Daybreak - Prime gets ads — the OTT plot twist (feat ex-Netflix marketing head Swati Mohan)

Episode Date: May 22, 2025

Nearly a decade ago, Hotstar, Netflix, and Amazon Prime entered the scene and positioned themselves as the anti-TV. No fixed showtimes. No endless ad breaks. No re-runs you had to sit through just because nothing else was on. For the first time, we were in control. TV became personal. It became on-demand. And best of all—it was ad-free. It felt like there was no going back.But now something has shifted. Subscriber growth is stalling, and that’s making streaming platforms nervous. Really nervous. Their answer? Bring back ads. Amazon Prime Video is the latest to jump into India’s ad-supported streaming game, also called ad supported video on demand or AVOD. And Netflix? It’s reportedly toying with the idea of a free, ad-supported tier here—just like it’s doing in a few other markets. In other words, OTT is starting to look a lot more like the very thing it was supposed to replaceHave we come full circle? Or is this just the natural evolution of an industry growing up?  Daybreak hosts Snigdha and Rahel speak to Swati Mohan, the former head of marketing at Netflix India, to find out Tune in. P.S The Ken’s podcast team is hiring! Here’s what we’re looking for.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.Listen to the latest episode of Two by Two here

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get an alert as soon as we release our first episode, please follow Intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Nearly a decade ago, Hot Star, Netflix and Amazon Prime entered the scene and they came in as the anti-TV.

No fixed showtimes, no endless ad breaks, no reruns you had to sit through just because nothing else. was on. You see, for the first time, we were in control. TV suddenly became personal. It became on demand. And best of all, it was ad-free. It really felt like there was no going back. For a few years, things went well. These streaming platforms managed to garner viewers in some of the farthest reaches of the country. We were flooded with a seemingly never-ending stream of quality content. Films, television shows, live spots. It was the average couch potatoes dream come true.

But now that shine is bearing off, something seems to have shifted. Subscriber growth is stalling and that is making streaming platforms nervous, really nervous. So what are they doing? Well, this may surprise you. They are bringing back the ads. After Disney Plus Hot Star, Amazon Prime Video is the latest to jump into India's ad-supported streaming game, which industry insiders call A-Wod or ad-supported video on demand. Turns out even Netflix is toying with the idea of introducing ad-supported tiers here in India,

just like it's doing in a few other markets. In other words, OTT is starting to look a lot more like the very thing it was supposed to replace. So what happened? Have we come full circle or is this just the natural evolution of an industry that is growing up? Well, to find out, Rahil and I spoke to Swati Mohan, the former head of marketing at Netflix India. Swati is a seasoned marketing and business leader with more than two decades of experience in media, entertainment, technology and consumer brands and has held top leadership positions at National Geographic Channel and Group. Today, as the streaming world pivots from subscriptions to ads, Swati joins us to unpack what that means. And I don't just mean for the industry, but also for all of us as viewers. Stay tuned.

Welcome to Daybreak, a business podcast from the Kempark. Ken. I'm your host, Nikha Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague Rahal Philipose and I will come to you with one business story that is worth understanding and worth your time. Today is Friday, the 23rd of May. Hi, Swati, welcome to daybreak. I think there are very few people better place to comment on this particular development than you. You were the head of marketing at Netflix, of course, right when it launched in India and through its golden years, the OTT on steroids face.

You've had, in many ways, ringside seats to India's OTT story. So when you hear the news of Amazon introducing ads, what was your initial reaction? Well, first of all, thanks for having me. A great topic. And of course, I've been a great fan of daybreak and the Ken. So, you know, really excited to be here.

The topic of pricing, tiering, A-Wod, S-Wod has always been sort of, you know, interesting and intriguing to me, and it remains so even after I've left that space. So to your question, my first reaction, essential, inevitable, you know, somewhere important that it happened, and an indication of, you know, a bunch of things really, right? At one level, it's a very bold step by Amazon Prime Video. You know, no consumer will, you know, instinctively say, oh, my God, all right, I'll pay more for the same thing that I was getting all this while.

