Sachetisation of OTTs: Thinking big, but in small volumes at a time

Abstract

The rapid growth of Over-The-Top (OTT) platforms has revolutionized the way consumers access digital content, particularly accentuated during the pandemic. Despite this expansion, high subscription costs and limited pricing models hinder accessibility for consumers with low purchasing power, while creating retention challenges among high Customer Lifetime Value (CLV) users. This paper explores the concept of sachetisationthe strategy of offering smaller, affordable content packages—as a potential solution to these challenges in the OTT domain. By conducting a comprehensive survey on the pilot offerings of such sachets, this study evaluates consumer demand dynamics, pain points, and preferences for sachetised OTT content.

The research identifies high subscription costs and inadequate pricing tiers as major consumer concerns, particularly among younger and price-sensitive demographics. The survey results reveal that around 44% of respondents cite high subscription costs as a significant issue and around 19% find Crackdown on Password Sharing (implicit price sharing) a major concern. While around 19% reveal their inability to derive value from the content, and the 18% express dissatisfaction with the lack of flexible pricing tiers. Additionally, the study highlights the appeal of targeted sachetised packages such as weekend-specific content, seasonal offerings, and event-based access to live sports. For instance, 38.64% of respondents, mainly students and individuals under 18, use OTT services daily, indicating a demand for affordable, short-term content packages.

Findings suggest that sachetisation can enhance affordability, cater to diverse viewing habits, and hence foster sustainable growth in the competitive OTT market. The insights gained provide a framework for OTT platforms to develop flexible pricing strategies, improve customer satisfaction, and drive revenue optimization through innovative content bundling and selling.

Keywords: Over-the-top (OTT) platforms; Sachets; Sachet marketing; Sachetization

Introduction

By 2022, internet video traffic in India is anticipated to soar to an impressive 13.5 Exabytes (EB) per month, a significant surge from its 2017 mark of 1.5 EB per month. Video content is expected to play a pivotal role, constituting a remarkable 77 percent of the total internet traffic by that time [1].

Factors like the cheapest internet in the world, expansion and availability of high-speed internet, growth in smartphone users and rural internet penetration, has spurred the growth of online video viewership in India, reaching a significant milestone of over 300 million users by 2019 [1].

Digital media platforms, commonly referred to as over-the-top (OTT) platforms, have seen remarkable expansion everywhere in recent times [2]. OTT platforms’ ability to provide exclusive, diverse content surpassing traditional television experiences in quality have led to this surge in popularity and prevalence [3]. Additionally, advancements, accessibility and availability of the technology and internet infrastructure have played crucial roles in driving the growth of OTT platforms across diverse demographics and geographies [4].

India has the second highest per capita consumption of online video globally [1]. The rate of OTT revenue growth is projected to slow down, with an expected compound annual growth rate (CAGR) of 7.6% until 2026, reaching a revenue of US$114.1 billion by that year [5]. As India’s online landscape evolves and video becomes a dominant force, shaping access to information, entertainment, and communication, it is imperative to reassess its future trajectory. This shift necessitates strategic adaptation to harness video’s potential, addressing technological, economic, and social factors. Embracing this change could unlock new opportunities, drive innovation, and significantly impact the future of digital interaction and content consumption in India, ensuring sustained growth and relevance in the dynamic digital ecosystem.

Sachetisation and OTTs

Sachetisation is the strategy of subdividing products or services into smaller, cost-effective units or bundles, often by maintaining the same quality and reducing the price [6]. Shampoo sachets, chips sachets are the most relatable examples for the Indian audiences. Mostly available in the small sachets worth Rs.1 or Rs.2, while the snacks sachets come with small sachets of Rs.5. Gopal snacks, the Indian company who recently closed its IPO application, for an extended period, relied heavily on the ₹5 strategy, which involved selling small snack packets that appealed to impulse buyers. This sachet strategy accounts for over 82% of the company’s revenues [7].

Quoting Viral Acharya (September 23 2019, Opinion, Indian business & finance, Financial Times),”FMCG companies showed that big problems in India can be addressed by providing small solutions. The act of making affordable, bite-sized packets out of regular products came to be known as ‘sachetisation’. Sachetisation of everything from biscuits to body creams changed the FMCG industry in India. Indians wanted the same things as everyone else, but they could only afford it one sachet at a time.”

Sachet marketing is also described as the practice of “thinking small, but in large volumes’’ (Trend Watchers 2004). But considering its huge potential for sustainable growth, we feel it actually could be ‘thinking big, but in small volumes at a time’. In India, sachetisation of the product offerings was used to boost product trials, promotions, and usage frequency by offering affordable, small-sized units. It helped companies enhance market reach and affordability, especially in rural areas, while improving storage and portability. This strategy lowered entry barriers, allowing broader consumer access and driving repeated purchases through convenience and cost effectiveness [8].

