 Ladies and gentlemen, with that we are moving forward towards our fireside chat where we will talk about 2020 year that was in this chat we have with us Mr. Gaurav Gandhi, director and country general manager Amazon Prime Video India. And sharing this session is Mr. Novel Ahuja co-founder and director exchange for media group. A very warm welcome to you gentlemen. Mr. Ahuja I'd leave the screen to take forward. Thank you. Thank you. Thank you, Kyati Gaurav. Welcome to the session and thank you for joining us today. I hope you and everybody at home is doing well. Let me start by, you know, talking about what's happening around us before we get into the finer points of the OTT business with Gaurav here. You know, over the last one week I've been asked a few times, why are we doing this event, you know, is it necessary to curate something at a time like this why not postpone it and we had a discussion. I had a discussion with all my colleagues. We also spoke with some of our partners. These are not easy choices to make. But we finally decided that curtailing whatever little economic activity that's happening around us, especially in the media advertising industry is going to be counterproductive. Times are difficult. A lot of our own colleagues, their direct families, friends have been suffering. For me, my father is unwell in Delhi. I've had lots of friends who have lost family members. At times like these when there is so much gloom and doom around, not organizing events is in some ways not going to, you know, change anything, especially if we are not coming in the way of any essential services working, or we are not kind of adding, taking away bandwidth from, you know, what the government or our COVID warriors are trying to do. And in line with that, with that thinking, what we've also done is today's evening ceremony, which is the exchange from media OTT play awards has been toned down significantly and we'll just do a metal announcement and there'll be no celebrations. So as I said, not an easy choice to make, but we decided with going ahead with, you know, whatever economic activity we indulge in and, you know, hopefully things will start getting better as the country sees the peak of COVID cases behind us. With that out of the way, Gaurav, thank you for joining us. It is a very momentous year for the OTT industry. But before I get into business, tell us how you're coping up, how are your colleagues at Amazon coping up with the pandemic and, you know, as a leader, how do you keep strength and give strength to your colleagues every day? Thank you for having me now. Well, it's pleasure to be here talking to everyone. It is a difficult time for everyone and, you know, you talked about it. And it's no different for us. You know, everybody here is impacted, you know, you can't find anybody around who's not impacted one way or the other. So at times like this, people and their safety and the family safety comes first for anything else. And our big focus is that and the focus of the company also is on making sure it's pretty safe and healthy and what we can do for ourselves and the people around us. So that remains like the number one area of focus for everybody. And of course, given that we continue to do our job of trying to get an attainment to people, you know, safety and confines of their home as much as possible. And I think we've been, you know, given the difficult times industry has been overall. Everybody's come together to see what best we can do with that and I'm glad that we played our part in that. Let me dive into our session today, which is about the rise of OTT and what the future holds for us. Before I ask you a few questions, let me put some facts on the table to create a sort of background and perspective to our colleagues from the industry who are watching. Bach's report, recent report said India now has some 210 million households with television sets, which roughly means that five people per household, roughly a billion people are watching or have access to television content. Now that feat, as we all know, has been achieved in almost 30 years of private satellite television in India. Television industry, pay TV revenues are expected to touch almost $12 billion by 2025, which is not far just four years away. On the other hand, OTT is estimated to have almost some reports say OTT is estimated to have almost 500 million subscribers by 2023, which is just around the corner, just 18 months away, and also expected to have almost $5 billion revenue. The current OTT market size of around $1.5 billion includes obviously both advertising and subscription revenues, with a larger share almost two thirds coming from advertising and rest coming from subscription. The point here is what TV managed in almost 30 years, OTT will end up covering half of that journey in just a, you know, one third under one third of time period, if you assume that you know the real growth of OTT in India started a decade back roughly 10 years. Now that is obviously having a profound impact on consumers, consumer habit, content production, the entire ecosystem of OTT businesses in India. Let me start by asking you, Gaurav, you've seen both sides of the journey, you've been a television executive for many years before you launched Voot for