Decoding the X factor: Like most OTTs, MX Player is yet to break even

Karan Bedi looks weak. He is recovering from a bad bout of Covid and holds his head several times during an online interview. But that doesn’t stop the chief executive officer of MX Media from talking emphatically about how MX Player, a free over-the-top (OTT) platform, is different from a free-to-air (FTA) channel.

“We are a large FTA, but the problem is, in India, a free channel is only about mass content,” says Bedi. He points to ABC, CBS or NBC in the US. These are large (and free) networks that host big sporting events and shows like Friends, while premium programming, such as Game of Thrones, is on pay channels such as HBO.

“In other countries, all the big (Indian) general entertainment channels, including Star Plus, would have been an FTA. But because of the way the whole terrestrial versus cable thing played out, that didn’t happen (here),” he says.

This puts India’s second-largest OTT, after YouTube, in a strange position.

MX Player, which has delivered hits such as Lock Upp and Ashram, straddles several different markets. These could be the 250-odd million people watching Dangal TV or Star Utsav on DD Freedish or the 450 million watching anything from gardening to bhajans on YouTube.

“OTT has been the biggest disruption in mass entertainment in India in the past 30 years. Hundreds of millions of people had been left out of the entertainment ecosystem due to distribution constraints on television (TV). MX’s biggest achievement has been to bring high-scale mass entertainment to this population,” says Bedi.

Advertisers agree.

“The markets where FTA dominates, MX delivers the same reach and it is also well placed in the OTT space,” says Shrikant Shenoy, general manager, Lodestar UM — a media buying agency.

In 2021, advertisers spent more than Rs 4,000 crore trying to reach audiences on FTA and another Rs 9,000 crore trying to reach them on advertising-based video-on-demand (AVoD) brands, such as YouTube. That is a total of Rs 13,000 crore, and it is growing in double digits.

MX Player’s ability to reach this new market being created — as linear and digital worlds collapse into one another — is its first defining feature.

The second is its belief that not everything on OTT has to be about original content.

“The one statistic we track very actively is minutes per user. If we weed out new content, over the past two years beginning with the pandemic, the minutes per user are (still) up fourfold. What that tells you is that demand is insatiable. Large amounts of content are not leveraged. We are still 20-25 per cent of where demand is,” he says.

More than 65 per cent of the content consumed on MX Player is what it calls ‘owned and controlled’. This is originals plus programmes licensed for a long period, say eight to 10 years. The Outpost (American), Penthouse, and Snowdrop (South Korean) are among the dozens of shows and movies dubbed in Indian languages.

“We do not buy film premiere rights for hundreds of crores,” says Bedi.

What it does is, “look at analytics and data to decide on originals. For example, Campus Diaries was born from the insight that there is nothing relatable for younger people on AVoD”, says Bedi.

Note that people under 35 — one of the most desirable target groups for advertisers — form almost 90 per cent of MX Player’s audience. This focus on all types of content goes completely against the usual pressure Netflix or Disney+ Hotstar face on how much original content is being rolled out in a quarter.

That brings this to its third defining feature.

For the $470-billion Amazon, the video business is a way to sell more shoes and bags. For Disney, streaming is how it hopes to remain relevant for the stock market and consumers. So parentage has a huge impact on how a streaming brand thinks.

While MX has a subscription element, its bread, butter, and jam remains advertising. That is because it is part of the Rs 1,600-crore Times Internet, which, in turn, is part of the approximately Rs 10,000-crore Times Group, which is largely ad-oriented.

It bought MX Player in June 2018 from South Korea-based J2 Interactive for $140 million when it was just a video player. About half its 350 million users (then), or 175 million, were from India. For Times, which had missed the TV bus, this was the perfect entry point into entertainment video. In the past three years, it has managed to migrate a chunk of the users from the basic player to OTT.

Going by the Comscore data for January, of the 406 million unique visitors that Times Internet had, 160-odd million came from MX Player. The Rs 770-crore that Tencent invested in MX Player in 2019 was, arguably, one of the biggest infusions it has had recently.

Is it the most important asset in the Times Internet portfolio?

“No. Times Internet owns and operates five properties, each with over 100 million monthly users, of which MX Player is one of them,” says Satyan Gajwani, vice-chairman, Times Internet.

Where MX Player helps in is cross-pollinating growth and traffic across the whole Times Internet portfolio, which includes Gaana, Economic Times, and Times of India.

Like most OTTs, it is yet to break even. Unlike most, it doesn’t have the deep pockets of Disney ($67 billion in revenue) or YouTube’s parent Google ($258 billion in revenue).

This battle is about to get more interesting.