* 10-minute read *
Recently, the Pakistan Electronic Media Regulatory Authority (PEMRA) announced a call for feedback on a consultation paper to license and regulate ‘web TV’ and Over-the-Top (OTT) content services. By the looks of it and as stated in the call, PEMRA seeks to bring OTT content services in specific, and web streaming services in general — loosely defined as ‘web tv’ in the document — under a licensing regime, and based on it issue licenses to local and international OTT platforms.
What does this mean, and how could the initiation of Over the Top Services breathe a new life in Pakistan’s media and content industry?
More importantly, if implemented with an intention of stepping up the political control on digital media, how could this policy scare away the big OTT platforms such as Netflix and Amazon Prime, and initiate a new wave of political censorship further constraining the already over-regulated media landscape of Pakistan?
I try to answer in this article.
What is OTT?
Over the Top service (OTT) is a broad term and could be used to describe a number of ‘over the top’ and free services. However, in the lingo of media and content, OTT usually refers to content-platforms that provide film and video content over the high-speed Internet. This nature of service is also sometimes referred to as Video on Demand or VoD. Netflix, Hulu, Amazon Prime, Apple TV are some examples of international OTT platforms.
In contrary to what many believe, generally in the context of media, the definition of OTT does not include free web streaming services such as YouTube or DailyMotion. However, YouTube TV, a premium streaming service of YouTube, does qualify as OTT.
OTT platforms are extremely popular across the world. They are considered to be an excellent means of universal content distribution as they transcend well beyond the traditional, cultural, and geographical borders and limitations, and given the nature of the Internet, even the local content-regulation policies.
OTT platforms generate revenue mainly from subscription, which is considered to be ‘gold standard’ with regards to the content monetisation standards.
What is ODV?
Original Digital Video (ODV) usually refers to the original video content produced and distributed for online consumption, including but not limited to OTT platforms.
The term ‘original’ refers to its proprietary and the copyrights which are mostly owned by the parent OTT platform itself. For instance, ‘House of Cards’ is an ‘original’ Netflix series and loosely put, it could fall in the larger category of ODV.
ODV content is taking the world by storm. Combined with the super-efficient Internet-based distribution, ODV content is reaching out to the whole world and creating a new form of home-based entertainment, rivalling traditional linear television and even the conventional cinema.
New players are constantly stepping into the ODV market, including but not limited to Apple and Google, increasing the footprint of ODV and impacting both the viewership and ad-markets substantially. To demonstrate just how big the ODV could get: experts in 2016 projected growth of 68% in the advertisements revenue of ODV, 59% of which is to ‘shift’ from linear television i.e. satellite and cable television channels.
According to a study conducted by IAB in 2018 with 353 digital advertisers, 9 out of 10 advertisers believe that investment in ODV will ‘grow’ and make up a much larger market share. Nearly 68% of respondents plan to spend more on ODV in the coming years. Read the report here.
ODV is already a multi-billion industry and through OTT content distribution, it reaches out to millions of consumers on a daily basis across the world.
Why is OTT important for Pakistan’s media landscape?
Short answer: any content medium or platform that helps the local content producers generate subscription revenue for their content could help rejuvenate Pakistan’s content industry, including film and theatre, even news. As a matter of fact, it is exactly what Pakistan’s media industry needs at the moment, and if I may add, with a certain amount of desperation.
Long answer: to understand the need and importance of generating user-based subscription revenue independent of advertisement, we need to step back and look at the big picture.
In Pakistan, more than a 100 broadcast TV channels (excluding another 36 recently licensed by PEMRA) compete for an advertisement-pie of 42 billion PKR annually. A substantial percentage of this ad-revenue is generated and hence controlled by the government. On the other side, conservative estimates suggest that cable operators in Pakistan (2200 official and hundreds unofficial) earn nearly 60 billion PKR through subscription revenue by distributing content that isn’t even their proprietary.
