MediAvataar's News Desk
Chapter 1: The Currency of The Streaming Wars
Electronic Superhighway: Continental U.S., Alaska, Hawaii” by Nam June Paik (1995): 15 x 40 x 4 ft., at the Smithsonian American Art Museum. Photo credit: centralasian/flickr.com
Over the next 12 months a few new players, and in some ways not-so-new at all, will be entering and beginning to crowd the subscription-video-on-demand (SVOD) space. As each player hopes to be a winner, increasing their share of consumers’ time and attention, a new era is dawning. Revolutionary changes to the business of television are expected, the era of the “Streaming Wars” is truly upon us.
Meanwhile, audiences are fearful that the content ecosystem is not only getting more crowded, but also more fragmented, dispersed, and expensive. Still, audiences, content creators and distributors can agree upon at least these two truths: 1) consumer attention is finite and 2) good characters and good storytelling are invaluable.
In “The 30,000 Foot View: A Preview of the 2020 Streaming Wars”, Parrot Analytics provides a unique industry perspective. We will highlight the opportunities for each of these players to keep the content ecosystem accessible, exciting, and entertaining for audiences – because we all love to experience the magic of content.
The attention economy
In their Harvard Business Review article, Mark Purdy and Gene Reznik argue that going forward, every company, including even those not currently involved in entertainment, must think and act like an entertainer. It is not enough to simply be a producer or seller of goods – instead, in an age that is defined by interactive and immersive experiences, companies must reinvent themselves to stand out in the crowd of choices and options.
What about the entertainment business itself? Many have argued that the future of media consumption is one of convergence driven by interactivity.
Users not consumers: The convergence towards interactivity
Netflix is one of many companies that are now serving up content across multiple platforms and audience universes. As a leader of the disrupters and streamers, Netflix has begun transforming their viewers to partners in storytelling. Take Black Mirror: Bandersnatch, for example, or Bear Grylls’ You vs. Wild – two recent titles that allow audiences to navigate their own path through the story with the help of a TV remote.
Netflix has also ventured into other interactive formats such as Fortnite with cross-over promotional strategies. In this 250 million strong gaming universe the streamer has a single-minded purpose: To grab attention, to convert this into an emotional investment or at least some form of curiosity and then to extract maximum commercial value.
Through these interactive forms of storytelling, audiences are invited to play a role in elevating their experiences and to become fully immersed in content. The trend here is clear. Netflix is only a symptom of an attention economy in which the demand for content is not sustainable if audiences remain consumers or viewers. Passive viewers are less invested and are happier to not re-subscribe for a service.
SVODs everywhere are desiring interactive users. New streamers such as Quibi and Facebook Watch appear to be geared towards capitalizing on interactive tactics — take for example the Spielberg horror series that will only be available for watching at night or Skam on Facebook Watch, which inspired consumers to engage interactively on real-world social media accounts.
D. T. Max of the New Yorker argues that this “engagement” will drive the industry. Specifically, he states, “advertisers want to pay for how often you like, post, and click, rather than for how long you passively watch.” In other words, stories are designed to create fandoms. Today’s stories do more than fill time with entertainment. They aim to become embedded into the social, emotional, and intellectual lives of audiences, often not without controversy.
Yet, increasing convergence also means blurred lines between classical content categories. At Parrot Analytics we have been quantifying this trend for a while now, and in the process becoming the global leader in measuring and capturing what all content producers want: Attention, driven by consumer activity.
Attention is not only viewership, it is not only ratings of quality — after all, interactive mediums have never used these as standards. Rather, it is something much more all-encompassing: True audience attention happens when fans are demanding content passionately and this involves interaction, connection, and sharing. Consumers, when fully engaged, express their demand for a TV series in a plethora of different ways across multiple channels and devices. Thus, it is important to measure global audience demand holistically.
In the attention economy, demand is finite
Though the volume of content available to audiences is growing, the human mind and thus audiences’ ability to enjoy this content remains limited. It is no surprise that audiences experience decision-fatigue and frustration in finding and making time for their favorite content.
The players in the market understand that they are vying for attention in an increasingly saturated economy. To win, they must also help audiences manage their attention.