But at the same time, so bold enough to say that, look, I've already evaluated the fact that I have to invest in content. I want to make sure that that quality of my content remains untouched. You all have loved it. You've also been continued subscribers. So guess what? There are two sets of people. I know a bunch of you are price sensitive. So I'm going to keep the price the same for you, but you're going to get some ads. And then there's another set of people saying, I don't want the ads. I'm absolutely okay to pay. So they've obviously evaluated that there are these two sets, and I am going to be able to cater to both,

a value-sensitive consumer as well as a price-sensitive consumer. The third part is, here, I'm opening my doors to a set of advertisers who actually I kind of know because of my Amazon business. And at the other end, there are advertisers who wanted to be part of the video game for so long. They've already experienced it on other platforms in some form or the other. and now this discerning audience who, you know, is binging all the time, etc. It's more of a series game really with, you know, S-Wod market specifically. They will be able to get a piece of that, not just in India, imagine in their 200 million plus base as well.

So I think all in all, they're doing a bunch of things. Depending who you speak to, you're going to get a different reaction. Got it. So, Adi, you know, you know, the next question. is to do with how it almost seems like we're going back to the times of television ads, right? Because when OTT platforms, you know, early on when they came into the picture, they came into the market, you know, it was almost like an antithesis to television, right? But now it seems like we're going back to the TV model.

So can you talk a little bit about the evolution of OTT that you've seen over the day? over the past decade almost and all the different phases of growth and what phase of growth are we in right now? Right. No, it's a great question, right? And again, you know, as I said, depends on who you ask, the reaction will be different. I think if I step back and look at the phases, I would say in a category that's been just about a decade old. Now, remember, a decade is not that long a period of time to say, hey, this is the only playbook that will work, right? Everyone's kind of, correcting themselves. It, you know, sort of lays a new correction and benchmark for the rest of the category to price and, you know, sort of sell, etc. So in this case, I would say, let's step back.

Let's go back into early years of OTT. There was, you know, a lot of ambition, positivity. There was this individuality of, you know, I can watch it on my mobile. I'm away from the SaaS, behoo of it all when it comes to the kind of content I'm able to watch. I'm able to partake in social conversations globally on, you know, these global series like a stranger things, etc. that are, you know, that are cult following, right? I'm part of that community. So there was that phase, right? High investment in content and marketing, but of course, remember, content takes a few years to really come alive. Sometimes it takes up to years, right? Now, phase two was, you know, you mentioned the words steroids earlier, Rahil. So let's stick with that. And call it the

steroid phase, which was the phase of the pandemic. The people who were watching television, which at that time remember, was continuing to be this ever growing, it still is growing. Television industry now as a share of things might have declined in share, but overall, it was still the largest buy of media and entertainment was television. And those guys did not have anything else to watch. They were used to new content every day and they had no option. they were almost forced into this habit and behavior. And that created this sort of steroid-like behavior on the growth that everyone was experiencing. We had like a fast track of behavior change, which would have ideally taken a lot more number of years.

Right. It kind of got, there was a shortcut that sort of happened. You know, I hate to call the pandemic phase that. But it was definitely a, you know, a phase which forced a behavior of watching something connected to the internet or the wife. on your devices or in your home with your family, which had not happened before in India. It was kind of a phase that was driven more by circumstance than strategy, right? But it couldn't have come at a better time for OTTs.

Absolutely. And remember, people discovered content, right? It may have been six years old. But for them, it was new, right? They were discovering a lot of content that they hadn't seen, you know, dubbing strategies were at an all-time higher that time saying, hey, let me just cater to different languages, etc. It coincided with a lot of stuff that was, you know,

already had been shot but was imposed. So there was new content also happening. A lot of the big franchises had subsequent seasons coming out during the pandemic. And now the third phase, which I believe that we are in, is about this normalization of not the same rate of growth. Watch time has come down. People have gone back to work a couple of years ago at least. And now the question arises of, okay, so now how do we sustain that growth?