Viacom and then jumped into Amazon. And you've also seen the insights of how television companies have worked. In your assessment, how's been the journey from being a TV executive to now an OTT company leader from a view of one, the content piece that you always looked at and second the business model of both of these companies, how they work. Yeah, thanks. It's a big question and has many strands to it. So I'll try and answer that. I think it's fair to say that the OTT segment or streaming segment in India has grown exponentially over the last, you know, five or six years or seven years. And before I get to TV, there are some tailwinds that the category has seen, which has led to this growth and I think some of them are going to continue. So whether it was the fact that, and Kanchana was talking about it in the previous segment that I joined, she talked about the fact that OTT gets to smaller town cities rule very easily on distribution. And I think that's a very critical difference between the two. The fact that there was a physical distribution needed compared to your running on a backbone of telecom and wireless infra. So that one of the biggest tailwinds obviously was with the growth of broadband and affordable data as well as connectivity. And the other question you talked about was 210 million homes and interesting part of that is about 95% of that homes are remain single TV. So here you have a ubiquitous, you know, sort of device which becomes TV for everybody in the house. And therefore, you suddenly have hundreds of millions on back of that data available to access content. And then the third part of that is naturally about content availability. And another interesting part of that was the early parts of the growth of the journey came from, you know, a lot of free content available easily, whether it was YouTube or broadcast or putting the content away and people get on the habit of it. And then came the premium content where customers could actually directly pay and that segment grew with affordability growing. So in many ways, the tailwind of this sector has been unique and that continues to grow. But I want to just go back to your question on broadcast a little bit before we come back to streaming and how that that will sort of see over the next few years. I think the broadcast business in 30 years done a lot. So first of all, let's like we think say 30 years but you know that industry 210 million has achieved a lot. That said, it has, it has its commercial model, the way it is, it is highly dependent on advertising. Yeah, it has challenges on the subscription revenue side it has had over the years. And because it's dependent so much on advertising, it sort of operates on the currency of ratings, which itself means that you have to sort of serve the center of plate lowest common denominator first, and then build segments on top, and the largest sort of revenue will go to the one which serves the maximum size of the plate. So to say, now that makes it that everybody is chasing just that singular kind of eyeball to be able to make a difference and make a revenue model. So in many ways, all broadcasters have the same revenue model. It's largely linked to advertising, somewhat linked to subscription if at all, but nobody subscriptions queued only or could not. By the way, many TV companies tried the slicing model but it never worked because of high distribution costs. Exactly. And therefore, if you were dependent on that you had to then therefore, you know, change your models back to saying, how can I work within this confine and therefore it led to the kind of content and the kind of shows and the episodic like the kind of episodic formats and so on and nothing wrong with it. It's just that it is a function of the commercial model. Now, I'll give you an analogy to it when you come to streaming. So there was segmentation so to say it was not possible at all. And we all know that even in advertising, the more sharper you can get to segment to a customer set and so on, the more you can, you know, get to besides the size and scale of audience, you can get to higher CPMs or higher rates. Now, when it came to streaming, you certainly could segment. You could say this is for X and this is for Y. Much like you would say in the multiplexes, I'm only going to make a movie for 100 seats and one screen compared to 1000 seats screen and single screen where I had to therefore make every movie combination of many genres while segmented cinema can come up because multiplexes were there now. In many ways streaming can do that. And that's the difference in the model. The earlier versions of streaming said hey, but there's no scale here it's only for, you know, select Metro audiences but you know, interestingly, you know your question. One question from the, from somebody on the audience was about, does it reach into the country, I can tell you prime video is watched in over 4300 towns and cities in the country. You know, and we and we are a service behind a paywall. So, so I think the, there is scale in streaming, there is the business model of segmentation and streaming. And one should sort of not confuse streaming always with streaming only content. The fact is this, the pipes of broadband and the services on streaming can