Effective pricing strategies for OTT - Balancing free, AVOD, paid tiers

OTT platforms are adapting to meet consumer demands by adjusting their pricing models. To attract and retain subscribers, OTT platforms are employing pricing models that balance accessibility, value, and flexibility. Tiered pricing, from basic ad-supported plans to premium ad-free experiences, allows platforms to cater to various income groups and viewing preferences. Offering bundles and family plans enhances perceived value, while periodic promotions and annual discounts foster long-term engagement.

In this two-part report, Adgully delves into the current state of the OTT industry in India, the growth trajectory that it is taking, regulatory issues, pricing strategies, evolving business models, viewership, and much more.

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Effective Pricing Strategies for OTT Platforms

Targeted pricing for local markets: Janaki Amrite, Associate Vice President, Pocket Aces, highlights how global OTT platforms are adapting to India’s price-sensitive market by introducing more affordable, mobile-only plans. “Platforms are finding success with balancing free, ad-supported, and paid subscription tiers,” she says, adding, “This freemium model is tailored for the Indian market, where accessibility is key.”

Rajat Agrawal, COO, Ultra Media and Entertainment Group, adds here that Freemium models, tiered plans, and discounted annual subscriptions allow flexibility. He, too, feels that catering to regional and income-based demographics through targeted pricing, and options based on concurrent logins or ad-free experiences can appeal to a wider audience.

Affordability as a strategic advantage: Tanush Handa, Manager - Public Policy, Ardent Co, emphasizes on the importance of affordability in India’s OTT landscape, where adjustments have been carefully aligned with consumer expectations. “In a price-sensitive market like India, affordability is integral to driving subscriber acquisition and retention,” Handa explains. Citing JioCinema’s Premium plan at Rs 29 and Netflix India’s reduction of its basic plan, Handa sees these moves as strategic adaptations to consumer needs. “These adjustments highlight a landscape where affordability and flexibility are paramount to consumer decision-making,” he adds.

Value-driven offering: According to AV Anoop, Film Producer and Managing Director of AVA Group of Companies, “Pricing should be value-driven, reflecting the convenience offered by OTT services. Given the cost of DTH services, platforms could justifiably charge an additional 20-25% for the enhanced experience.”

Consistency is key: Saurabh Srivastava, COO - Digital Business, Shemaroo Entertainment Limited, says, “Shifting between AVOD (ad-supported) and SVOD (subscription) models risks disappointing paying users. For lasting loyalty, platforms should maintain a steady content mix, with clear incentives to convert users from free to premium. Value matters more than being the cheapest.”

Support conversion of free users: Tanush Handa, Manager, Public Policy, Ardent Co, notes, “India’s video streaming audience has surged, but only a fraction pays for subscriptions, signaling a need to combine affordability with perceived value. Freemium models, with ad-supported free access alongside premium tiers, lower entry barriers and support conversion of free users.”

With competitive pricing and regional content, OTT platforms can enhance their reach and appeal. Mayur Joshi, Associate Account Director, BC Web Wise, shares the following key strategies:

Subscription Video on Demand (SVOD): This model, where users pay for unlimited access, remains popular. Platforms like Netflix and Disney+ employ tiered pricing to meet varied user needs.
Freemium Models: Ad-supported free options alongside premium versions allow users to experience the platform before committing, aiding conversion.
Hybrid Pricing Models: Combining subscription and advertising (AVOD) or transactional video (TVOD) streams diversifies revenue. Hulu exemplifies this with its ad-supported and ad-free plans.
Regional Content Pricing: Pricing strategies that emphasize regional content, as seen with Zee5 and SonyLIV, resonate with local audiences and boost subscriber growth.
Bundling Services: Bundling multiple services, like Disney+ with Hulu and ESPN+, provides better value and encourages subscriptions across platforms.

According to Pocket Aces’ Janaki Amrite, “In a competitive OTT landscape, regional content is a differentiator. Platforms must adopt flexible pricing models to cater to local tastes. Telco bundles, providing premium content alongside data packs, also broaden reach across diverse demographics.”