How do we get back to that? How do we make sure that while, you know, there's always a correlation between watch time and retention typically, right? And how do we make sure that people stay on there, you know, they don't find it as too much of a hit? Because while some people, and it's probably the likes of you and me who are like, that's fine, let it continue, no problem. But a lot of people are sort of sensitive to, hey, I haven't found anything worth watching. Why do I still have this subscription? Right. And when you don't have the time, you ask yourself this question a lot. And so you may have noticed in this third phase, a lot of this experimentation on pricing, bundling, tearing has happened across the top platforms, not just one. Prime Video is doing it now, right? But the others Netflix experimented with Price. Geo and Disney has come together in that same phase. If you remember, you know, HBO wanted to launch has not been able to launch. A lot of things. things happened in this normalization phase. And I think we're still there trying to figure out,

it is somewhere an indication that when it comes to the playbook that existed maybe a few years ago, that does need a relook at some level. Yeah. So, I think about, you know, just going back to the different phases that you spoke about, right, can you also talk about how different platforms developed content, you know, in all these different phases? Yeah, great question. I think it's, it's, you know, very, very closely linked to anyone's ambition in the market and the results they were seeing, right? So initially, if you recall, the platforms that had broadcaster backing was doing Catchup TV, right? It was a free service, it was advertiser supported, and this was sort of a way to get the ad share from the YouTube's of the world or the metas of the world,

because a lot of the advertising dollars were going there. And people realized that even the advertising and the marketers were saying that, hey, my consumers on the mobile man, right, and you're not giving an option. And so there was a very easy switch to say, hey, you know what, I'll give you television and digital now, right? And so you get a sort of different audience, etc. I can cater to more advertisers.

I can bundle them together to cater to both. That was that phase. That was the first phase. Then came original content, live sports. And dependent on, you know, where your pocket was and how deep your pocket was, It was, you know, the second phase was all about originals. It was all about life sports. It was all about, you know, post-theatrical releases.

As you recall, in that phase, you had, you know, a lot of the lead platforms bringing you theatrical releases within eight weeks, which again sort of maybe changed the behavior of people who wanted to do this first day for show of it all, right? Because they said, it doesn't matter. I'll just watch it when it comes in. you know, in my living room, no problem. Yeah. So there was a lot of that.

And of course, there was this whole regional play. People realized, and they were drawing a lot of, I think, references from even a YouTube where there were so many examples saying people are watching in their local language. If you want a service to survive, you need to be able to cater to multi-generational homes, which often have a person speaking in a different language, as well as being able to cater to, you something a kid wants to watch. So the content strategy was evolving based on the learning that they were getting from households that were continuing to watch.

What were the triggers of retention? And a lot of these were that. Returning series, talent, Bollywood, even, you know, movies from down south, which was such a play for some of the platforms. And a winning strategy, if you ask me, right? Because the content that's been coming out of there has been phenomenal. And so dubbing again was a major, major thing to say that, hey, let me at least make it accessible. And today, language, if you ask me, has democratized it across the world.

People are watching Korean shows, Turkish shows. Right? So language is becoming secondary to just the drama and the storyline that's at play. Right? We're getting very used to reading our shows as well as watching. Third phase now was about, hey, I've got, I'm very confident in the product that I have. I've seen how much they love it in terms of the fandom. I've seen the watchtime.

I've seen the global resonance of all this content. Now let me try and make sure that more and more people are able to access this in terms of either newer audiences at a lower price point or in the case of Amazon Prime Video advertisers. Right? So I think people are saying, what's my next level of growth? Is it a wider, deeper, tier two, three audience? or is it now an advertiser who can provide an additional revenue stream for me?

And the case of Prime Video, they already have a stack that they can just optimize across. But we can speak about that a little bit later. Could it also be a combination of both, Swati? A combination of which two would you mean? You mean like advertisers and also, you know, the other point that you mentioned, right? So I think in the case of Prime Video, as I said, like I'm generally speaking about all platforms. It's about what is the next horizon of growth, right?

What's that consumer set? I can go wider by having a different price point. I can bundle with existing telcos out there that have already got a sense of loyalty with customers and reduce my friction. Or I can also create growth. It depends on what you define as growth. Is it revenue? Is it subs?

is it profitability. And I think everyone has a different definition of it, and that's all right. We can sit back and, you know, unfortunately, television has ingrained in us the fact that growth means number of people. Yeah. Right? And so I think that's where this is a little bit different, and it's an important reminder for anyone assessing or judging decisions that are made by OTT platforms. It's a very different metric, and it differs from company to company. I think it would be a good time to kind of take a step back and look at what the data shows us as well, right?

