When retail met media
What does the entry of non-media firms like Flipkart into video and media firms like Times Internet into transactions mean?
Last week Flipkart, an online retailer, launched a streaming video service. Backbenchers, its first original series that goes live this month will be hosted by filmmaker Farah Khan. She will be bantering with some of India’s top celebrities. Guneet Monga of Sikhya Entertainment comes on board as a creator and curator of short stories. More than half the content on Flipkart video will be from tierII and tier-iii towns. The idea is to drive internet users not familiar with online shopping to Flipkart, said a company spokesperson at the launch event.
The move is interesting for three reasons.
One, Flipkart that reaches 160 million people is majority owned by the $515 billion American retail giant Walmart Inc. On the other hand, another Us-based firm — the $233 billion Amazon, one of the largest online retailers in the world, began a video service in 2007 that eventually evolved into Amazon Prime Video. It has invested millions on original shows such as The Family Man or The Marvelous Mrs Maisel. Amazon Prime Video came to India in 2016. So two of the world’s largest online and offline retail firms have made significant streaming video forays into India.
Two, Flipkart’s video service comes soon after one from food aggregator
Zomato. Earlier in September, Zomato began offering 18 originals such as Food and You with Sanjeev Kapoor or Dude Where’s the Food with Jordindian, among others. Then there are the food shows it has licensed and Sneak Peek, a series on restaurants it launched in August last year. The originals will be available only in India, where Zomato operates in 500 cities. The rest of the videos can be streamed in all the 24 countries to the 70 million users it reaches. The idea is to drive penetration and get people to spend more time on Zomato. Last year Ola, a cab-sharing app, began offering Ola Play, an in-cab video service for a small extra charge.
Three, and there is irony in this, this wave of non-media companies getting into video comes at a time when media companies across the world are getting into all sorts of “transaction services.” These could be direct online retail or activities that helps direct traffic to sites where users spend money. This in turn generates a commission or “affiliate revenues.” For instance, Times Internet, one of the largest digital publishers in India, gets just over a third of its revenues from services that push affiliate revenues, such as Dineout, Etmoney or Gradeup.
Where would a video offering from Flipkart or Zomato sit in a market swimming with multi-million dollar shows?
There are more than 35 apps competing for the attention of around 600 million broadband users in the estimated ~8,000 crore online video market in India. Google’s Youtube is the largest, reaching over 265 million Indians every month with revenues of over ~2,000 crore in 2018. There is Hotstar from Disney, Voot from Viacom18 and Netflix among others.
These are regular media firms that make advertising or subscription revenues from serving licensed and original content. “We don’t want to be Netflix or Youtube. We are a vertical content creator, so our budgets are limited. The idea is to aid people in their dining-out or dining-in decisions. It is about transaction and search based video rather than a full movie,” says Durga Raghunath, senior vice-president, growth, Zomato.
However, globally, with the exception of Amazon, the record of nonmedia firms that try their hand at video is pretty dismal. Walmart, Mediamarkt, Carrefour, Sainsbury’s, among some of the world’s biggest retailers have tried to use video. “Most of these services were TVOD (transaction video-ondemand) focused and not particularly successful. Most closed after a few years,” says Tony Gunnarsson, principal analyst, PAY-TV and OTT Video at London-based research and consulting firm Ovum. Eventually, the contradiction between trying to become a creative firm trying to get audiences simply doesn’t sit well with the pressure of getting that video to generate so many million in sales.
The reverse is not yet as true. NDTV Convergence, NDTV’S successful digital arm took a serious shot at specialised retail in fashion but it hasn’t amounted to much. A bulk of Times Internet’s revenues, growth and profits comes from brands such as The Times of India or Gaana. However, affiliate revenues from a host of services are growing too.
Wait then for more experiments from media and non-media players before a pattern emerges.