Kandpal [9] viewed sachet marketing as a strategy that involves designing and selling products in small, affordable packages. He stresses that its success hinges on acceptance not only by rural consumers but also by urban and semi-urban populations and interestingly, these small packs have gained greater popularity in urban areas. He thereby concludes that the Global companies in India must shift their focus from merely pricing to delivering value by offering high-quality products at fair prices. Thus, ‘Sachetisation’ of product offerings is believed to have empowered consumers with limited purchasing power by providing affordable miniature product versions in consumer industries. This has also helped cope up with the impact of inflation, enabling them to continue consuming some of their staple goods.

Belgavi & Lele (.n.d) highlights that a contributing factor to the limited adoption of financial instruments is the commoditization of products, and primarily occurs as products are often presented in standard, predefined packages due to cost considerations. They foresee significant opportunities for further product innovation through the inclusion of certain key attributes and believe that the product innovation through strategic adjustments in sizing and pricing seems to emerge as a promising avenue for addressing the growth challenges.

The purchasing capability of the worldwide population is increasing linearly. However, the options available to individuals among streaming services (and the expressed objective of E&M companies to market to them) appear to be growing exponentially [5] Consumer preferences for content offerings on OTT platforms are influenced by various key factors. Factors such as content quality, service consistency, platform quality, convenience, affordability, and the variety and quality of content play significant roles in shaping consumer preferences [10-13].

Additionally, user engagement, gamification of content, and personalized recommendations contributes to attracting consumers towards OTT platforms [14-16]. The COVID-19 pandemic has further impacted consumer preferences, with factors like space to watch with family, time to use OTT platforms, and the quality of content gaining importance [17-19].

These factors influencing consumer preferences for content offerings on OTT platforms can vary across different demographic segments. For instance, millennials may prioritize factors like content availability, performance expectancy, and habit when selecting OTT platforms [20, 21]. On the other hand, Gen Z consumers may be more inclined towards platforms that emphasize diversity and authenticity in content [22]. Moreover, the adoption of OTT platforms among different demographic segments can be influenced by user behavior, technological flexibility, and customercentric content [23].

Personalization plays a significant role in enhancing consumer stickiness on OTT platforms [24]. Platforms like Netflix have excelled in providing personalized recommendations based on complex textual analysis, which contributes to user satisfaction and loyalty. Moreover, the association between customer satisfaction and long-term financial performance is well-established [25]. Firms that balance revenue expansion and cost reduction while prioritizing customer satisfaction tend to perform better in the long run. Identifying the gratifications behind OTT platform consumption is essential for tailoring content to meet user preferences [13]. By understanding the underlying motivations and preferences of consumers, platforms can deliver content that resonates with their audience. Furthermore, resilience strategies adopted by OTT platforms, such as competitive pricing, customer experience enhancement, and content localization, contribute to long-term success [12].

Factors influencing user behavior, such as switching intentions and retention on OTT platforms, are critical considerations [26]. Understanding the push-pull-mooring effects that shape user behavior can help platforms design strategies to retain customers effectively. Additionally, studying user behavior through models like UTAUT can provide insights into how users interact with digital solutions on OTT platforms [27]. Service quality is a key driver of customer retention and long-term relationships [28, 29]. Platforms that consistently deliver high-quality services are more likely to retain customers over time. Moreover, factors like local language content and targeted marketing strategies play a role in attracting millennial consumers to OTT platforms [20].

It is thus observed that by leveraging insights from studies on user engagement, customer satisfaction, personalization, and resilience strategies, OTT platforms can customize their offerings to drive long-term revenue growth and establish lasting relationships with their user base. While the OTT video streaming market continues to expand overall, boasting a 7.6% CAGR through 2026, players are now facing the reality that there may not be sufficient individual subscriptions to sustain their growth aspirations. Netflix’s announcement in April 2022, revealing a loss of 200,000 subscribers, marks the first such decline in a decade [5]. The simple business model of the OTT platforms has been subscriptions as their primary revenue stream. However, with the challenge of dwindling organic user growth, Netflix is strategizing to introduce an ad-supported option this year. This move not only opens up new revenue streams but also provides the potential for reducing subscription costs [5].

Hence, it is observed that the consumer preferences for content offerings on OTT platforms are shaped by a combination of factors related to content quality, convenience, affordability, user engagement, and personalized recommendations. These factors vary across different demographic segments, highlighting the importance of understanding the diverse preferences of consumers in the evolving landscape of OTT platforms and in contemplation of some innovative models for engagement and revenue generation.