So we actually had a look at the ORMAX OTT audience report for 2024. And we found that while video streaming in India currently stands at about close to 550 million people and that number is consistently growing. What isn't growing as quickly is the active paid subscriptions, right? We find that those have stagnated at around 100 million. That was last year. I'm sure the numbers increased just a little bit. As of this year, we'll have to wait for, you know, this year. edition of the Ormax OTT audience report.

But essentially, in a nutshell, it's exactly what you were saying, right? Swati, its OTT penetration seems to be growing, but the number of people who are willing to purchase a subscription on these platforms seems to be stagnating. And therefore, you know, we seem to be in a situation where streaming platforms now have to kind of reinvent their business models to an extent. I'm curious to know what is that extent, right? Like, how far are they going to go? You know, with every company, it's different.

The North Stars can be different. you know, let's have a look. Let's compare Netflix in Amazon Prime Video, for example. Netflix does not have an annual plan, right? It does not have a membership that offers, you know, delivery and music, etc. It doesn't have any of that. It has a monthly plan. It is a pure play content business that is running on monthly subscription revenues.

And hence their obsession is about making sure. that our customer keeps subscribing to the platform, right? Prime Video has an annual plan. It has a quarterly plan. It has a monthly plan also. And I would assume, based on whatever numbers I recall, I would assume about 75 to 80% of Prime Video members are also Prime Members, and hence have an annual plan.

Because it is like, you know, initially, of course, It's always been a top-up on their utility service of delivery of e-commerce. Right. So these are two very, very different businesses. And by the way, kudos to them. And specifically in India, they have managed to make sure the prime video is also a standalone business that a lot of people who come for prime actually value the prime video service a lot more than others. Right.

So that's a very unique thing that I recall happening for India specifically because their content has been phenomenal. Right. So I think that's, those are the two different things. Now, the extent, now, you know, if we go deep into prime a little bit more. So what they're saying is, I could be a person who's saying, hey, I've been paying 1499. I've been paying, would I pay it from my prime only membership if it didn't have prime video? I think a lot of us would say yes, right? Because that's an advantage. That's something now it's habitual. I can't live without it. So at some level I could argue that, hey, I've been getting this free all this while. All right. So it's how someone rationalized. it when they see value in something deeply. So now what's happening is we're saying in the same service, right? There is a strategy here, if we really analyze it, saying $14.99, I'm going to give you the same service, but it's going to have ads. Right. And I referred earlier to the price sensitive person saying,

don't want to lose out, let me continue, right? Because I value this in my life. And nobody will take a move like this, by the way, if they hadn't got the confidence, in the market, in their consumer, in their behavior. And in the case of Amazon Prime, they've actually had other markets do this already. So they've already got those learnings, right? And then comes that other value-conscious consumers saying,

hey, you know what, I just don't want ads anymore. I can't deal with them. I've just had years of not having them. And I don't mind paying the $6.99 more per year, mind you. Right? So I'm okay with that. And so the extent here to a consumer, they're saying, you know, it's actually a retention, acquisition, price hike, revenue.

It's all in one. And I think somewhere it seems like it's muddle. But they have obviously, you know, to each specific consumer, it's going to appear differently. I also want to talk a little bit about what you mentioned, Swati, right? Like Prime has this e-commerce platform and that, of course, is a huge, you know, unfair advantage that it has, right? How do you see it, do you see these two converging at some point now that it's going to be running ads? You know, how do you picture it happening in the future? No, I think that is the advantage.

And, you know, they have had the AMS platform is, you know, one of the most sophisticated advertising, ad tech tools that we have out there, right? So it is insane the amount of, you know, data, behavioral insights, recommendations that they offer people who have, you know, sort of listed their products on the Amazon ecom platform. Now, imagine being able to go and go to an advertiser and imagine they already have the tech stack. They have the advertiser network and they have this, you know, they have 200 million of video subscribers. So you can go from, you know, product discovery, brand building to product discovery to consideration to purchase all in one universe, right? It may not happen at the same time.