In a recent podcast on the attention economy, Giancarlo Pitocco highlights the ratcheting up of various tactics (such as auto-play features) between Netflix and YouTube in their fight for consumers’ attention. Netflix and YouTube are just as much technology ventures as they are media ventures. They combine technological advances in recommendation models, curation and best-fit content-to-user algorithms to gain and retain that coveted currency: Audiences’ attention.
The fact of the matter is, each day there is only a limited amount of time available to each consumer to fully engage with an entertainment platform. Audience demand is therefore finite – and SVOD platforms only know this too well. At the heart of the subscriber business model, each company protects the revenue each subscriber represents. And for every moment spent on a platform, each subscriber potentially deprives competitors from a monetization opportunity.
The obvious business implication therefore, is that subscribers, too, are finite.
Demand and subscription: Digital originals are key for SVODs
Media analyst Rich Greenfield argues, “Originals are the No. 1 reason you sign up for an SVOD service,” as reported by Variety. Using global TV demand data, we can offer up concrete evidence that his theory is supported.
As the chart below demonstrates, Parrot Analytics’ global TV demand analyses reveal that quarterly demand for digital originals and subscription numbers are predictive of one another.
Using a generalized additive model, we found that our model using Demand Expressions (DEx) for digital originals to predict US subscriptions in the millions was statistically significant and robust (i.e., R-squared > 85%). This means that demand, the global currency for the attention economy, explains the majority of the variance in subscription patterns at a macro-level. While the dataset was limited by a lack of daily numbers of Netflix subscribers, it still provides evidence of a strong relationship between the demand for digital originals and subscription.
Not only do our findings underline the relationship between interactive forms of attention and consumer behaviors, but also the value of demand in the attention economy. The finite resource of attention is the prize of the upcoming “Streaming Wars”, a major contributor that drives consumer decision-making, including the services to which they subscribe.
The other finite resource, of course, is the value perception – audiences’ willingness to subscribe and pay for their monthly subscription. Paul Bond reports that a Hollywood Reporter/Morning Consult poll finds that most American households are willing to pay a maximum of $21 in streaming subscriptions per month. Elsewhere, one of our research studies conducted in 2018 revealed that 35% of Americans are willing to pay for more than one streaming service, a percentage likely to rise sharply as cable subscriptions continue to nose dive.
Netflix has a basic plan at a $9, a $13 standard plan, and a $16 premium plan. Disney+ alone will be about $7 monthly, but the Disney-Hulu-ESPN bundle will be $13 per month. HBO Max is expected to cost $15 monthly. Apple TV+ will be released at $5 a month. Meanwhile, Amazon Prime Video’s price is about $13 per month and includes more than access to their streaming content. It’s clear that most users will not be paying for all of these options.
But, can new players expect a significant number of subscribers to sign up in 2020? Does this mean the early streamers (e.g., Amazon, Hulu, and Netflix) may lose subscribers?
Let us offer up the following chart, which takes another look at Netflix’s US subscribers and compares that to Netflix Originals’ share of digital original demand in the US. We can, therefore, evaluate the demand represented by each subscriber for Netflix and the available opportunity for new streamers.
As seen above, despite Netflix’s increase in US subscribers, these now represent a smaller percent of the total demand for digital originals in the United States. Where the 47 million US subscribers in Q1 of 2016 corresponds with Netflix Originals owning over 70% of the total demand for digital originals in the US, the 61 million domestic subscribers in Q2 of 2019 corresponds with Netflix Originals now making up under 60% of the total demand of all digital originals in the US market.
What can we learn by reflecting on both charts combined in this first article of our series? Netflix’s domestic subscriber rate is slowing down and reaching an asymptote, but the market demand for digital originals is only increasing. Netflix has been slowly losing its share of the US market. The simultaneous decrease of Netflix Originals’ demand share to subscriber ratio represents not only the increased competition but may also point to another challenge: Netflix may be translating less of their new content and subscribers into engaged audiences that are actively immersed in Netflix content.
With the upcoming roll-out of new SVODs soon to tempt audiences and crowd the content ecosystem even further, Netflix will need to fight tooth and nail to maintain its lead. It will need to fight hard to keep consumers from churning and subscribing to some of the new players with competitive pricing (e.g., Apple TV+ at $5 or Disney+ at $7, though these may be worlds apart in terms of the expected content offering). Netflix’s challenge is intensified by its upcoming loss of content; new players such as Disney, NBCU and AT&T plan to take back their coveted content as their contracts with Netflix come to a close.