provide some originals they provide TV content available, you know, to the customers, the same soaps and TV shows, they provide news. They also provide sports and they also provide movies. Today they provide, you know, almost as much if not larger reach for many films, you know, that's the article business can provide. So I think that's the big difference and I see over a longer term it's more and and then or but streaming has a very big headroom to grow and and in a few years you'll be as many customers actually streaming as watching TV. Absolutely. I'll come back to the, you know, TV versus streaming debate a little later in our discussion. Let me jump on to, you know, what's been happening around us over the last 12 months, especially with regards to the movie business, unfortunately cinema halls have to shut down and the sort of impact of that has been content consumption movie content consumption on TV platforms as skyrocketed. And that's completely also changed the dynamics of the movie, you know, business trades, so to say, I recall it was early 2000 and Z launched this Friday premiere show then they started acquiring television movie content, satellite movie content in bucketfuls and suddenly a title pricing for movies went up skyrocketed and then Sony TV got into the game, they acquired the entire Yash Raj library, gradually Star got in, they tied up with many large producers and today OTT platforms are doing exactly what, you know, television did 15-20 years back. One of the reports I was reading said that subscription video revenues on OTT last year surpassed cinema hall ticket revenues naturally because a lot of cinema halls were shut. Now, the corollary of this Gaurav is that OTT platforms have obviously spent a lot of money on acquiring movie content. It has also created a kind of inequality in the sense that only big ticket titles get sold well and the other titles kind of, you know, find it difficult to get buyers. A lot of OTT platforms have also curated their SWAT, such strategy around big ticket releases, for example, Z is going to release Radhe on Z5 before it hits cinemas. Tell us, as laypeople in this industry, how do the economics of movie content acquisition work, how do you ever sit down and do a PNL where you have to write 300 crores plus on the cost side and you know, revenues are, you know, sort of kind of fuzzy, I would say, for lack of a better term. Before we get to a comment on the economics, I think it's important to understand the role streaming is playing and I would say it's, you know, simply put you said it's similar to what broadcasts are doing, you know, a few years back, but I would say it's really different in my view. I'll tell you why. Today, you know, in a country which makes between 1500-2000 films and has, you know, all of us are film fans and, you know, we only have 9000 screens. Per capita per million screen rate is amongst the lowest in growing markets, so it's 8 per million or something like that compared to 100 plus for US and, you know, 5x on China. I think the problem with that is that the reach that our biggest films are getting today in theatrical, in the percentage audience would be like the biggest film would get 2% people to watch in theaters. Most films will actually have, you know, in this earliest window between 0.1 to 0.5% of audience watching it. The thing what streaming is able to do is provide augment that reach significantly in the very early window and therefore generate value for both customers who may not choose to go to theater for every movie. We may necessarily go for events, we went filmless and some films also generate value for the producers who are able to now actually make additional revenue in the earlier window. And I think the third important piece is it is able to seed demand for which was earlier non-existent. Let me give you an example. And I'll come to the reach points more in more detail. When we did direct to service film last year when we actually, you know, when there was a lockdown and we worked with creators to get these movies on, we did movies in five languages. One of the interesting thing we observed novel was that our Tamil Telugu, Malayalam, Kannada cinema movies actually got about 50% of its audience outside their home state. What that really meant was that there was now a customer base ready to watch these films in their local language with subtitles or whatever else options were available on localization and get that reach. If you look at a difference now with that versus what was happening earlier. In a theatrical world, I will get limited distribution of these films outside the home state because obviously demand is a physical theater ever came to that test. Even in TV world, the reality was those packs would be the local language packs, original language packs sold to customers who want that language. So you will buy the Tamil language on a DTH or on cable and you only get the movies there. Here suddenly, customers who are able to actually, who otherwise watch Hindi or Bengali or Marathi are able to watch Malayalam language films. A great example is say, I mean, last year, a lot of these so right through with a great example. This is certainly a great example. You know, so, so I think that's a very big thing for creators for