But imagine the offering to the advertiser is something that not many people can really offer. Yeah. And Swati, if you had to compare this, OK, Prime has this Amazon, right? And then you have geo with its telecom bundle, right? Like, can you compare the two? Well, it's different. I think the similarity will be in the fact that it is all, you know, there's an element of convergence that's happening

when it comes to device or connectivity, right? That's the geo thing, right? So I can give you a broadband connection and I can give you some, you know, I can bundle some OTT subscriptions with that. I can bundle it with your telco plan. I can also, you know, sort of preload it, into some geophones if you take my telco service. So there is a lot that can be done over there

in terms of bundling. But the advertiser focus is what I'm referring to right now. So I think, you know, I can't comment on, you know, how that, you know, the entire P&L over there looks like. And, you know, I'm sure they're able to, you know, help each other out meaningfully, which is why, you know, that is absolutely a force to be reckoned with. but Amazon is equally a force in a very unique and different way.

Right? So while we may call it an unfair advantage that Prime Video has, Gio equally has an unfair advantage in being able to have the largest mobile network in the country. That's exactly it, right. Soati, Amazon is like really uniquely placed in the sense that, like you said, it has the tech stack. It's kind of a gold mine for advertisers. In addition to that, of course, we spoke about India and the price sensitive customer.

My question then is not why. is it doing it now? Rather, why did it take this long to get to, you know, introducing A ward, right? Was it a kind of wait? Couldn't they have done it a lot earlier? Why now? You know, the when is, in my opinion, you know, when I teach go-to-market strategies to many founders, everyone ends up focusing on the why, what, how. And sometimes the when is the most important question in the strategy that people forget because everyone wants to do everything all at once. think retrospectively, it may seem like this was just such an obvious thing, but imagine in a world where there was free, there was an A-Bot service that everybody else had, which was free.

No subscription paid, only A-Bort. That's not what Prime Video is doing. They're still charging a subscription fee. Right. This is the difference. Had they introduced this earlier, the number of people who I imagine would be quite considerable, who would go from their 1499, and pay that extra $699 would have been lesser. This is the habit building needs to happen. You have to have gotten to that behavior of, and listen, there was YouTube free. There was award of Z, Sony, hot stuff free, right?

All of these, Bvout was free, right? These were already free without anyone paying. Now, people have to have seen the value someone is bringing to be able to then say that, you know, if you start with free, there's always a time in place. I remember when I joined Netflix, there was this whole thing. There were so many articles about the price, they've got the price wrong. Right?

They've got the price wrong. Everybody is one, you know, is one third the price. Yeah. Right. It's, you know, three times the price of cable. It's, you know, three X the price of any other platform. And so there is a when of everything, right? And so many years later, right, I remember, you know,

I was part of the team that was fortunate enough to launch the mobile plan. That was the first, yeah. Actually, the first step was removing the free trial. People said, how will you remove the free trial? Everyone has a free trial. Right. But it's fine. People who value, you're actually deferring it in some level.

So I think there is, you know, A, we must remember three things. Every specific platform's North Star is different. The hangover we have of number of people, you know, which is a very television way, print way, radio. It's a very traditional media way. of looking at a business. That is very different from OT2 to OTT. Avot can talk about it. If you're selling advertising dollars,

you should speak about your scale because that's what you're selling. But when you're selling subscriptions, you have to speak about the power of your service and content. Right. Right. And so now Amazon has a 220 million plus base of video subscribers, right, as considerable bases in India.

Now they're going to sell at the back of their scale as well as their content love because they have successful franchises. You do it right in the beginning. You've probably set a wrong rate for your advertisers to begin with. Plus, your ability to charge for subscription will also reduce. So I think the timing makes sense. So, you know, talking about being patient and understanding, you know, how habits develop, Swati. Can we also talk about how. all of this is going to change ad formats and how brands are approaching storytelling,

right? Say, for example, binge watching, right? Yeah. How is that going to affect advertising? Yeah, very interesting question. And, you know, that's the part. I think everyone has to wait and watch on when it comes to, will they have, you know, the scrolls in the middle, will they have it in the beginning? Will it be, you know, there'll be a lot of this imagination on how they're going to do it.