So, is Netflix in trouble?
And, will these new SVODs be prepared to compete over the long run with the long-standing streaming giant?
You’ll have to see for yourself in Chapter 2: The Crowding Content Ecosystem, which reveals the transformations underway in the digital originals content ecosystem, quantifying and charting the expected threats to Netflix’s dominance.
Source: Parrot Analytics
As the 2020 election season kicks into high gear in the United States, people will visit YouTube to learn about the candidates and watch the election season unfold. Over the last few years, we’ve increased our efforts to make YouTube a more reliable source for news and information, as well as an open platform for healthy political discourse. Here is an overview of how this work helps us to better support elections.
Remove election-related content that violates our policies
Our Community Guidelines provide clear guidance on content that is not allowed on YouTube. One common question we get is how these policies apply to election-related content. Here are some examples of where our established deceptive practices policies apply:
Content that has been technically manipulated or doctored in a way that misleads users (beyond clips taken out of context) and may pose a serious risk of egregious harm; for example, a video that has been technically manipulated to make it appear that a government official is dead.
Content that aims to mislead people about voting or the census processes, like telling viewers an incorrect voting date.
Content that advances false claims related to the technical eligibility requirements for current political candidates and sitting elected government officials to serve in office, such as claims that a candidate is not eligible to hold office based on false information about citizenship status requirements to hold office in that country.
Additionally, we terminate channels that:
Attempt to impersonate another person or channel, misrepresent their country of origin, or conceal their association with a government actor.
Artificially increase the number of views, likes, comments, or other metric either through the use of automatic systems or by serving up videos to unsuspecting viewers.
As always, we enforce our policies consistently, without regard to a video’s political viewpoint.
The best way to quickly remove content is to stay ahead of new technologies and tactics that could be used by malicious actors, including technically-manipulated content. We also heavily invest in research and development. In 2018, we formed an Intelligence Desk to detect new trends surrounding inappropriate content and problematic behaviors, and to make sure our teams are prepared to address them before they become a larger issue. For example, in 2018, as a result of the Intelligence Desk’s work to detect the evolving online tactics and impending statements of terrorist organizations, we shared 100,000 digital fingerprints (also known as hashes) of terror content to the Global Internet Forum to Counter Terrorism’s hash-sharing database.
To combat foreign and domestic coordinated influence operations looking to interfere in electoral processes, we coordinate closely with Google’s Threat Analysis Group (TAG) to identify bad actors and terminate their channels and accounts. Through TAG, we work with other technology companies to share intelligence and best practices, and share threat information with law enforcement.
Raise up authoritative election news
Political news and events can be subject to misinformation, so the availability of quality information sources is crucial. That’s why we raise up authoritative voices, including news sources, for news and information in search results and “watch next” panels. Millions of search queries and recommendations are getting this authoritative ranking treatment today, and we're continuing to improve and expand our systems.
Additionally, we introduced Top News and Breaking News shelves to highlight quality journalism, as well as information panels that indicate funding sources below videos from publishers that receive public or government funding. During breaking news events, we provide short previews of text-based news articles in search results, along with a reminder that developing news can rapidly change. Because of all these efforts, last year we saw consumption of content from authoritative news partners’ channels grow by 60%.
For the 2018 U.S. midterm and the 2019 EU Parliamentary elections, when users searched for a candidate on YouTube, we surfaced an information panel with additional information about that candidate—for example, party affiliation and district—above search results. We also highlighted the official YouTube channels of candidates when available. We will have a similar feature for candidates in the 2020 U.S. elections in the coming months.
Reduce the spread of election misinformation
Content that comes close to violating our Community Guidelines is a fraction of 1% of what’s watched on YouTube in the U.S. To reduce this even further, in January 2019, we launched changes to our recommendations systems to limit the spread of harmful misinformation and borderline content. The result is a 70% average drop in watch time of this content coming from non-subscribed recommendations in the U.S. These changes are now implemented in the U.S. and other English-language markets, and we’ve begun expanding this effort to non-English-language markets, helping us reduce recommendations of borderline content, including election-related misinformation, around the world.