In short, our media economy is massively tilted in the favour of distributors and against the content-producers, including journalists.
The over-dependence of media on the advertisement, especially the news media, also raises serious questions with regard to news media’s ability to practice ‘independent’ journalism, hence jeopardising media freedom. And now with the rise in the popularity of other more lucrative digital mediums for advertisement, the impact is beginning to show. For the first time in the history of the private broadcast industry in Pakistan, television ad-revenue in 2017-18 has seen a decline of 4 billion PKR which is now resulting in jobs cust and market-compression — all this while the digital ad-revenue is constantly going up.
Thus, at this point, the content producers in Pakistan direly need the ability to generate subscription revenue directly from the users without the traditional role of the middle-men i.e. distributors, and consumer culture of ‘paying for content’.
Local OTT platforms can be excellent catalysts for that.
For starters, the licensing of local OTT will ensure that the companies creating and distributing ODV content have protections of the law, such as the copyright, freedom to do business, and competition regulation. The licensing will also mean that OTT companies will be encouraged and facilitated to create a stream of subscription revenue directly from the consumers, effectively by-passing the traditional distributors i.e. cable operators, which in itself is becoming a tool for censorship. The need and popularity of OTT subscription payments will also push the policymakers to work towards an online payment portal or solution.
In short, with local and international OTT players in Pakistan, a new content ecosystem could emerge, making space for traditional content producers in film and theatre industries. It will also encourage existing media industry actors, including the media-groups like Geo, ARY, and Hum to generate independent revenue streams from their ODV (mostly entertainment) content, hence indirectly, subsidising their news businesses.
Most importantly, through the OTT platforms, all sorts of Pakistani ODV content could be showcased globally, and with the right tools, this whole industry could prove to be extremely lucrative for the (currently underprivileged) local content producers.
What are the key concerns?
Short answer: for starters, from the document circulated, it seems, that PEMRA seeks to go well beyond the mere ‘licensing’ of OTT platforms.
It describes the process as ‘regulation of web TV and OTT’, which, according to the definitions provided in the document, could mean anything including a licensing restriction and content-regulation of streaming content on free video platforms such as YouTube, DailyMotion, and Twitch. Although the document currently excludes User Generation Content (UGC) — thereby excluding independent video podcasts by journalists and anchorpersons — from the content it seeks to ‘regulate’, it does include ‘web channels and content that is either competing with or breaking the revenue away from the linear TV’.
Needless to mention here that due to overlapping and somewhat confusing definitions, the User Generated Content from journalists and anchorpersons might as well be included in the list of content to be regulated on the pretext of ‘market competition’ since most of this content is exclusive ‘news and views’, and it is actively breaking away ad-spend from TV.
PEMRA by doing this, according to the document, aims to provide a ‘level playing field’ to all actors including linear TV broadcasters. However, considering the track record of PEMRA, and that of political censorship in general, the policy brief gives one a shudder down the spine.
Long answer: mainly there are three key concerns.
First; the regulation of non-OTT content on free streaming services such as YouTube thereby facilitating censorship,
second; the implementation of existing PEMRA’s Code of Conduct on local and international OTT platforms against the free and universal nature of the Internet,
and third; the fallacy of PEMRA’s ‘level playing field’ argument raising red-flags on this process all over.
Starting with the first; in the document circulated by PEMRA, the term ‘web TV’ immediately catches one’s attention. Web TV is loosely defined as the ‘content broadcast on the Internet’, which clearly includes everything from free video platforms such as YouTube and Facebook to OTT platforms such as Netflix. The term itself is, however, ancient and isn’t used anymore because of its over-broad and unspecific nature, since there are various kinds of ‘content broadcasts’ happening on the Internet in the modern age. It is, thus, curious to see PEMRA intentionally including a generic term with a specific platform specification i.e. the OTT.
