Amazon’s Prime Video: Redefining OTT Monetization in India

OTT platforms in India are facing a dilemma: should they raise subscription fees or introduce ads to generate revenue? Amazon Prime Video has decided to go the ad route, marking a significant moment for both the streaming giant and the Indian over-the-top (OTT) media landscape.

The shift towards ads is driven by the economic realities of the Indian market. With OTT subscriptions priced at just $7 to $10 a year, much lower than in other countries, the current model is simply unsustainable. Uday Sodhi, former head of SONY LIV, believes that platforms now have to choose between increasing fees or embracing ad-supported models.

To accommodate different viewer preferences, platforms could adopt a tiered system where those who don’t mind ads pay a discounted rate, while viewers who want an ad-free experience pay full price. With over 600 million Indians streaming video on mobile but only about 100 million subscribing, the move towards ads seems like a logical progression.

Industry experts like Soumya Mukherjee, COO of Hoichoi, see Amazon’s decision as part of a broader industry trend rather than a radical shift. Hybrid subscription-ad models are common globally, and Amazon Prime Video, with its focus on a larger ecosystem beyond video streaming, is uniquely positioned to take this step.

From an advertising perspective, Meher Patel, founder of Amazon Ads partner agency Hector, highlights the advantage of Amazon Prime Video’s deep data resources and advanced targeting capabilities. This precision targeting allows advertisers to reach their desired audience more effectively than traditional broadcast models.

As platforms like Amazon Prime Video explore new monetization strategies, the focus remains on maintaining a high-quality user experience. Sameer Nair, Managing Director of Applause Entertainment, emphasizes the importance of balancing ad revenue with content quality. The evolution towards ad-supported streaming is seen as a natural progression in India’s media landscape, with the key challenge being to command competitive ad rates while keeping user experience a top priority.

Overall, the introduction of ads on Amazon Prime Video is not just a business move but a reflection of the changing dynamics of the OTT industry in India. As platforms adapt to new monetization models, the goal is to find a balance that benefits both viewers and advertisers in the long run.