Recognize and reward campaigns, candidates, and political creators
Politicians, commentators and news publishers can access a suite of YouTube features and resources, including support from our partnerships team. These specialists work with news organizations, political creators and candidates on both sides of the aisle to optimize their presence on YouTube, helping them more effectively reach viewers, engage their community and keep their accounts secure.
In addition to our work at YouTube to support elections, other teams at Google are also working hard ahead of Election Day—including by expanding our political advertising policies to provide users with even more visibility into who is buying election ads on YouTube, Google, and partner properties. YouTube remains committed to maintaining the balance of openness and responsibility, before, during and after the 2020 U.S. election. We’ll have even more to share on this work in the coming months.
Written by Leslie Miller, VP of Government Affairs & Public Policy, YouTube
The creation of Warner Max, a new film label that will serve as the feature production arm of HBO Max, was announced today by Ann Sarnoff, Chair and CEO of Warner Bros., and Warner Media Entertainment and Direct-To-Consumer Chairman Robert Greenblatt.
This unique joint venture between one of Hollywood’s most successful movie studios and its sister company HBO Max, which launches in May, will ensure that the new platform has a steady stream of high-quality and highly curated original films.
With an initial target of eight to 10 mid-budget movies per year, the new joint venture will be overseen by HBO Max’s Chief Content Officer Kevin Reilly and Chairman of Warner Bros. Pictures Group Toby Emmerich, who share greenlight responsibility for Warner Max films and will work in close collaboration with senior executives Carolyn Blackwood (COO, Warner Bros. Pictures Group) and Sarah Aubrey (Head of Original Content, HBO Max). Jessie Henderson, executive vice president of original feature films for HBO Max, will expand her role to serve as the day-to-day head of the label and liaison between HBO Max and Warner Bros. Pictures Group and jointly report to Aubrey and Blackwood.
This new partnership will take advantage of the WarnerMedia organization’s vast feature film expertise, library, resources, and relationships, with Warner Max utilizing existing Warner Bros. Pictures infrastructure, including physical production. Warner Bros. and New Line Cinema will continue to create mid-budget fare for traditional theatrical distribution, while Warner Max will create a new pipeline for filmmakers looking to make a particular type of film or connect with a specific audience that would be best reached in the streaming environment. The first Warner Max titles will premiere on the service in 2020, and Warner Bros. will be responsible for distribution of these titles in all other media and territories beyond the HBO Max SVOD window.
“From the get-go we have been strategizing with Toby and Carolyn about HBO Max original films,” says Kevin Reilly, chief content officer, HBO Max and president, TNT, TBS, & truTV. “We are going to deliver a collaborative and lean process for talent, make a range of quality films, and provide a platform for each of them to have cultural impact. Now, HBO Max will be home to a robust collection of the legendary Warner Bros. film library and a new slate of original Warner Max films.”
“Working with Kevin, Sarah, Jessie and their teams, we’re committed to creating dynamic and compelling films that draw on the depth and scope of the creative resources across WarnerMedia,” says Toby Emmerich, chairman, Warner Bros. Pictures Group. “We’re excited to help make HBO Max a destination for both film-lovers and the creative community, while delivering a win across the entire WarnerMedia organization.”
“Warner Bros. Pictures Group has long been the gold standard for filmmaker driven storytelling. We are proud to be in in the features business with them and continue that legacy on our SVOD platform,” Sarah Aubrey, head of original content, HBO Max. “Warner Max gives us a special opportunity to continue cultivating this style of rich and diverse storytelling and it couldn’t be in better hands than with our head of features, Jessie Henderson, who’s built her career in this space.”
“It’s been great collaborating with our colleagues at HBO Max to take full advantage of our shared strategic advantages and creative expertise to make Warner Max a competitive player in the original SVOD film space from day one,” says Carolyn Blackwood, chief operating officer, Warner Bros. Pictures Group.
It’s been an eventful start to 2020 and I have a lot to share. For many OYOpreneurs it may have been emotionally tough; it’s certainly been so for me. Earlier last month, I shared our vision for 2020 and how globally we are applying our learnings from 2019 into a focused roadmap — we look to ensure sustainable growth and operational excellence, pivot on strong partner relationships and customer experience and chart a clear path to profitability. In the coming days, we will also issue our annual report like we have been doing in the past. While we are under no obligation to share this widely, as an organization, this is one of the many ways in which we demonstrate our commitment towards building an organization centred on the highest standards of transparency and corporate governance. The report will showcase the significant strides we have made in creating a sustainable business and our focus for 2020 and beyond.
