Smile everybody, the light at the end of the tunnel seems to be shining. Digital media it seems is finally paying off -- financially.
More than 227 million Indians watch a film, a TV show or listen to music on the mobile, computer, tablet or other devices. Digital ad spends are growing three times faster than the industry average. In 2012 advertisers spent Rs 2,100 crore reaching out to people while they are online. While pay revenues (the money you and I pay for ringtones etc) were higher at Rs 25,000 odd crore, a bulk of it goes to telecom companies. However the non-telco pay revenues are growing as subscription services such as Saavn and Gaana.com take off.
For very long the internet was the scourge of media firms. After years of pathetic revenues and piracy, how and why is the internet finally delivering? Because video consumption has taken off and because telcos are increasingly powerless in the whole digital entertainment game.
Take reason one. According to comScore data video consumption in India doubled to 3.7 billion videos a month, over the last two years. Another source puts India third in the world in watching videos online through a PC/laptop and fourth in watching them on the phone. This growth in video overcomes a big barrier to digital's growth in India — literacy and language. So advertisers are now paying far better rates than they did for plain clicks and leads.
Second, and more important is the declining power of the telecom firms. Typically telcos have kept 70-80 per cent of the money consumers paid for ringtones, caller tunes and other such things. The rest is split between the content producers (Sony, UTV etc) and aggregators (OnMobile, Hungama etc). Both had no choice but to lump it. So digital was always an addendum to their main offline revenues.
However as competition within content companies and aggregators increased both have been trying to improve margins. And one way of doing this is by bypassing the mobile operator and getting better revenues. Zenga TV for instance offers more than 100 channels such as Aaj Tak, DD News and others and is a profitable and ad-supported venture. Saavn and Gaana.com are becoming popular sites for downloading or streaming legal music for Indians.
Others such as Google’s YouTube offer a mix of both professionally and user generated content and split the ad revenues with the content companies.
Google claims that it gives the lion’s share of revenues to the content firms.
So there are various other ways of reaching the ad or pay revenues which were earlier completely controlled by the telecom operator because he controlled the user and the billing.
The building of this healthier digital ecosystem means that content is now being created or curated only for digital. For instance Humaramovie.com is a hot favourite with short film makers who want to upload their work. This is because unlike other such sites it has a panel of experts such as Imtiaz Ali, Anurag Kashyap and Anurag Basu who curate what goes online. At last count the website got more than 2.7 million views and was expected to break even in the next 18 months. About 30 per cent of its viewership comes from the mobile, a device where paying for content is an established thing.
This is a path the US market is treading too with interesting results. Earlier this year the US-based Netflix spent $100 million on a new season of House of Cards, which was then ‘aired’s online. This is happening in India too. Zenga for instance is now generating enough cash to commission its own shows meant only for the mobile and web. Humaramovie has started producing a film. So the aggregators are now becoming media firms in their own rights and discovering the gold in professionally generated content. .
This in turn means that for consumers, going online doesn't have to mean getting poor, error-riddled content.
Keep on smiling.
The writer is a media specialist and author. Follow her on twitter at http://twitter.com/vanitakohlik