In theory, both the terms, i.e ‘web tv’ and OTT could be used interchangeably but there is a fundamental difference in the design. Web TV could refer to all sorts of broadcast on the Internet, both free and premium, however, OTT mostly refers to paid content.
PEMRA defines the term ‘web tv’ as ‘a content service whereby news or entertainment is made available via a website either live or recorded, which may compete with the linear TV service’. This technically includes all independent content producers, especially those who are monetising their content either through local partnerships or platform revenue.
As mentioned earlier, there is some ambiguity around the term, but the definition makes it entirely possible to use this term to ‘crackdown’ upon content producers that may be producing journalistic or political content. The only qualifier in the equation seems to be ‘competition with the TV’. Incidentally, as mentioned earlier as well, the TV revenue is going down and digital is going up. Thus, an argument can be easily made to bring all sorts of content into the ambit of this policy.
In summary, the deconstruction of the term ‘web TV’ could be very easily used for political censorship, especially if the content in question is being monetised through platform-monetisation or local advertisement.
This brings us to the second key concern; does it make sense at all to implement the PEMRA’s code of conduct that was mainly developed for television content to OTT and ODV?
The proposed policy clearly states that all local and international OTT platforms, in order to be able to operate in Pakistan, need to acquire a license from PEMRA and ensure the implementation of PEMRA’s ‘code of conduct’ on their content.
The code of conduct in question was developed only for television and broadcast content, and if its implementation is forced on OTT and ODV content, it could completely disrupt the artistic freedoms essential to digital programming, thereby ending up being completely counterproductive.
More importantly, it could have serious repercussions on local content producers, and could potentially cause international OTT players to sway towards other Asian markets such as India, thereby taking away key investment opportunities — details in the next section.
Lastly, the fallacy of PEMRA’s ‘level playing field’ argument for this policy; why is PEMRA looking to regulate the digital space at all?
The argument that PEMRA provides for proposing the regulation of the OTT and web-streaming space is to maintain a “level playing field” for linear TV, essentially to ‘shield’ the TV broadcasters from the ‘shift’ in ad-revenues towards digital platforms.
It may sound fair to many, but in reality, the argument doesn’t hold ground considering the following facts:
1. PEMRA has the legal mandate to provide essential technological infrastructure to its licensees i.e. the broadcasters, to be able to broadcast their content efficiently. According to its rules, all the broadcast distributors, i.e. the cable operators, are bound by law to broadcast/relay all the TV channels (100+) licensed by PEMRA. However, the current analog cable networks cannot go beyond relaying more than 80 channels, thereby disenfranchising the others by default.
If there was ever a valid concern about the ‘absence of a level playing field’, it is the inability of media’s infrastructure to relay/broadcast all TV channels licensed by PEMRA in accordance to the law. However, PEMRA has to-date failed to complete the process of digital switchover, i.e. the digital up-gradation of media distributors, thereby unfairly empowering the cable operators byproduct to ‘drop’ any given channel in the name of ‘adjustment’.
It’s also important to mention here that Pakistan remains one of the few countries in the region that haven’t completed the process of digital switchover.
2. The state television network, PTV, is currently out of the purview of PEMRA regulation, and on top of that, PTV is directly subsidised through a special ‘television fee’ addendum to every electricity bill in the country. However, PEMRA fails to provide a technological structure to its licensees where the broadcasters, instead of relying 100% on advertisement revenue, could initiate and experiment with a similar ‘subscription revenue’ — a feature that could be enabled in post-digital switchover cable networks.
To demonstrate just how useless this policy to regulate OTT and web TV will be in providing a level playing field as PEMRA argues if it’s implemented in its current form; the total ad-spend of Pakistan in 2017-18 according to Aurora Fact Files was 81.6 billion PKR, out of which broadcast ad-spend made a massive 42 billion PKR. Digital ad-revenue on the other hand, was a mere 5.5 billion PKR. However, there is an additional 60+ billion PKR subscription revenue that could be tapped into.