I also believe that today it is more important than ever before, that we supplement our strong business plans with an uncompromising commitment to building an employee-first culture, with significant investment in continually improving our governance framework. We are now implementing elements of our 2020 strategic objectives across geographies and categories to strengthen our value proposition for owners and customers, and above all, ensuring that each and every OYOpreneur continues to feel proud of being a part of our core mission — creating quality spaces for millions of middle-income people around the world.
January 2020 ended on a promising note for us. I met OYOpreneurs across India, China, Japan and US offices over the past month, and everybody was curious about the results of other regions or teams. I felt I should write a note that puts all this in perspective. It is key to remember that we are building a business of real impact and real value where the opportunities of change and disruption are significant. Thanks to every OYOpreneur’s support in helping us achieve the mission of offering better living spaces to people. We have had to make some really tough decisions in the interest of the business and, as I shared earlier, I am thankful to all the OYOpreneurs who walked this journey so far and wish them all the very best.
Rightsizing the Right Way
Recent efforts at rightsizing the organization have been a significant chapter in our evolution as a company. It has not been an easy decision at all. I want to thank every OYOpreneur for their efforts and fully understand the impact this may have caused. About 69% of the impacted OYOpreneurs opted for outplacement support that OYO offered. We have been in touch with over 48 companies and shared around 900 profiles with them. The positive reception by other companies towards OYOpreneurs has overwhelmed me.
We did this very difficult exercise while giving the utmost attention to the larger health, spirit and integrity of OYOprenuers. We ensured high fairness in how impacted OYOprenuers were compensated and given benefits and support, and it’s great to see the way the industry responded by opening its arms to absorb our former colleagues.
One testimonial came my way from a BD manager in Mumbai, who recently got placed at a leading real estate services company. He said, “[I] have learnt a lot at OYO and that learning has helped me crack lots of interviews and get a job. If there is ever an opportunity to rejoin OYO, I will be very happy to join back”. Anecdotes like these continue to inspire all of us. I, too, hope that we will get a chance to work together again in future.
We have also made strategic changes to the roles of individuals to direct and shape our journey as a leaner, more efficient, and sustainably growing organization. Our employee-first agenda is a realization of how our talent-driven capabilities have charted the OYO story so far, and it is this irreplaceable factor that needs to be leveraged to express what OYO truly is and stands for
Strong focus on Governance
OYO has been continuously investing in strengthening its corporate governance. We recently welcomed Betsy Atkins, CEO and founder of Baja Corporation, as an independent director on the company’s Board of Directors. Given her expertise on corporate governance matters, Betsy is also going to chair the Ethics and Integrity Committee of our Board. We also recently elevated Aditya Ghosh to the Board to benefit from the depth of his experience in running successful public companies.
More recently, we have also appointed Gerardo I. (Gerry) Lopez as a Director, nominated by SB Vision Fund, on the company’s Board. Gerry Lopez is a global business executive with over 33 years of experience in leading transformations and creating shareholder value across diverse businesses and industries, including Hospitality (Extended Stay America), Entertainment (AMC Theatres), Multi-Unit Retail (Starbucks), Food & Beverage (PepsiCo, International Home Foods), Consumer Packaged Goods (Procter & Gamble) and Supply Chain (Handleman Company).
Delivering Value to our Owners
Capitalizing on the extensive market-level insights, our focus is to streamline supply so that we deliver on the promise of exceeding expectations of our hotel partners. OYO India continued to sign 800-1200 rooms per day in January 2020 in the franchise business while gaining relative speed. We have also actively pursued partners who had parted ways with us, after ensuring their commitment to service quality is high and I am happy to inform you that we have seen over 100 hotels choosing to return to OYO in Jan 2019. It is also heartening to hear some of the stories of why these partners chose us again while committing to ensuring customers get the best service.
For example, in Siliguri, we worked with an asset owner to address his concerns around clarity and reconciliation. Like you know, we have made changes in the recon format and the early results of this change look good, however, there is more to do. As a result of OYO’s efforts, the hotel is now driving good business and the owner has also given us another hotel to manage. I want to congratulate all our teams that made this possible.
