Over the top (OTT) has come up in a big way in India. The technology that refers to the delivery of audio and video over the internet, has opened up a completely new way for operators to generate revenue from VoD, catch-up TV, and interactive applications.
There has been a rise in the number of people consuming web-based OTT content. With the start-up boom and the availability of services online, like retail, banking, ticketing, entertainment etc. more Indian citizens across age groups are using the Internet. We also see an upward trend in smartphone adoption which allows the customers to be “connected” on the go. The advent of affordable Internet ready mobile devices, heavy usage data packs from service providers and a surge in easily available online content has facilitated the migration of audiences from the TV to the mobile medium thereby boosting the market for OTT content.
OTT Market of India
India is one of the emerging markets in Asia and is also recognized as a mobile-first market. That’s a lot of people, a lot of potential of even more content being consumed, and on a lot of screens and devices. A generation mostly born into experience the Internet for the first time on a mobile device.
Where there are eyeballs, there needs to be content; and Over-The-Top (OTT) service providers have emerged in the past two years filling those needs. According to a Media Partner Asia (MPA) report, India’s active OTT video subscribers are expected to grow to 105 million by 2020. With expected exponential growth in smartphone usage and a rollout of 4G services, the OTT industry is set to take off in India. According to the recent research report by Deloitte, with a greater roll out of 4G services in the country, consumer demand for online content will increase rapidly in the coming years. Further, low-cost smartphones bundled with low tariff plans will help in boosting Internet usage in India over the coming years.
Presence of Indian OTT players in global market
The time is ripe for Indian over-the-top (OTT) players to enter the International market with a subscription-based video on demand (S-VOD) model. The spring in their step comes from the global consumer spending on S-VOD services which is expected to total USD 18.7 billion in 2017. It is an increase of 28 per cent from 2016, according to Gartner Inc., an information technology research and advisory company.
These statistics have been exploited by Eros Now and Spuul, who have a significant international presence and are cashing in on the Indian diaspora. Viacom 18’s OTT platform VOOT is all set to make its international debut this year. According to media reports, even Hotstar will enter the international markets soon. B4U is also expected to launch an OTT, catering only to international audiences.
European and North American users reportedly have higher chances of paying a subscription fee for OTT content. Gaurav Gandhi, COO, VOOT, says that when OTT players from India enter the international market, companies will largely follow a subscription-based model and depend less on advertising for revenues.
The creators of Spuul started out with a single-minded agenda to reach out to the diaspora audience and have been rewarded handsomely in terms of revenue and viewership. “95 per cent of our revenue comes from subscriptions. Revenue from countries like USA, UK, Australia and countries in the Middle East contribute to nearly 50 per cent of Spuul’s revenue,” said Rajiv Vaidya, CEO, Spuul India.
While Indian users of OTT platforms are still averse to S-VOD, Indian OTT players could foray into the international market with their library of regional content that has a huge demand among the Indian diaspora, to grab a piece of the S-VOD spending pie.
For Spuul, the S-VOD model has contributed towards significant revenue generation from outside India and has helped Spuul break-even and turn cash positive. According to Gandhi, the average revenue per user (ARPU) in the international market for television is around USD 3-5 per channel. In comparison, the monthly ARPU in the Indian TV market is around USD 3-4.5. Therefore, the opportunity for Indian OTT players in the international market is huge.
The opportunities for regional content are plenty as well. Co-founders of YUV, an upcoming regional OTT player from Tamil Nadu, B.S.Radhakrishnan, GauthamSwaminathan, both feel that the international market will embrace Indian OTT players, give the range of regional content libraries available on platforms. According to Vaidya, content in languages like Tamil, Telugu, Punjabi, and Gujarati are most popular among the international audiences right now.
OTT market of Indian sub-continent region
A quarter of all households in the Asia Pacific will likely subscribe to a subscription video-on-demand (SVOD) service by 2022, up from a tenth in 2016, according to Digital TV Research. In total, over-the-top (OTT) revenues for TV shows and films in the Asia Pacific are set to reach US$24.41 billion in 2022, three times the $8.27 billion raised in 2016. Total OTT revenues for the region will increase by almost $3 billion this year alone, according to the company’s latest study. By 2022, China will account for half of the revenues collected by OTT operators in the 22 Asia Pacific countries covered by the report.
Revenues from SVOD services and that generated by advertising on OTT platforms are well matched. “SVOD will be the leader in 2017 and 2018, but AVOD will regain the crown from 2019. China will supply 61% of the region’s AVOD revenues by 2022 – or $7.27 billion,” the analyst noted. SVOD revenues in the Asia Pacific are projected to rise to £9,090 million in 2022, up from $3,388 million in 2016, with China leapfrogging Japan in 2017 to be the market leader in terms of revenue. Some 234 million people will subscribe to premium VOD services by 2022, up from 91 million last year – with 139 million (59%) of these residing in China. India and Japan will follow with a combined total of 50 million subscribers, with 44 million spread across the remaining 19 countries covered in the study.
With more than 300 million Internet users and nearly one billion smartphone users, India is developing into a major market for over-the-top video, especially with nearly one third of the population consisting of consumers in the Millennial and Gen Edge generations.
Niche OTT services have a solid chance of success because of India’s fragmented demographics made up of multiple languages scattered across diverse regions. The industry also has access to a large international population of Indian immigrants that is hungry for familiar entertainment fare, and Frost & Sullivan believes that the market for premium content will continue to develop with players in the region likely to partner moving forward.
“Even though the return on investment for OTT services providers is slow and does not justify the business proposition in the short run, competition will spur all broadcasters to consider the OTT business,” said Research Analyst Aafia Bathool. “Exclusive content at a competitive price with a sophisticated, user-friendly interface is the way forward. To achieve this, the market will see increasing strategic alliances among ecosystem players.”