:00 01:12

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Synopsis
Though SonyLiv is a first mover in the OTT space, it lost ground to other platforms due to a crisis in Sony's broadcast business.
However, things are changing and there has been a renewed focus on digital over the past two years. But with over 30 OTT platforms
and three major broadcasters eyeing the spot, can SonyLiv reinvent itself?
More than 30 video-streaming apps are now jostling for
attention in a market that is fast saturating. What started as
a relatively open market with big studios setting up their
BY
platforms, soon morphed into a tripartite struggle for Swagata
dominance between Netflix, Amazon Prime, and the newly
Panjari

Soumya Gupta

merged Disney+Hotstar. 13 mins read

Oct 7, 2020, 12:01

This could have become a four-way struggle, had SonyLiv

merged with Viacom18. While negotiating for the third time, Share This
Sony Pictures Networks (SPN) and Viacom18 – a joint
venture between Mukesh Ambani's Reliance Industries-
owned Network18 and US entertainment company Viacom
Inc –had agreed to merge their entire entertainment
portfolio with close to INR10,000 crore in revenue. SPN GIFT ARTICLE FONT SIZE

would have had the controlling stake. The combined entity

(Sony, Viacom, and Jio Studios) would have had 77 TV
channels, three film studios, two digital-content studios and
two streaming platforms - SonyLiv and Voot It would have
.

become home to a robust library and more than 2,700

employees. However, the deal has been called off .

If Viacom’s Voot, a relatively smaller player, were no longer

to be in the picture, could SonyLiv still be the fourth vertex
of the competition?

TV business vs. OTT play

So far, Sony's OTT ambitions have been mellowed. Losing
digital rights for sports to Star and other platforms like
Facebook hurt its platform SonyLiv further, at least with
Indian audiences. But things are changing now.

Sony’s faltering focus on OTT stems from the trouble in its

television division.

“Right from the broadcasting days, Sony and Star have been
competitors. In between, Sony wasn't focusing much on its
digital platform, instead, they were investing heavily in
linear TV. But, in the past two years, they are investing and
trying to build their digital platform. The merger would have
not only boosted their position but would have given that
extra nudge to compete with Star,” says an industry expert.
In 2014, when the television-viewership data came from
TAM (television audience measurement), Sony
Entertainment Television (SET), the flagship channel of
SPN, witnessed a week-on-week drop. SET saw its most
significant drop in November 2014 – week 46, when its
viewership fell below the 200-million mark. The channel's
gross viewership was recorded at 190 GTVM with a relative
share of 7.66% (compared to the previous week’s 245 GTVM
and 9.98% of close share).

Even after the new rating system, BARC data HSM (U+R)
NCCS All 4+ Individuals, was rolled out in 2015, SET’s woes
continued.

Initially, SET managed to climb to the fifth spot. Two weeks

later, with the inclusion of rural data into the BARC ratings,
it slipped once again to No.8. This impacted the channel’s
advertising revenues.

Taking this into account, SPN appointed Danish Khan as the

channel head. Khan, who was the programming head of Star
India for over two years, put together a team and brought
new programming to the channel’s roster.

Two years into his leadership, SET managed to make into top
5 list. Khan's play on viewers' nostalgia with Yeh Un Dino Ki
Baat Hai proved to be a successful experiment. Moreover, he
also brought back some of the favourite non-fiction shows,
such as Kaun Banega Crorepati, Indian Idol, Super Dancer
and Dus Ka Dum .

Under his regime, the channel launched SET Original and

did its first IP collaboration with Swastik Productions for
the big-budget show Porus SET soon grew to become the
.

market leader in the Hindi general-entertainment category.

The growth in viewership also led to an increase in its

advertising revenue.
The IPL setback
As SET was getting back to normal, SPN faced its next
challenge – losing the Indian Premier League's broadcasting
rights.

“Loss of IPL rights meant the network had to come up with

an alternative that will offset the (IPL) revenue loss. The
network had to invest in other big properties in the sport
genres. Hence, there wasn't much investment happening on
the digital front,” the industry expert quoted above says.

While it lost the IPL, SPN acquired TEN Sports from Zee
Entertainment Enterprises Limited (ZEE) and its
subsidiaries reportedly for USD385 million. The network also
has the rights to telecast matches of all cricket boards
outside India, except Bangladesh, South Africa, and New
Zealand. It has the broadcast rights for other sports such as
Euro (football), FIFA event (football), NBA (basketball),
Australia Open (Tennis), and UFC (Ultimate Fighting
Championship).