Neetesh Chandel from our BD team actively engaged with the owner of one of our oldest hotels in Rewa, Madhya Pradesh (India) and resolved all his concerns in 3-4 meetings. The hotel recently went live with OYO again.
You may have also grown familiarity with Captain Solanky who was quoted in a few media articles. You will be happy to know that following our Gurgaon Hub Head Mr Sangwan’s recent engagement with Captain Solanky, the latter has suggested resolution of his past concerns.
As we aim for sustained growth with a strong focus on service excellence with sound margins and profitability, we are also evaluating and optimizing our network. In South Asia, we had a total of ~300K+ rooms as of December 2019. This is a 2.1x increase (year-on-year) with India being one of our mature markets. As a result, we are now present in 415+ Indian cities with 18,000 buildings. We are proactively working on ways to customize agreements and reconcile with owners in the best possible way. A practical and enforceable alignment strategy through centralized operations and communications is being rolled out across geographies through our renewed Service Account Management (SAM) system.
In newer markets like the US, in less than 10 months (March to December 2019), OYO expanded presence across 39 states and it continues to grow. Our value propositions to the customer and our technology capabilities forged through key partnerships are viewed as unique developments in the industry. There are also a few owners who, having had a successful run with OYO, have opened multiple buildings with us. We signed over 2,000 rooms in just one week of the month and have seen good progress. We have further progress to make in improving partner experience by making OS improvements etc, which Abhinav and the partner experience team are actively working on.
Increasing Customer Preferences
Customers are at the heart of everything we do. Our app was downloaded 4.1M times in the last quarter, which makes it one of the top 3 hotel booking apps globally (not factoring in China). The OYO app has been downloaded a total of 82M times and has around 41M customers* (assuming all customers are single occupancy, however, we see ~60% double occupancy, leading to 65M expected customers), who have checked in to an OYO at least once. We are able to generate business through higher repeat rates. For instance, even in January 2020, in one of our mature markets, India, more than 90 percent of the business for OYO Hotels was generated by repeat and word-of-mouth guests.
In the same period, sales for OYO Vacation Homes grew ~1.9x (MOM over December 19) just in the month of January’2020. In just 6 months of operation, we have doubled the growth rate for the full year in FY19 vs FY18. This is a direct result of the great work being done by our BD teams in both Belvilla and DanCenter brands. The results of Traum are improving as well here.
We also witnessed an 80% increase in revenue from business-to-business (B2B) or corporate customers in 2019 on a year-on-year basis. This needs to be highlighted to bring perspective on our strong corporate sales, especially in view of misleading and unsubstantiated claims that OYO’s corporate accounts have shrunk. Globally, we have also seen an increase in corporate customers in 2019.
I would like to give a shout-out to OYOprenuers Saurabh Doshi (contracts with three large corporates) and Vishesh Mathur (~3.8x growth in revenue) from India, Diaz Pharikesit (contract with a leading insurance company) and Yusnida Situmorang (contracts with various corporates and travel agents including the event ‘Asia Mission Camp 2020’) from Indonesia and Prawit (contracts with a leading travel and a publishing brands) from Thailand, and many others for taking ownership in driving our corporate sales.
Partnerships & Acquisitions for Competency Building
Our approach towards partnerships is guided by identifying synergies between core capabilities of OYO and various partners. Recently, we signed a long-term partnership agreement with Sabre Corporation. With this partnership, OYO will be connected to almost 900,000 travel agents globally.
Another significant update is that OYO Vacation Homes (OVH) recently entered into a strategic alliance with German-based e-domizil to acquire TUI Woltors Home Management Company. The transaction is subject to approval by the relevant antitrust authorities. The acquisition is intended to enable OYO to significantly grow its holiday home operator business in Europe by expanding portfolio with 17,000 additional units to over 50,000 properties. As a result, we will also expand our presence in Europe from 22 to 26 countries. In future, OYO will be increasingly represented in Germany, France and Italy. Our current offerings in Poland, Greece, Great Britain, Portugal, Norway and the Czech Republic will also expand. Read more here.
I would also like to take this opportunity to provide a quick update on our businesses in our high-priority markets:
We continue to invest in the United States — OYO USA was launched in March 2019 (formally announced in June 2019) and we ended the year with ~280+ buildings in 39+ states, increasing our nation-wide reach.