Remember, they are a subscription. subscription service also. And watch time is going to be critically very, very important. I doubt a consumer giant like Amazon will create an experience that is disruptive to its viewer, its member, its customer. And so I think at one level, they will have to balance customer experience and advertising advertiser expectations. At the other end, I think it's also an opportunity for advertising.

to be able to build brand campaign is in a very unique way. Now, let's look at, if it, you know, remember the time IPL started and now it's become a norm that people are creating 20 seconders and 10 seconders, and the 60 seconders just gone. Like, I don't know many people are making a 60 seconder for a live match anymore, right? They're building their expectations.

They're building their campaigns around this, you know, sort of 45-day back-to-back matches, and a campaign, a brand is introduced, campaigns, and I've taken through multiple brands now into IPL that do their first visibility on the IPL itself. And so brands have been built. And I would imagine an audience which is binging 10 episodes in one of, you know, let's just say a returning season

of something that's in its fifth season, you know, imagine what you can A-charge and imagine the impact that an advertiser will be able to see when it gets exposure across 10 episodes of a much-loved series. Imagine what that could be. Not only that, look at global advertisers. There are a lot of global advertisers as well. And imagine the exposure they could possibly get in markets

that also run a global show that is launched across all the markets. And of course, these markets need to have had an ad-supported tier as well. But imagine that opportunity for Amazon and for advertisers, global advertisers overall. So these are the two things that I think are. exciting from an advertiser and Amazon perspective for me at this point. But, you know, it's a wait and watch on how they balance, you know, revenue making with, ad revenue making with viewer experience. So it's interesting what you said about kind of, you know, not disrupting the

OTT experience, right? So in fact, while we were researching for this particular episode, we found out that Netflix has also kind of made that shift into award in the West. And something that they've been experimenting with is ads that pop up when you pause your content. It's very unique for that to happen. I think that's actually very, very cool. I read about that as well. And I think here's the thing, right, someone, the first player that does it. Let's not forget Netflix also, and we mentioned it earlier, has an ad supported tier in a lot of the markets outside of India.

And that's been fine. It's been doing well for them, in fact. It's a lower-priced advertising deal. Right? And that's been doing well for them. And again, customer experience and having lived that culture and that sort of member obsession that that company has for the time that I was there,

I'm not surprised that they would come up with unique ways to be able to not disrupt that. Watch time is everything. And I'm sure, as I said, Amazon, the same consumer giant has already got reels of data across their consumer across platforms already. They know what they're watching, browsing on all their platform, what they're reading, what they're listening to, and being able to offer all of it together to an advertiser.

I mean, you know, anyone else would be selling it saying, this is what we believe, but Amazon will say, this is what your customer's doing. Actually, this could be an absolute clincher for Amazon, right? because I guess to a certain extent, and correct me if I'm wrong here, Swati, but Netflix, the one thing that it's had really going for it so far, and we've spoken about this earlier on the conversation as well, is that first mover advantage.

But now, I mean, just, you know, that text act that we were talking about, the kind of data that Amazon has access to, like, that could potentially really drive prime ahead in this kind of OTT race, right? Yeah. Yeah, I mean, look, they'll have to be careful. Data's, you know, a sensitive thing. But I think in terms of the insights they're sitting on, you know, I would, you know, they definitely have that advantage.

And they already, as I said, they already have the network of advertisers and marketers and product companies who are already on their platforms. So they've already seen the impact in one sense. And, you know, if you've got a loyal base, you know, magic can happen. So, Swati, another question that I wanted to ask about, you know, the whole premium experience on Prime, right? like what you said earlier, even the version that has ads is not really free, right? That is also kind of premium. And then there is the ad-free version, which is almost like another layer of premium, right? So doesn't this add more pressure on prime to kind of pay extra attention, right,

to the whole premium experience that a customer goes through on their platform? Yeah, they have to. Look, I think there will be people, you know, look, the people who are complaining are probably the ones who, you know, I just don't want to pay more, frankly, right? And that's okay. That's absolutely reasonable saying what do you mean, same experience. So actually in one level, offering me a slightly lesser of an experience than I did before. But it goes back to will you be able to live with ads or will you be able to live with paying more?

And that's the choice at one level that Amazon is giving the consumer. But what about the people who feel like I have been paying, I'm still paying, but I have to watch these ads, I don't want this. That's okay. I think the thing will be fine. You know what? Let's just say, first of all, you're probably on an annual plan, right? 75, 80% of the people are on an annual plan. They will go through the experience of watching ads because I think they've announced the date middle of June somewhere where this will start happening.

