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‘We expect to break even towards the end of Diwali next year’

YuppTV founder and CEO  Uday Reddy is bullish about the over the top (OTT) business in India. The over the top (OTT) service targeted at South Asians is hoping to achieve break-even in Diwali end in 2019.

Having raised $50 million from KKR-backed Emerald Media, the OTT platform is investing heavily in acquiring and creating content as it faces intense competition from homegrown and foreign OTT giants.

Reddy believes that content will be the key factor that will define the success of OTT platforms. He also feels that the aggregation model is the way forward. He also notes that the OTT industry will also see a consolidation as it is a very capital intensive. Reddy also asserts that the freemium model will be the key revenue model in India.

He spoke to TelevisionPost.com’s Ashwin Pinto on a range of issues from the company’s plans for India and global markets to the challenges in the Indian OTT market.

Excerpts:

What is the game plan of YuppTV to grow its presence in India and globally?

In India, we are one of the neutral platforms. So we want to aggregate all the content. We want to be the point of interface for all the content. We are focusing on regional content like Telugu in the original space. Internationally, we have been able to consolidate and have leadership in the South Asian segment.

For us, aggregation model is the key. Whatever is available we will aggregate. We are also acquiring as much content as possible. We have more than 350 channels and that includes all the premium networks.

YuppTV had raised $50 million in 2016. How is the fund being used?

It has primarily been used for content, subscriber acquisitions and entering newer markets such as Malaysia and the Middle East.

What traction is YuppTV receiving in India?

It is pretty good. We have five to six million active users. We have more than 15 million downloads. Digital is the future. Our engagement is increasing. In India, our originals are gaining traction. Our Telugu show has received a huge response.

What is the scene in terms of targeting profitability growth?

We are in the investment mode. Our focus lies in expanding into new markets. Another area is acquiring content and creating content. We expect to break even towards the end of Diwali next year.

What is the revenue model for YuppTV?

Outside India, it is pure subscription. In India, it is a mix of primarily advertising and subscription. Overall, most of our revenue is subscription. Our fee is Rs. 99 a month in India but we will revise this moving forward.

One of YuppTV’s key offering is Live TV? Is it enough to generate revenues in India?

We have Live TV, catch-up on Live TV then there is a TV show section where you can binge watch. We also have a movie section. Consumption is divided between live and catch-up.

Is acquiring content rights a big challenge given that broadcasters have their own platform?

Yes, but we have a decent number of broadcasters on our platform apart Star which wanted to go directly to the consumer with Hotstar. But most of them are on our platform. A lot of smaller OTT players have realised that they want to work by doing both direct to consumer and also by working with aggregators like YuppTV and Jio. Going forward, in the long term, the consumer wants one single interface.

It is painful for a consumer to have 10 downloaded apps. In the short term, you will see a lot of direct to consumer OTT plays but now they are also looking at aggregators. Consumers want one platform to pay.

India has broadcasters with their own OTT service. Then you have the likes of Netflix and Amazon. Where does YuppTV see itself in this scenario?

We are very focussed on the broadcaster aggregation model. Original content in regional and the South is also a focus area.

Do you work with broadcasters on a revenue sharing basis?

The deal depends on the network. There are different models. Some could be flat fee while some could be minimum guarantee and some could be revenue sharing. It is very complicated and depends on the network. These are multiyear deals that are in place.

Is YuppTV’s consumption happening more in the Metros?

For now, it is the Metros. But with regional content to come there will be more consumption from the tier 2 towns and cities.

Could you talk about YuppTV’s plans to create original content?

We have committed 12 shows. We focus in-depth in creating regional content. An episode is generally 20-22 minutes in length. This is a small piece of our content over our aggregation model. We have started with two to three shows. Shows will launch on a month to month basis.

Why did you start with Telugu?

We are doing Tamil, Telugu, and Malayalam. Since a lot of our international footprint comes from the South Indian diaspora, therefore, it made sense to focus here. There are a lot of players creating content in Hindi but on the regional side, there are very few. So we thought that we could focus on this area. In terms of genres, we look at rom-com, thrillers, young generation centric content.

Is measurement a challenge when it comes to working with advertisers in India?

No! It is accurate. It is not like broadcast. In the digital world, every single second of watch time is measured. It gives exact metrics for advertisers. Everybody uses the same CPM model like how many impressions. Everybody including Google has the same way to measure.

How has 4G and the launch of Jio helped digital video consumption in the country?

There has been a phenomenal multifold increase in digital video consumption that has happened. It has made things commercially viable and pushes networks to increase their broadband. It is a great move across the board. The decrease in broadband prices, increase in speeds will really push OTT video in a much faster way. The internet is going to be the future for consuming TV content. It could be on mobile, smartphones or on the Smart TV, Connected TV set. Abroad Netflix’s consumption mainly happens on TV not the PC.

We are seeing players making moves to prepare for a changing environment. Disney acquired 21st Century Fox. Dish Network has Sling.

In India, OTT is still at an early stage in terms of the right business model. What will be the right business model?

It will be a freemium model. The majority will be advertising but subscription will grow in the coming two years. Almost 70% of revenue will come from advertising after two years.

Do you see a shakeout in the OTT space?

There will be a consolidation for sure. There will also be content providers realising that they need to do both direct to consumer model and the aggregation model. Clarity will happen very soon. Now a lot of players have backed out of doing OTT.

Earlier every broadcaster and every small, medium production house wanted to do it. But they realised that consumers will not watch it that way. So they are partnering with aggregators besides doing a direct to consumer model.

OTT platforms are not TV channels. They are the same as Tata Sky. People on OTT want all the content in one place like a DTH or cable TV subscriber.

What is the big challenge going to be as you expand your reach?

I think that it is a challenge to replicate the scale at which the big boys play. It is going to be a very capital intensive business. It is going to be a content-centric game and this is going to be a challenge. I don’t think today a small player can come in and do OTT. The barriers are very, very high now and we have to be prepared to stay ahead.

How prepared is YuppTV for the challenge ahead?

The leadership that we have established whether it is regional or international is important. You have to innovate on the technology front. Having original content so that there is no dependency is very critical.

Outside India which are your main markets?

The key markets are US, UK, Europe, Australia, New Zealand, Canada, and the Middle East. Our focus is on South Asians.

What is the content acquisition strategy for services like YuppFlix?

This is targeted for movies on demand and any TV shows that are binge-watched. Originals that we create are also a part of it. It is primarily focussed outside India. After a couple of months, we will start acquiring rights for India as well.

Could you talk about YuppTV Bazaar and the progress that it has made so far?

We are pushing it and marketing it as we go forward. It is a curation of YouTube players on our platform.

How are you growing relationships with smartphone manufacturers like Samsung, LG?

We have pre-installed apps on their devices. It is easy for a consumer to discover us. With Vodafone, it is a B2B model.