Annualized revenue has grown from $1M in March 2019 to $178M in December 2019. We have already committed $300 million to this market and are going full steam ahead with our plans – no change whatsoever.
With two of our strong global leaders – Abhinav and Abhishek – now being based in the US, I am confident that they, along with the strong local leadership team and OYOpreneurs will continue to build a future-ready and future-proof business in the market.
The response from our asset owners and guests in the US has been encouraging. We recently hosted the OYO Utsav event in Surat, Gujarat (India) with about 300 of our partners from US and markets to recognize our partnership. It is also worth highlighting that we receive 30% demand from OYO direct channels like our app and call centers in cities like Houston. Some of our assets, like OYO hotel Denham Springs I-12, or OYO Townhouse Tusla Airport, have seen 37-65% direct demand (from app and call center).
OYO Vacation Homes continues its strong growth momentum with ~1.9x (MOM over December 19) in Jan 2020. On the customer side, we recently revamped the consumer website ‘Belvilla’ with a complete revamp of UI / UX, intelligent search experience, and faster browsing and frictionless checkout experience. With the new website, the bounce rate has reduced to 2.10%, pages per session improved by 25% and load time improved by 20%. If you or your friends are considering a European holiday at one of our awarded vacation homes, do check out www.belvilla.com
We continue to work closely with holiday homeowners in Europe and earn their trust. We are fortunate to have owners who have partnered with OYO for multiple homes.
Our shareholders conducted a survey across our China hotels where customers rated OYO on par with market leaders on the parameters of cleanliness, good surrounding environment, location and pricing. OYO customers identify us the most by affordability (80%), and also align well with cleanliness (55%), good location (38%) and good customer service (23%). With the OYO Simple deal (Win+), we have earned back ~8.5K rooms of those lost in Q4 2019. We are positive about maintaining a stable and deeper relationship going forward.
I would also like to share an update on the novel Coronavirus crisis that is gripping China at the moment. I want to emphasise that the health and wellness of OYOprenuers and all our stakeholders is a key priority for us. We have already restricted work travel to and from China, with only a few business-critical exceptions. We will continue to stand strong with our teams, guests, partners and the country and support them in various ways. We understand that the current situation would impact OYO’s business and operations in the country. But that does not mean that we will compromise on the wellbeing of our teams, guests or partners at any cost. We will soon announce some measures that OYO intends to take in China during this difficult phase.
In January 2020, we served about 6.5 million customers. As many of you may be aware, our hotels have a check-in experience tab that reflects customer check-in experience. We track it daily at the hotel level and continuously work with hotel owners to improve and offer a superior guest experience. We have started experimenting for a small group of customers, giving the power of choice to customers, who will be able to select a hotel based on a check-in experience score. This would also dis-incentivise partners from providing a less than great experience at check-ins, as it would impact their scores and restrict customers from willfully booking their hotels.
We are also actively engaging with our partners through improved monthly statements that offer a new version of reconciliations and settlements of assets. We now transact with our partners on a weekly basis. Initiatives such as Club Red have proven to be effective in nurturing our partner network. OYO Asset Managers from partner support teams have started hand-holding partners who have a new or grave complaint to ensure direct and full-scale management of escalations. We will further double down efforts on the OYO Partner Engagement Network (OPEN) so that OYOpreneurs will engage with franchisee partners spread across India on a one-on-one basis. Our purpose of these engagements is to communicate a set of structured and planned agenda items, covering multiple areas of our partnership, where we currently find gaps and perhaps, misalignment, in a trusting environment.
For OYOprenuers, we are taking several measures to simplify work culture, ensure their holistic career development, instill a fresh sense of pride and belonging for OYO and drive further happiness and well-being. Our aim is to make OYO an even better place to work for every OYOpreneur. In the coming days and weeks, we will roll out some initiatives in this direction.
Southeast Asia & Middle East
OYO continues to be a market leader in SEA with 3,300 buildings with over 100K rooms, commanding an average rating of 7.92/10 from customers. OYO SEA has more than 200 properties and 4.6 times more 9+/10 rated hotels than all peers combined!