Right? And then there's the question, it's not like it's going to happen the next. time you renew. It's happening now. Yeah. And so they are in a sense. So will they stop watching? Will they stop? Because they also lose, remember, the other stuff that came along with their membership, which is Prime. Right. Right. So they go to another plan which has Prime. And I think Prime has also been tiered. I think Amazon has also been period. There's a prime light, etc. There are all these other plans as well for shopping only. Right. So they may want to go to that only. And they will experiment. As I said before, it's a bold move of a global consumer company.

that's saying we believe in our product so much. And we have a loyal base of people who've been paying for us. We want to make sure that the quality of our content does not get compromised at any cost. Right. And that cost right now, which they're seeing, they've obviously evaluated the trade-off in various perspectives, is the fact that, yes, I may have to make some customers a little uncomfortable, but I'm hoping that they believe in the portfolio of offering that I have. And for those who won't, then, you know, I think they'll take a decision then.

But of course, they've taken a calculated informed decision. They've probably also, you know, seen it across other markets where they've already started the ad support to tier. And of course, you know, they would have done an analysis on that as well. But the last point I just want to make is, look, if television as an industry is anything to go by and that pattern that we've seen, maybe it isn't. But it's important to remember that the 35 to 40-year-old industry of television has been an ad-supported in sort of market, right? It's been 75% ad-supported versus subscription, right? And the reason why it's continuously been growing television,

it's still growing, may not be as part of the overall share of the media and entertainment industry, but it's still growing in absolute terms, is because the prices have been constant and people have been okay. with advertising. The pressure has been taken by advertising. It has not been hitting the consumer pocket, right? The same goes for all other traditional media as well. If I look at the other, like let's just talk about new customers coming to Amazon. Let's talk about that. They haven't hit 100% penetration, far from it. Let's look at Spotify. Let's look at YouTube. They're probably in single digits of the number of people who've taken a subscription plan versus who those who are okay with

advertising. So we're forgetting that there is still a large amount of penetration that Prime Video has to do. And therein, the new customer will come and say, should I take this deal or this deal? One is over 2000 and one is $4099. Which one should I take? This one has ads. This one does not have ads. Right? And so I think there will be, there's a little bit of that, you know, resetting that's happening. And the great thing about this category is that, you know, one person sets a sort of a benchmark either on price or a tier or a model. And everybody learns from it in the process. So I think we're still in that phase.

And I think, you know, we have to pull back on the judgment a little bit, on the pressure a little bit. Because, you know, as I said, it's a decade old. A decade isn't enough. I remember even when we launched HD channels when I was at National Geographic, we initially, if you recall, HD channels was supposed to be an ad-free experience. Correct.

Right? It had to be something that the subscriber had to pay for. And so the HD bundles that were offered for an ad-free experience after a year and a half got ads. Yeah. They did. And we forget those moments because they seem small. Maybe they didn't hit our pocket as much.

Right? Maybe there was no podcast to talk about it at that time. But, you know, and I don't think they lost many subscribers. Got it. Just to round it up, Swati, you know, last question. You know, who do you think, because this is also, this whole third phase is also like an OTT war, right, of a different type. What are the qualities you think that the winner is going to have in this phase? I think, you know, again, it depends, you know, who's setting, you know, the finish line here, right?

So is winning about profitability, is winning about subscribers, is winning about, you know, enough Oscars? Like, everyone has different sort of situations. I think it's just that. So I'm not being diplomatic and those who know me know that I don't know how to be. But I'm very conscious that each of the big players today and we know the names of all the players, I think everyone is trying their best at some level. they have similar customers. In some level, they have unique customers. They have a differentiated, sometimes overlapping content strategy. And I think they're all learning from each other. And that's

totally fine. They've got fabulous leadership at the helm. And they're all consumer obsessed. And I think that is going to be the quality for wherever they need to reach in all of the finishing lines that I mentioned, that consumer obsession has to be, you know, first. First and foremost. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories,

newsletters and podcast extras. Head to the Ken.com and click on the red subscribe button on the top of the Ken website. Today's episode was hosted and produced by Rahil Filippoze and I, Sinkda Sharma, and it was edited by Rajiv Sien.