Aha takes the Netflix way to reach out to subscribers from small towns

• After Netflix, another OTT platform is moving to an advertisement-based video-on-demand (AVOD) model.
• Regional OTT platform Aha announced that it would have ads on its platform and a no-ad subscription option.
• AVOD models are money churners for OTT players. According to the TMT Predictions 2022 report by Deloitte, AVOD is expected to garner more revenue than subscription-based video on demand (SVOD).

India is home to around 60 over-the-top platforms but most of them haven’t been able to make profit, as subscription revenue isn’t bringing them the revenue they desperately need. Netflix finally gave in and announced that it was now looking at ads on its platform.

Regional player Aha, which provides Telugu and Tamil content is the latest to switch to a hybrid model. This is a mix of advertisement-based video on demand (AVOD) and subscription-based video on demand (SVOD).

“All OTT platforms right now are burning a lot of cash in terms of both creating content and acquiring subscribers. Across India, there's only a certain amount of paid subscribers that you can bring onto the platform. So, at some point, everybody needs to walk towards profitability. The natural answer here is AVOD, which is where the consumer base is 10x or more than the subscription base that you have,” Vaasudev Koppineni, VP - content and strategy, Aha told Business Insider India.

Aha will have three options for consumers by October. There will be free content with ads, gold subscription and premium with high-definition content. Aha is also optimistic that it would be on the path to profitability after moving to a hybrid model.

“With our team expanding the non-subscription revenue into brand solutions, AVOD and other new initiatives, I think we are on our path towards profitability,” said Koppineni.

AVOD models are money churners for OTT players. According to the TMT Predictions 2022 report by Deloitte, India’s AVOD market will double from $1.1 billion in 2021 to $2.4 billion in 2026.

Rural consumers prefer affordable OTT plans

Having established a strong presence in the cities of Telangana and Andhra Pradesh, Aha wants to expand and go deeper into the country and that was one of the reasons behind the switch in business models.

“We wanted to reach out to the rural audience of AP, Telangana, where we were able to lower the entry-level pack. That's when we decided that it's time to launch inventory on our platform, take down the back price for our entry-level consumers, so that they can afford our premium-content viewing with ads,” Nitin Burman, head of non-subscription at Aha, told Business Insider India.

He said that rural India was a price-sensitive market.

Currently, Aha’s annual premium subscription plan is priced at ₹699. There’s a ₹399 basic annual package and the quarterly package is priced at ₹199. The prices will be revised in the festive months.

To make the most of its budget and pass on the benefits to consumers, Aha also focuses on creating original content, which Koppineni says is more viable for a streaming platform from a business perspective.

“Creating content or having your own IP makes more sense than acquiring content because today, with growth in the competition, everybody's fighting for the same piece of content, which actually leads to the costs going high. What was earlier capped at 40% recovery of a content piece from digital has now grown to 60%-70%. So acquisition has become more expensive,” said Koppineni.

Growth of regional

Born just before the beginning of the pandemic in March 2020, Aha currently has 10 million monthly active users (MAUs) and its app is installed by 30 million people. It has captured over 2 million paid subscribers and each of them share their passwords with 2-3 people – so around 8 million users access Aha content on an average.

According to a FICCI-EY report, the share of regional language consumption on OTT platforms will cross 50% by 2025 from the 30% share it held in 2019. FICCI-EY believes that regional consumption will surpass Hindi, but will settle at 45% of the pie.

“As per various reports, the next step for any national player to get consumers on board is from the regional audiences. And we have already captured urban markets and are in phase two of going to Tier II and III markets,” said Burman.

Aha is also aiming to become a super app of sorts for its regional audience by adding gaming onto its platforms.