OYO SEA was the winner of the ASEAN-India Excellence and Achievement Award 2019 and Business Excellence Award at the 4th ASEAN-India Business Summit held in Manila, the Philippines.
In the Middle East, we grew to 17,000+ rooms in 32 cities by the end of 2019. We also actively worked with the government of the Kingdom of Saudi Arabia and used our technology to audit 450,000+ rooms in Makkah and Medina to make them more hospitable and comfortable for pilgrims visiting from across the globe.
Brazil and Mexico
Latin America is emerging as one of our high-potential markets in the months to come. OYO Brazil is now 400 buildings strong and leads the market in terms of occupancy with high gross margin. OYO stands at 334 buildings in Mexico with a presence in more than 40 cities.
OYO Life Japan has gone through its highs and lows and is now at $45M+ in annualized revenue with 6,000+ apartments. In a nutshell, we have witnessed 11X annualized growth in a period of 8 months!
At the end of 2019, we had 190 hotels in Japan across 70+ cities in less than a year’s time, which have more than 5800 rooms.
There is a lot that has been said about OYO’s reputation among partners in Japan. I had requested a few OYO leaders to tour the market and hear from partners. It is intriguing and humbling at the same time to learn that our partners continue to be quite enthused about their association with OYO and looking forward to the opportunity of a long-term partnership opportunity with us. Of course, partners were worried about some of the news reports and our re-assurance meant a lot to them. The interest OYO has generated from the business community in Japan is immense and real estate groups are keen on learning from our business model.
Our guest ratings (8.3/10) on booking.com are significantly higher than those of prominent competitors in Japan (APA 7.6/10)
We are privileged that both our businesses in Japan are led by some of the most dynamic, capable and experienced leaders such as Yamamoto-san, Takeuchi-san, Dohi-san, Junichi-san, Tahara-san, Futasaku-san, Sakishima-san,Shigeto san, Teshima-san, Hori-san and Yoshino-san.
OYO UK is now 200+ buildings strong and growing steadily. In London alone, we manage over 46 OYO hotels. We also recently welcomed Rishabh Gupta, a seasoned OYOpreneur, as the Head of UK and Ireland to script the next phase of our growth in the market. The UK team has also reworked our deal structure and has added 700+ rooms to the portfolio in January 2020.
As a startup, we have grown in public limelight since our inception. Though you may be privy to most of the coverage on OYO in the last few weeks, some of which have been critical, I would also like to mention a few newsworthy recognitions that continue to remind that we have a big opportunity, we just need to put our head down and execute.
As you may be aware, OYO Hotels & Homes is now part of the curriculum of the prestigious Harvard Business School. OYO is only the second Indian startup to have achieved this feat.
Titled OYO: Creating Effective Spaces, the case study talks about OYO’s inspiring journey, growth and challenges. It encourages budding entrepreneurs at Harvard Business School to pursue their entrepreneurial dreams and work hard to achieve them.
Also, Chitra Narayanan’s new book published in January 2020 has OYO on its title – ‘From Oberoi to OYO’. I have not had the chance to read the full book yet, but based on what I have heard about it, the book highlights the evolving saga of the hospitality industry in India. Her elaborate understanding of how we are entering a new terrain with a robust supply network is an inviting experience for anyone who is interested to learn about a business of scale and customer engagement. I would like to thank Chitra for her insights, and in recognising OYO as befitting to be on the title of her book.
Shifting gears to the US, the Los Angeles Times featured us in an article about the new developments in Las Vegas, highlighting that the former Hooters Hotel and Casino is now OYO Hotels and Casino.
I also had the opportunity to interact with Dr. Annurag Batra, Chairman and Editor-in-Chief, BW Businessworld. We spoke at length on what inspires us to help our guests in #LivingTheGoodLife in our capacity as a company and what it means for us and our stakeholders in making a global footprint as an Indian company with our scale and scope of customer engagement. I would encourage you to watch it too.
I want to emphasise that we are – and will always be – committed to growing OYO the right way. As we move forward in our journey, we will do so by staying focused on our first principles of ensuring trust, being respectful and resilient at all times. 2020 is going to be a landmark year, and I am excited. Let us all come together, put our heads down, execute and serve our customers and partners. We have a long way to go, and it is still Day 0!
Authored by Ritesh Agarwal,Founder and CEO of OYO Hotels & Homes
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