It is, thus, completely incomprehensible as to why PEMRA would bother with a mere 5.5 billion PKR advertisement-pie when it can easily tap into many times larger ‘subscription revenue’ to provide a level playing field to broadcasters. It is also unclear as to why PEMRA fails to provide a level playing field to its licensees within its own domain and mandate, and yet insists on overstepping its mandate to regulate a medium that is completely out its purview, hence the red-flags.
Why should PEMRA be careful?
Short answer: the ‘regulation’ in the digital space per se is completely unnecessary. Regulation is typically used to provide and regulate access to a scarce resource, such as broadcasters’ access to spectrum, which clearly isn’t required for the digital mediums. Thus, the nature of the regulation that PEMRA seeks to move forward with, it seems, is mainly ‘content regulation’ which could be seen as a massive deterrent for international players.
Additionally, the content-regulation could stifle the creative and artistic freedoms of local OTT content players, thus putting them at a disadvantage to compete in the international and regional ODV markets.
Long answer: A report by IAB Singapore and eMarketer predicts that digital ad-spend will account for 53.5% of the total ad-spend by 2020 in the Southeast Asian countries. Indian digital ad-market is predicted to grow from its current turnover of 116 billion INR per year to 434 billion INR per year in 2023. Unsurprisingly this growth is mainly because of the ODV players.
Digital Market Asia, a Singapore based media house declared Pakistan, India, and Sri Lanka the fastest growing digital ad-markets in 2019. There are many similar studies predicting massive growth in digital ad-markets of Pakistan.
However, this growth in the digital ad markets alone will not have an impact on Pakistan’s content industry. We need the right policies to translate this potential growth into tangible actions and measures that encourage and facilitate Pakistani content and content producers, thereby enabling them to compete with the regional and even international content.
Unfortunately, it seems that PEMRA’s proposed policy to regulate OTT and web TV does the exact opposite. Consider the following facts;
1. OTT platforms aren’t, by nature, designed to cater to a local audience, which means that Pakistani OTT platforms will actually be competing in a regional and even international market. To put things in perspective, India alone has close to 40 homegrown and global OTT platforms. If PEMRA chooses to implement its code of conduct, it will only be able to do so on Pakistani OTT platforms, thereby grossly limiting the local content creators’ ability to produce competitive content.
Think of this as throwing a person into the ocean, who is unable to swim, tied to a rock, with his/her hands and legs bound!
2. As mentioned earlier, the international OTT platforms and ODV are all about free artistic and creative expression, and Pakistan’s market isn’t big enough to either entice or compel them to operate locally. Unclear and confused policies such as the one recently proposed by PEMRA could prove to be a deterrent not only for the OTT platforms but could also generally earn Pakistan an extremely bad reputation and prove to be damaging in the long-run.
At this point, when Netflix has vowed to reach the 100 million subscribers mark in India, and when we as a country are constantly pursuing big tech groups for a physical presence in Pakistan by easing the policies to do business, we simply cannot afford unclear, under-researched, and unnecessary regulatory policies that may or may not be seen as a move to increase political control over digital content.
What needs to be done?
For starters, PEMRA needs to take a step back from its proposed policy and re-think the process and its implications on Pakistan’s digital content industry. Secondly, the regulator should focus only on the licensing (not the content regulation) of OTT platforms in Pakistan. The regulator should also think about encouraging international players to maintain a presence in Pakistan by introducing subsidies and eliminating intermediary liabilities. Most importantly, the regulator, instead of overstepping its mandate into digital, should focus on providing a “level playing field” to its existing licensees by initiating the digital switchover process and creating open market opportunities such as potential subscription fees for them to tap into the subscription pool.
Asad Baig is an Islamabad-based journalist. He is the founder and the executive director of Media Matters for Democracy, Pakistan's leading media development organisation. He's also the CEO of the Media Lab, country's first and only incubator and accelerator for digital media startups. He tweets at @asadbeyg.