Research objectives and Scope

The objective of this research was to explore the potential of sachetisation as a viable and a game changing, demanding strategy for Over-The-Top (OTT) platforms. The research aims to briefly assess the prevalent consumer grievances, viewing habits across demographics, their response and preferences to the sachet offerings of the OTT content.

Methodology

Survey Development

To address the research objective, a structured survey questionnaire is designed. The survey sought insights into the consumers demographics, viewing habits, pain points and their preferences for a pilot sachetised content.

Pilot Sachetised Content

Participants are presented with a hypothetical pilot sachetised content offering, including details on pricing, content variety, and accessibility in one of the survey questions. Feedback on the appeal of the pilot sachetised content and the likelihood of adoption is gathered through it.

,b>Weekend Funday Sachet, Rs.19 (Sat-Sun):

This package is designed for weekend entertainment or activities. With this sachet, the OTT service can offer an exclusive access to its premium content specifically on weekends. This service can be beneficial to users who have limited time to watch during the workweek but would like to enjoy more selection of content during their weekends.

,b>Sunsational Safari, Rs.59 (Summer vacation pack):

These packages can be utilized by users who are planning their summer vacations. They can offer OTT Content that is especially suitable for summer viewing like travel documentaries, beach themed movies or even outdoor adventure shows. It would also cater to user groups such as students who have more time at their disposal during such study or semester breaks.

,b>World Cup, Championships, Rs.49 (Leagues Sachet):

Users that are interested and super passionate about sports like Cricket, Football, Kabaddi etc. can purchase/subscribe to these sachets to stream live matches or access sports-related content during specific tournaments or seasons.

,b>Watch India-Pakistan T20 match, Rs.10:

This one event sachet would allow users to watch the legendary cricket matches between India and Pakistan in the T20 format. This package can target cricket enthusiasts who may not want to commit to a full subscription but are eager to watch the match between the two countries. Such passionate events have a huge potential to be monetized considering their huge demand and people’s willingness to pay and experience the thrill that doesn’t come often throughout the year.

,b>Weekday Watch box, Rs.22 (Mon - Fri):

This sachet can be offered to individuals who primarily watch content on weekdays after work. It would provide access to OTT services and content tailored for weekday evenings to the tired employees and help them unwind during the long workweek.

Observations and Discussions

The sample was distributed fairly evenly amongst the different age groups and we were able to garner around a total of 572 valid responses.

Table 1: Respondent profile and distribution.

Table 2: Overall User concerns.

Our analysis and discussions would be based on the above valid responses

Respondents identified several key pain points with their current OTT subscriptions. A significant portion (43.53%) cites high subscription costs as a major issue. This concern is particularly prevalent among students and housewives, suggesting a heightened sensitivity to price among these groups. The high costs may deter them from subscribing or maintaining their subscriptions, highlighting the need for more affordable pricing options to cater to these demographics.

Another issue affecting respondents is the crackdown on password sharing, with 18.71% reporting this as a significant problem. This concern is especially prominent among younger users, particularly those aged 18-24 and under 18. The restrictions on password sharing disrupt the common practice of account sharing among peers and family members, impacting their ability to access content without additional costs. Inadequate pricing tiers and options are also a source of dissatisfaction, with 17.66% of respondents expressing a desire for more flexible subscription models. The lack of customized pricing structures limits users’ ability to choose packages that suit their viewing habits and budget, indicating a need for more tailored subscription options.

A notable 18.88% of respondents feel they are unable to derive value from their current subscription packages. This sentiment is especially significant among students and working professionals who may find that the content or features available do not justify the cost of their subscriptions, suggesting that the perceived value of OTT services needs improvement.

A small minority (1.22%) of users report general satisfaction with their current OTT services.

Table 3: User Concerns by Occupation.

52% of the students find high subscription price as a major concern, while around ¾th of the respondents who claim to watch daily also cite high subscription price. All the respondents who prefer to watch mostly on weekends indicate crackdown on password sharing and high subscription price as their primary concern. Concerns about OTT subscriptions vary significantly by occupation. Among housewives, the primary issues are high subscription prices (37%) and the inability to derive value from current packages (23%), suggesting a need for more affordable options and content that meets their entertainment needs. Retired personnel similarly struggle with deriving value (30%), but their foremost concern is also high subscription costs (41%), indicating a sensitivity to pricing in this demographic. Students, who are often budget-conscious, predominantly cite high subscription prices (52%) as their major concern, highlighting the importance of costeffective solutions for this group. Working professionals, on the other hand, express dissatisfaction primarily with the inadequate pricing tiers and options available (27%), pointing to a demand for more flexible subscription models that align with their viewing habits. Lastly, businessmen report a significant inability to derive value from their subscriptions (37%), reflecting a need for packages that better justify their investment. This occupational breakdown underscores the diverse challenges faced by different user groups and the necessity for tailored OTT service offerings.

