Indian OTT platforms get box clever to become sustainable

Soma Tah

Majority of Indian users prefer to consume entertainment when they want, not when the broadcaster decides to deliver it. This has created a level-playing field for OTT platforms.

There was a time when it was hard to imagine a house without a television set, and now for many, it is even harder to imagine life without a smartphone and mobile internet connection. The average cost of 4G data and smartphones in India has gone down drastically in the last few years giving people more ways to consume entertainment at their own pace and the comfort of their choice of personal screens.

The entry of Reliance Jio into the Indian telecom space has not only disrupted the industry pricing for 4G data or 4G devices, it has made a far-reaching impact on the mobile video consumption too. Thanks to the availability of digital entertainment options offered by the Video on Demand (VoD) or Over the Top (OTT) services, an increasing majority of the Indian internet users today consume content when they want, not when a broadcaster and content owner decides to deliver it.

The all-pervasive smartphones with affordable data have also brought the vibrant native speakers base of 22 scheduled Indian languages from Tier 2, 3, 4 cities online and created a massive opportunity for the domestic OTT players to serve them in their native languages. Because, unlike the prominent OTT players such as Netflix, Amazon Prime, or Hotstar who are largely catering to the English and Hindi-speaking urban population, regional OTT players have the advantage of targeting a mass market comprising semi-urban and rural populations. 

The engagement levels of the Indian language internet users were also found to be on the higher side (530 minutes per week) than urban internet users (487 minutes per week), confirmed a study data by Google and KPMG in 2017.

“There is a huge potential lying for OTT players in Tier 2, 3, and 4 markets which can’t be ignored. We, at ALTBalaji, are currently focusing on ensuring that we dominate the Hindi speaking mass market because when you look at the geography and demography of the country, 70% of the content consumed is in Hindi,” ALTBalaji SVP-Marketing for Analytics and Direct Revenue Divya Dixit said.

“The next wave of growth in OTT landscape will come from our very own Tier 2,3,4 cities and the Indian language speaking population. The increasing digital revolution in these places will help bring a massive surge in viewership and subscriptions across the OTT platforms and will also help to create a demand for Indian language content as well to cater to this new set of viewers. It will be the same as what regional channels did to television roughly a decade ago,” adds Happii Digital and Broadcasting Network Director Kailasnath Adhikari.

As per KPMG estimates, Indian digital media and entertainment (M&E) revenues grew from Rs 121 billion in FY18 to Rs 173 billion in FY19 at a growth rate of 38.5% CAGR- making it the fourth largest revenue contributor in the Indian M&E space after TV, print and films. The M&E sector in India was estimated at Rs 1,632 billion in FY19. Digital is also the fastest-growing segment among all and it might even surpass the film revenues in the coming years (see: India M&E Market Size & Revenue).


Viewers’ habit is evolving

The viewing habits of Indian consumers have evolved a lot in the last few years. While on the one hand, short-form video content consumption on smartphones and social platforms has been on the rise, binge-watching shows on various OTT platforms have also become more common on the other hand, rather than watching them on daily or weekly installments. This has let the content creators experiment with different genres and formats of content.

“The way different channels exist on television, similarly different products provide very different relationships with the customers. They sit in different spaces in the customers’ lifecycle. If we look at it from a consumer’s lens, it’s just that some days people like to watch comedy, and some days they like to watch a drama,” Eros Now CEO Ali Hussein stated.

He further added that an increasing number of viewers are now interested in watching original shows and hence a lot of OTT players are now focusing on creating content. “This is an interesting phenomenon because it brings storytelling in a new form and redefines the way OTTs focus on customer acquisition and retention with unique content strategy.”

According to Shemaroo Entertainment COO – Digital Zubin Dubash, different viewers have different choices and it is essential to offer customized and curated content as per their choice. “ShemarooMe has specialized content categories which include movies, music, devotional and kids content, comedy category to cheer people up during these testing times. We give consumers the freedom to pick and choose from the categories of content and pay for them separately,” he said.