Regional Content: A Game Changer in Indian Entertainment

One of the most significant trends in the OTT content space is the growing appeal of regional content. Increased internet penetration, particularly in non-metro areas, has enabled a broader audience to access culturally relevant stories, sparking a shift in viewer preferences across India. OTT platforms are responding by investing heavily in regional content, catering to diverse linguistic and cultural preferences, and exploring new audience segments previously underserved by mainstream entertainment.

Parth Arora, Co-Founder & COO, The Salt Inc., says, “There are different factors that contribute to the popularity of regional content on OTT platforms. The increasing appetite for vernacular content plays a crucial role, as people connect with stories that reflect their own experiences and backgrounds. The growth of internet and mobile devices in these regions has led to widespread OTT adoption, expanding the viewer base. Platforms now focus on creating content for specific regions, offering subtitles, and dubbing to reach diverse audiences. This not only broadens the viewer base but also enhances engagement by presenting culturally relevant stories.”

Highlighting the importance of authenticity in regional storytelling, Ritesh Bhatnagar, Managing Director, Green Giraffe, says, “India’s rich linguistic diversity allows OTT platforms to tap into a wide audience by offering content in local languages, enabling people to enjoy shows and movies in their mother tongue. The advent of affordable smartphones and data plans has transformed consumption patterns, with viewers binge-watching regional content that resonates with their own cultures and narratives. Authentic storytelling, collaborations with local talent, and targeted regional marketing strategies are crucial as these platforms recognize the vast potential of regional markets.”

Sharing his insights on the evolution of regional content in the OTT landscape, Shemaroo’s Saurabh Srivastava says, “Significant investment and effort have gone into creating a roughly 130-million OTT subscription market. We estimate that almost half of the original content in 2024 will be created in non-Hindi vernacular languages, thus fostering local talent and offering differentiation. To scale further, catering to content in languages native to consumers will be essential.”

Film producer Anand Pandit reflects on the shift towards regional content as a response to changing viewer demands, saying, “The tide began to turn with the success of the ‘Baahubali’ franchise, and the pandemic was a game-changer in altering viewing patterns. Indian cinema is now truly diverse, with various industries synergizing across regions. Our audiences are increasingly drawn to nuanced stories rooted in regional milieus because they are unique, fresh, and relatable. OTT platforms have made regional content more accessible, with dedicated platforms for languages like Bengali, Tamil, Telugu, Marathi, and more. Subtitling and dubbing have also played a major role in popularizing regional narratives.”

Mayur Joshi of BC Web Wise adds here, “Viewers today look for content that reflects their language, customs, and traditions. OTT platforms are responding by investing in original regional content, enhancing accessibility through localized marketing, and expanding language offerings to serve diverse audiences. The rise of regional content also owes a lot to word-of-mouth, as audiences trust recommendations from friends and family, reinforcing the popularity of regional stories on these platforms.”

Highlighting the technological shift in content discovery Rajat Agrawal of Ultra Media and Entertainment Group, points out, “Cultural relevance and increased digital penetration, alongside platforms’ dedicated regional sections and language-specific originals, have helped attract regional audiences. Algorithms are personalized to recommend regionally relevant content, while some platforms even offer an ad-free experience, ensuring that audiences can enjoy uninterrupted viewing.”

Janaki Amrite of Pocket Aces emphasizes on the shift in viewer preferences and the success of multilingual content, stating, “The traditional boundaries between regional and national content are rapidly fading, marking a new era for Indian storytelling. Content now transcends language barriers with subtitles and dubbed versions, enabling audiences to consume content in more than one language. Major stars working across languages also contribute to the nationwide appeal of regional content. Many platforms now produce content in a minimum of eight languages, demonstrating their commitment to reaching diverse audiences across the country.”

AV Anoop highlights the broader scope of regional content on OTT, saying, “It’s not only TV shows and films that are gaining popularity, but also series centered on state-specific stories. Initially, OTT focused on fresh faces, but now well-known actors are joining the regional content wave, reflecting the increasing demand. Platforms are not only sourcing content from regional production houses but also adapting by creating dedicated sections for regional content, enhancing its visibility.”