"Early on, Sony had offered niche sports properties, but these
properties lack viewership. Though FIFA is a big event, it
doesn't take place frequently, and most of the matches
happen late at night in India. From a digital perspective, one
can't rely on these properties for attracting consistent
viewership. The platform has to be steady with content,
which is what Disney+Hotstar has been doing successfully,"
says another industry expert on condition of anonymity.
As the network was concentrating on stabilising its linear
TV business, the digital business went on a back foot. SPN,
the first mover in the OTT business with SonyLiv, lost
ground to other platforms like Netflix, Amazon Prime, and
Disney+Hostar.

Missing out on the first-mover advantage

Sony was early when it launched SonyLiv in 2013. During
those days, torrent and other illegal downloads were primary
means of online-video consumption (apart from YouTube),
and OTT subscription models were still a few years away, at
least in India. As a result, the platform was heavily
dependent on ad revenue, and hence focused on 'binge
content'.

"In its first phase, the platform focused heavily on the

technical aspects. The discovery of app and customising
content as per the bandwidth was the initial challenge that
the platform had to focus on,” the first expert quoted above
says.

But since 2016, the game has changed, particularly post

arrival of Netflix and Amazon Prime Video in India. Whether
it is original programming, sports, international and
premium content, on pretty much every parameter, SonyLiv
is far behind the top competition, despite its first-mover
advantage.
According to industry insiders, the crisis at Sony's broadcast
business kept the attention away from OTT.

"Following the changing market, the real focus should have

been original content and not television content binge. The
platform never explored its full strength even though Sony
has a huge content library. It started the distribution model
for its movie genre in 2015, but the market was not ready. As
a result, the model failed to attract users on the platform.
Today on average, 35%- 40% viewership on Indian OTT
platforms comes from their movie libraries," says one
industry executive, requesting anonymity.

Initially, catch-up TV content was a bigger driver for the

platform. According to a survey conducted by SonyLiv in
2013, 64% of viewers watched catch-up episodes, whereas
more than one-third of viewers consumed crunched
episodes or Quickisodes. But as Sony battled with a lack of
viewership on television, the digital witnessed the same fate.

According to the second executive, SPN invested in various

content acquisitions, such as the deal with BBC Worldwide
and Lionsgate. But these acquisitions weren't well marketed
or promoted. "The network did deals with international
studios like Lionsgate, but the content that came from these
deals catered to a niche English-speaking audience. In India,
only 10% of the population speaks English, and several
platforms are dealing in English genre entertainment.
Moreover, SPN didn't invest much in promoting SonyLiv
content,” the executive says.

SPN's primary focus has always been on sports, be it on

linear TV or digital. While the network managed to stabilise
its TV business post the loss of IPL, it didn't focus much on
digital. "Sony lost several big sports rights - that is where it
struggled. Facebook won the digital rights for La Liga,
whereas the IPL and English Premier League (EPL) went to
Star. There were no replacements for these properties on
SonyLiv," the first executive says.
The renewed focus on digital
Since 2018, the network is focusing on strengthening its
digital platform. It has acquired digital rights for all its
sports properties. For the FIFA World Cup 2018, SonyLiv
recorded 70million viewers across India. While the number
is not as high as Disney+Hotstar’s 202 million for IPL 2018,
it is still a significant number for niche sports held once
every four years.

Furthermore, the network is populating the OTT platform

with television offerings and has turned some of them, like
Kaun Banega Crorepati into interactive games.

“Five years ago, everything in this market was governed by

market share in television. It's not about experience, bosses
understand market share, and they're only concerned with
that. When the share goes down is when they get harrowed.
They're not concerned about who is heading what. Sony did
not want to take risks then because their TV market share
was falling. Some of their shows were doing badly. Their
shows began to do better with some effort, which gave them
the confidence to work on SonyLiv,” says a third industry
expert.

In 2019, SonyLiv also announced its entry into the Middle

East, offering content for the local audience and the South-
Asian diaspora in the region. The service is now available in
the UAE, Qatar, Kuwait, Oman, Saudi Arabia, and Bahrain.

With TV business looking up, SPN appointed Danish Khan

as the business head of SonyLiv, essentially to replicate his
TV success. This, even though he does not have any
particular experience with running OTT platforms.
Restructuring its digital business, SPN also appointed
Ashish Golwalkar as SonyLiv Head – content, SET and
digital business. Aman Srivastava, who played a significant
role in SET's rebranding and positioning, was appointed as
SonyLiv’s Head – marketing, digital business, and Amogh
Dusad as Head – programming and new initiatives, digital
business.
Right through constraints of the pandemic, SonyLiv has
been working on several original projects, including some for
theatrical release. As per the second executive, the platform’s
eyes are now set on competing with Disney+Hotstar.

SonyLiv is also aiming to become an OTT gaming

destination with over 100 exclusive show-based games, to be
launched in a phased manner. These include some popular
shows like KBC CID, Crime Patrol, The Kapil Sharma Show,
,

Patiala Babes, Baalveer, Kicko & Super Speedo amongst

,

others.