customers, which is unique. Similarly, outside the country. Again, a question which was coming. I think I again cost got the back a half off country and slides. We talked about exporting content. These movies internationally would get released only in about 1520 countries at best. And you know, I've been in this industry for 20 years and we've seen that number has grown from 10 to 20. It's not going for 10 to 15 right. And the reality is streaming is able to get those funds to available in 200 plus countries, but actually watched in 170, 180 countries in the initial period itself. So I think there is a there's a large role that will reach a distribution besides the economics that you want is able to play and change in the game. I'll give you a reverse example. You know, we're getting parasite last year. You know, for example, in India, a Korean language film, watch watched, you know, dubbed in Hindi by so many customers locally here. So, so I think a bunch of these things show you the part of economics of it. Your question I think that economics. It's a very simple thing. There has to be somebody for whom it makes sense to sell the film at a price and somebody you make sense to buy the film at the price. And everybody has a different model. Some people have a model which is, hey, let me put this on, you know, first on paid and free. Somebody has a model that you know, I have a, you know, a telecom business which will link to that somebody has different models. So I think you can debate about the model. I think what's going to happen going forward is we've been seeing for the last four years we're working with partners to get these films between four to eight weeks of theatrical. In any case, it made sense suddenly. Because theaters were shut to, you know, make it direct to service. Now, what that does is suddenly did the reach that people have got with this movie being watched in 4,000 cities and towns in the country. Suddenly, creators are able to say that, hey, I can actually get my audience far wider than even a theatrical release could get in the beginning. And I'm not here to say that streaming will replace theatrical business. I'm just saying that in many ways, what it will do is it is augmenting that reach and some films will go dead to streaming. Some films will come early, some films will go later window and so on. So it just creates an alternate vehicle for creators and for customers. Yeah, I think very interesting. In fact, you mentioned Risham. I think Risham is a fit case where a movie available OTT can go in the same language on TV, right? Of course, the Hindi one will be out. It will take maybe two or three years. But having seen the movie, I think it's a brilliant case for a Hindi TV channel to pick it up and just run it as it is on a Hindi TV channel. It will still have some takers. I don't know how the economics pricing will work, but fantastic content. We've seen this in so many films that are getting national reach and able to get customers across the country to watch it and enjoy it. And that's really the interesting part of how this dynamics is changing. Yes, let me come to the content piece, the non-movie, non-cricut content piece sort of. And a lot of various kinds of models have been tried globally and in India from the days of platforms like Hulu to Amazon and Netflix, Disney Plus to the Indian OTTs, the likes of Woot and MX players of the world. Naturally, content is the significant part apart from technology that OTT players need to invest in. I last read some 700 million odd dollars annually is being spent by OTT players, Indian companies in content, both acquisition as well as fresh content. And we've seen many over the last five, six years if we see the growth of OTT. Lots of various models have been tried when it comes to investment in fresh content in India. And a large number of OTT players are also owned by TV companies who have a certain kind of appetite and scale. If you want to do crystal ball gazing and tell us how that content piece will play out. And I asked that question with two legs. One is I think a large number of TV companies are now settled down to a kind of a basic level of fresh content they're doing. There was a time two, three years back when you had new show launches happening every week, two, three new show launches. Most of them are now doing a basic level show curation and the rest of the library is mostly TV content sort of driven. And second part is the mix of S-word versus A-word in their library or in their strategy. Like you mentioned, TV for many years was dependent upon advertising revenue. Even today you see a large number of OTT players in India, especially if you leave out the Amazon Netflix of the world are still dependent a lot on advertising. So given that and how that is likely to continue to happen, what is the impact it is likely to have on fresh content curation by Indian OTT players? Yeah, I think the very interesting part for us is that in our television world, we never had a premium pay channel. So if you look at the US, you had HBO or you had Showtime for many, many years and US was used to seeing premium television on TV truly. In our case, we were never used to that and over the last three, four years with a few streaming services like ours and