Table 4: User Concerns by Age Group.

Youth and Young Adults

For users under 18 and those aged 25-34, high subscription prices are the dominant concern, cited by 56% and 43% of respondents, respectively. These age groups are often more sensitive to cost, possibly due to limited personal income or reliance on allowances and early career earnings. Young adults aged 18-24 report significant dissatisfaction with the inadequate pricing tiers and options available, with 33% indicating this as their primary concern. This group, often comprising students or earlycareer professionals, likely seeks more flexible and personalized subscription models that can accommodate their dynamic lifestyles and budgets.

Middle-Aged Adults

Among users aged 35-44 and 45-54, high subscription prices and the crackdown on password sharing emerge as significant concerns. High costs are a major issue for 48% of the 35-44 age group. For those aged 45-54, the crackdown on password sharing (27%) disrupts common practices like sharing accounts within family units or with peers, impacting their ability to share costs and access content affordably.

Older Adults

Table 4: User Concerns by Frequency of Usage.

For older users aged 55-64 and 65+, the inability to derive value from current subscription packages is a prominent concern, affecting 33% and 39% of respondents, respectively. This age group may find that the content offered does not justify the cost or meet their viewing preferences, leading to dissatisfaction.

Sachet preferences

Sachet 1 comes out to be the most popular amongst almost all the demographic groups. 57% of the respondents who favor Sachet 1 (Weekend Funday Sachet) are under 35 years of age. Additionally, approximately one-third of housewives, students, retired professionals, and working professionals prefer Sachet 1. Among those who watch OTT daily, 50% favor Sachet 1 (Weekend Funday Sachet), while one-quarter prefer Sachet 4 (Watch India- Pakistan T20 Match). Young adults, in particular, exhibit a strong preference for Sachet 4, highlighting their desire not to miss highprofile contests.

Sachets 2, 3, and 5 demonstrated consistent popularity across all user groups, with occasional viewers showing the greatest interest in these packages, followed by those who watch several times a week, and daily. People who prefer to watch ‘Occasionally, depending on Referrals’, show uniform affiliation for all the pilot sachets, indicating that the flexibility and tailored content might cater to their niche requirements. Those who identified themselves as students showed more interest in the sachet 1 and 4, while the working professionals showed more inclination for sachet 1 & 2. Overall, the interest and engagement with all of the sachets looks pretty optimistic across all the demographics.

Conclusion

Survey responses reveal that high subscription prices are a primary concern, particularly among younger and middle-aged users. Students and young adults show a strong preference for more affordable and flexible subscription models, whereas older users struggle to see value in their current OTT subscriptions. These insights suggest that tailored sachet options can address specific needs, offering a more appealing and cost-effective alternative to traditional OTT subscription models. The positive reception of pilot sachets like the “Weekend Funday Sachet” suggests a strong demand for flexible, cost-effective subscription options that cater to specific viewing habits and schedules. The results indicate that customized, event-based, and short-term subscription models could significantly enhance user satisfaction and market reach for OTT platforms. The pilot sachet offerings might not only meet diverse viewing preferences but also provide a scalable solution to enhance user satisfaction and engagement. By targeting specific viewing habits and resolving key consumer pain points, sachetised content offerings could drive sustainable growth and enhance customer satisfaction in the competitive OTT market. Implementing this strategy necessitates a thoughtful approach to pricing models, content variety, and targeted marketing to meet diverse consumer needs and preferences effectively.

Future Research

Investigating the long-term effects of sachetisation on user loyalty and retention and hence the customer lifetime value would be not only interesting but imperative for the OTT players to consider such a dynamic shift in offerings. Examining whether users who initially engage with sachetised offerings become longterm subscribers or transition to traditional subscription models over time, i.e the upselling potential of value driven sachetisation marketing strategy, would be both interesting and beneficial. Also, the future work could delve deeper into optimizing sachetisation strategies by analyzing user behavior and preferences through longitudinal studies and A/B testing of various sachet configurations. Additionally, exploring advanced segmentation techniques could refine the targeting of sachet offers, ensuring higher relevance and appeal to different user groups.

Acknowledgement

None.

Conflict of Interest

None.

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