A recent Zinnov study on the Internet content consumption in India observed that most of the Tier-2, 3, 4 city-dwellers access the internet for the first time through mobile phones and therefore present unique preferences in terms of content variety, language, and format. Zinnov has categorized the content consumption trend under 3Vs – variety, vernacular, and video-first (see: India M&E User Preference)


The COVID-19 impact

Social distancing and work-from-home during COVID-19 outbreak have also changed the entertainment consumption patterns of people across the world. Outdoor entertainment modes took a blow, but certain segments of media and entertainment saw a generous amount of spike in the consumption, particularly in TV, OTT, and gaming, in terms of both the time spent and new user acquisitions. 

An interesting app usage data insight by Bobble AI reveals a whopping 82.63% increase in time spent on various OTT platforms during the first half of Lockdown 1.0 in India. Netflix has seen a 110% increase in time spent, followed by Amazon Prime Videos with a 98.92% increase. Netflix saw a 54.80% increase in daily active users (DAU) count also, while Amazon Prime saw a 23.52% increase.

Keeping the viewers hooked

The OTT industry might be witnessing unprecedented growth as the perfect home entertainment option during COVID-19 crisis. The real challenge will be to keep the users hooked on to the platform, even after the home confinement ends. In the long run, OTT platforms need to think beyond views and build sustainable strategies that drive growth and monetization. 

OTT platforms in India today are mostly dependent either on advertising or on subscription for monetization. Since India is a price-sensitive market, most consumers do not want to pay premium prices for digital content. A great deal of involuntary churn also happens due to a lack of auto-renewal in the subscription. On top of that, the fact that customers are content loyal, not platform loyal making it extremely necessary for the OTT players to invest in vibrant content repertoire and originals to differentiate makes it even more difficult for the OTT players to sustain. 

OTT platforms have started exploring effective techniques to keep customer acquisition low and expand monetization opportunities. To boost the subscription revenues OTT platforms have now come up with innovative pricing structures like sachet pricing, mobile-only pricing, offline payments, content bundling, regional packs, etc. They are also exploring strategic partnerships to get access to a wide customer base and better monetize their content through collaboration/syndication route, partnerships across telcos, cable/DTH operators, other digital platforms, cab aggregators, and even hardware platforms (see: India OTT business & monetization models).

Image Source: Voice&Data

Partnerships spurring OTT growth 

RJio’s entry disrupted the Indian telecom space with free voice and extremely low data prices. RJio has not only changed the way people consumed data on mobile phones, but also led to a sharp decline in telco revenues. Telcos had no option apart from looking beyond the traditional voice and data offerings and encouraging data consumption on their networks through content offerings, which has largely been executed through strategic partnerships with OTT platforms. Such strategic partnerships with telcos were also important for OTT platforms as they get faster and wider access to a captive subscriber base with minimal spending on customer acquisition.  

All the three major telcos including RJio, Airtel and Vodafone Idea have now become content aggregators for various OTT platforms. They are leveraging those content partnerships to upsell higher prepaid or postpaid voice and data plans to subscribers. 

The next big bet: Online games, sports

Premium live sports continue to draw a large set of viewers for TVs in India. Sports media rights market was worth USD 1.1 billion in 2019, according to a report from Media Partners Asia. OTT accounted for 21% of sports media revenue generation in 2019 across the 11 APAC markets and the number likely to almost double over the next five years to reach 40% by 2024, the report said. 

However, the disruption of sports broadcasting due to COVID-19 has opened up new opportunities for OTT players. With people isolating themselves at their homes due to the pandemic scare, from mid-March onwards, a dramatic increase has been recorded in the time spent on online games. Hence, online games have emerged as an attractive option for OTT players with the power to engage the young and adult demographic alike. 

Gamification is also considered to be a good way to reduce churn, enhance stickiness, and user loyalty on any OTT platform. A few OTT players such as Hotstar and Zee5 are using live sports and gamification to drive content engagements on their platforms already, and we are likely to see more OTT players betting big on online games. This will not only help them look beyond their core offerings but help them broaden their content repertoires and turn themselves into a one-stop entertainment destination for the users in the future. 

Also Read: 

Video Experience: The New Battleground for Telcos

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