a few others, trying to build out high quality cinematic value originals which are of global standard really. A customer that got used to that and I'm not saying that's the only thing customers watch. We customers watch all kinds and that's the beauty of this of this space. So you can have the, you don't necessarily have to have a super expensive, high cost, big star series always to make it work. You can have a really authentic story and that will work as well. And I think what we have seen as an example is that in all of this, it has to be distinct, authentic and stories of an intentional soil, which really works. And I think the more genuine you are and you work with key creators who are passionate about the projects, and not always choose the right characters. And we have many examples of Jyadi Bala Alavath as Hathi Ram or say Manoj Bajpayal, who's a big star anyways, and Shri Khan or Ali Fazal as Bundo Bhaiya or like Pankas Tripati as Kaleen Bhaiya. So many of these, like some of them are stars like Manoj and some of them were great actors and now even bigger stars. So I think what happens with this is that if you do, we have learned with and very early days, you're learning this and creators are learning alongside and we're all learning the art of the storytelling in a very different format. And many of these are creators who made fantastic cinema, but they made cinema for two and a half hours. These are 10 episodes, multiple seasons. So the industry is fundamentally learning a new art form. And the interesting part of this is you can make a show for Prime Video or for Netflix or Hot Star or Wood for anybody else. And the learning you get as a creator can be used for next shows for everybody else, right? So in many ways, the ecosystem that's developing for everybody around us, not just for a particular streamer. And that ecosystem of development novel of this learning is going to help everybody in the content creation business. Second part about, you talked about crystal ball gazing. I think the thing is the customer taste preferences define everything. As customers get used to watching stories like this, authentic stories, whether they can be, you know, Mirzapur, it can be Adal Lok or Panchayat, they are family man. They are used to watching these stories. They want more of this. And therefore, I think as more and more customers and deeper and deeper in the country watch these, their expectations change from everything streaming is giving them. So the next show from anyone is compared to the last show they watched. That's right. And for global services like ours, which have global shows, which are available here as well. And when somebody watches, you know, Jack Ryan or the boys here, and the customer also watches the family man Mirzapur, you have to keep that standard. But you have to be rooted in your storytelling. And the third thing I would say is that after the ecosystem development and the changing preference of customers is the fact that Indian stories are beginning to travel around the world. One in five customers in general of our originals today are outside of the country. So if you look at long term, what I think will happen is the creative ecosystem will, more and more people will learn the art of creating these high quality shows and it'll become the new standard. You will have customers expecting that across the board, and you will see changes coming in in many forms, including on television, the business model permitting. And finally, I think the Indian story will actually go around the world in a much, much bigger way. You know, again, I just like mentioned about some of them, you know, being nominated for awards and many awards around the world. I think the customer appreciation of many more cities goes even wider. And I think that we just getting started there now. So this is like, it's the best time to be a creator and a best time for being a customer because so much amazing content is coming from India. Absolutely. In fact, you know, Bollywood took India to the globe and now OTTs are spreading the next wave. Thank you, Gaurav, for such a candid and insightful conversation. I see the speakers from the next session are already on board before we go. One last question, very important question to all our, for all our viewers, you announced Mirzapur 3 will be out in 2022. Is it on track? I'm not going to steal the thunder by announcing it here, or, you know, what the dates are. But what I, or the, and I think the interesting part for us is that we have so much amazing content, including, you know, our next show last hour coming this weekend. So customers should stay tuned for that and we have many more coming soon. Fantastic. Fantastic. With that, thank you, Gaurav. Thank you for joining us. God bless you and hope you and your family are staying safe. And in these difficult times for the country as well as for the world. So this is like Amazon or the, you know, breaths of fresh air, you can tune in every evening. We are, I mean, we are doing it regularly. I'm sure a lot of you are already doing it. So look forward to more interesting, engaging content. Back to you, Khyati. Thank you so much for having me. It's a pleasure. Thank you. Stay safe. Thank you. Thank you so much, Mr. Gandhi and Mr. Mujia.