According to the network's press statement, SonyLiv will

continue to air its existing roster of entertainment shows
and sports events. That includes TEN Sports, as well as
WWE, UFC, and the UEFA Champions League. It is also
planning to offer a library of critically acclaimed and popular
American films and shows such as On Becoming A God in
Central Florida, For Life, Lincoln Rhyme: Hunt for the Bone
Collector, Alex Rider, Indebted, Dark Waters, and Green
Book.

The platform has also increased its subscription cost by

200%. As part of the revision, the monthly subscription,
which was earlier available for INR99, is priced at INR 299.
The six-month plan now costs INR699 (against INR299),
while the yearly subscription now comes at INR999. It has
also introduced low-tier annual packs of INR399 and
INR199.
Still,these are baby steps. As per the second executive
quoted above, compared to other platforms, SonyLiv is
spending relatively less on Originals. In the past five years,
the platform has invested around INR400 crore, a third
industry executive with knowledge of the matter says. In
comparison to Netflix and Disney+Hotstar’s budgets for
content alone, this number is tiny. In the past four years,
Hotstar has spent around INR1,532.42 crore in the content
cost. Last year, Netflix CEO Reed Hastings announced that
the platform has invested INR3,000 crore in 2019-2020 for
creating original content.

The financial heft

To invest in the original content and acquisition, a company
needs to have a strong financial backing, something that
SonyLiv doesn't lack. SonyLiv, a subsidiary of SPN, has a
strong support from its parent company.

In its financial filings for FY19, SPN has posted operating

revenue of INR6,223.72 crore for FY19, a mere 2.8% drop as
against the revenue of INR6,472.2 crore in the previous fiscal.
Currently, SonyLiv has around 130 million downloads on
Google Play Store. According to the second expert, the
pandemic-led lockdown has increased the monthly active
users (MAUs) and daily active users (DAUs) of all digital
platforms.

"SonyLiv has definitely benefited from the lockdown and

according to my estimates it might have recorded 2x-3x
growth,” the third executive said. Last year, SonyLiv’s MAUs
was reportedly around 120.5 million users.

This year, the platform has leveraged the strength of its

popular show Kaun Banega Crorepati to attract viewers.
From registration to the selection process, the show has
gone virtual to attract viewers. The platform is planning to
further increase the engagement for the show via different
segments.

What the merger would have meant

Not just SonyLiv, but Viacom18’s Voot too has entered the
Originals game with the launch of Voot Select. Though a bit
late, both networks are experimenting with their original
offerings. In the last few months, Voot has offered Originals
such as Asur, The Raikar Case, and The Gone Game amongst
,

others.
One of the major advantages that SonyLiv and Voot merger
would have had was the exposure to different audiences.

In general, SPN caters to the urban audience, whereas Voot

has a better hold on the urban+rural audience; the merger
would have brought both audiences to the same platform.
“SonyLiv’s programming is more urban-centric, whereas
Voot has a more rural approach. If these platforms come
together, it would be a perfect mix. Moreover, SonyLiv has
sports events which is missing in Voot's offering; similarly,
Voot has a robust kids' catalogue compared to SonyLiv. The
merger could have filled these gaps creating a full-fledged
platform,” the second expert says.

Besides, both Sony and Viacom (Colors) have wildly popular

reality shows in their libraries. Both the platforms enjoy
higher engagement and loyal viewership for their shows
such as Kaun Banega Corepati, Indian Idol, Big Boss, and
Khatron Ke Khiladi amongst others.

"With the merger, all viewership would have accumulated

on one platform. Not just the content synergies but the
combined entity would have also enjoyed the strong
distribution platform with Reliance Jio,” the second expert
said.

SPN did not respond to ET Prime’s queries till the time of

publishing this article.

The bottom line

The merger of Disney+Hotstar has resulted in 8 million paid
subscribers, with 300 million active subscribers as of May
2020.

In 2019, according to media reports, SPN had a market share

of 8.8%, whereas Viacom18 had 9.8%. Had the merger went
through, the combined entity would have had a market
share of 18.6%.

While the deal seems to have fallen through, consolidation

is inevitable to survive in this cluttered environment. As per
the Boston Consulting Group report, on an average, 50% of
OTT apps are uninstalled in the first seven days of
installation. “Thanks to the ongoing fragmentation in both
advertising money and subscription base online, a
maximum of 10 players are expected to remain in the space
in the next three to five years. In such a scenario, the
companies will have to consolidate their strengths,” says a
fourth industry executive.

Had SPN and Viacom18's merger taken place, it would have

been the second-largest deal after Star India and Disney.
And the combined entity would have had the prowess to
take on Disney+Hotstar.

(Graphics by Abdul Shafiq)