If there ever was an industry segment which got a booster shot from the pandemic, it is the OTT space. As the virus locked up millions of people indoors and turned movie theatres into ghost towns, viewers found succour in binge-watching millions of hours of content on streaming platforms as even the ever-flowing tap of TV channels’ content went dry.
Unbeknownst to most viewers, their binge-watching doubled OTT platforms’ revenues over each of the two pandemic years. The number was Rs 10,863 crore in 2021, a 4x jump over the pre-pandemic revenue of Rs 2,714 crore in 2019, according to PwC estimates.
But as the health crisis comes under control and other avenues of entertainment open up, OTTs’ growth rates are expected to mellow down. “You can’t put the genie back into the bottle. People continue to use streaming as a choice. Even calibrated growth is healthy growth,” says Gourav Rakshit, COO of Viacom18 Digital Ventures, who leads OTT streaming platform Voot. It is true. Seen as one of the fastest growing media and entertainment (M&E) segments, OTT revenues are set to swell to Rs 21,032 crore by 2026 at a CAGR of 14.1 per cent.
But it is getting trickier to hold the attention of the fickle viewer who is spoilt for choice today. The 60-odd streamers in the country have pulled out all the stops to get the viewers to stay and pay. For starters, all major players are pumping truckloads of money into producing original content—Rs 3,700 crore in CY2021 alone, according to a report by research agency Omdia.
Among them, Amazon Prime Video—which the Omdia report says invested Rs 1,040 crore in 2021—has said that it will double its content investments in India over the next five years. In April, it announced 41 original series, movies and co-productions in Hindi, Tamil and Telugu for the next two years. The e-commerce giant has also forayed into cricket streaming by acquiring the rights to air New Zealand matches. It hiked prices in India—a key market for the company with one of the highest proportions of Prime members who stream on Prime Video each month—by 50 per cent across plans in December. “We continue to see fantastic customer adoption with India witnessing the maximum number of new customers worldwide, who started streaming on Prime Video last year. Indian consumers are value conscious and not price conscious,” says Gaurav Gandhi, Country Head of Amazon Prime Video India.
It’s rival Netflix, on the other hand, has slashed prices. The California-headquartered streaming giant has struggled to add subscribers in India with its western-flavoured content slate. It has lately taken to acquiring hit blockbuster Hindi films such as Bhool Bhulaiyaa 2, Gangubai Kathiawadi and RRR among a spate of digital premieres of films across Hindi, Tamil, Telugu and Malayalam. The streamer, which has made more than 90 original films and series in India at an investment of over Rs 3,000 crore, has ventured into gaming and plans to roll out an ad-supported version globally.
Disney+ Hotstar, the other streamer with an international parent, holds the pole position with its 50 million paid subscribers, largely due to its Indian Premier League (IPL) viewership. But losing the digital streaming rights of the money-spinning tournament during 2023-27 is expected to halve that subscriber base and force it to rustle up non-cricket originals, experts say.
For another streaming giant, SonyLIV, the biggest driver of growth is originals and sports. Though its parent broadcaster doesn’t have a presence in the south, the streamer sees it as one of the biggest growth levers. “We are active in Hindi. We’ve done two original shows in Marathi and will launch more. We are launching originals in Tamil in July; Telugu in November; and Malayalam by February. We will subsequently go to the other languages,” says Danish Khan, Head of SonyLIV, Sony Entertainment Television and Studio Next.
A number of hindi-dubbed south Indian movie titles also populate its content catalogue. Khan adds that 30 per cent of the viewership for SonyLIV’s Hindi originals comes from the five southern states, while a third of the viewership for its Tamil and Malayalam movies comes from the north.
ZEE5, another streaming platform, has been building a diverse content library, backed by the regional might of Zee Entertainment Enterprises Ltd (ZEEL). It has announced more than 40 originals across Hindi, Tamil, Telugu, Punjabi, and Bengali for 2022. Sony Pictures Networks India and ZEEL are in the midst of a merger.
All eyes are now on Voot, that stands to gain at least 20 million to 25 million subscribers after billionaire Mukesh Ambani’s Viacom18 snagged the digital streaming rights of the IPL for 2023-27 for Rs 23,758 crore. Viacom18 has also landed an investment of Rs 13,500-crore led by media veterans James Murdoch and Uday Shankar, heating up the competition in the space. Rakshit says the plan now is to focus on originals, films, sports, short form content and interactives. “We need to dial that up to the next level, and do it better than others.”
Massy advertising-based video on demand (AVOD) OTT platform MX Player has a mix of original shows such as the Bobby Deol starrer Aashram, and Bhaukaal, along with a host of licensing deals with firms with large content libraries such as Shemaroo to offer their audience a wide variety of content. “Certainly, original content investment is what we are focussing on,” says Karan Bedi, the CEO of MX Player.
Meanwhile in the south, actor Allu Arjun-backed Telugu OTT platform aha plans to quadruple its user base to at least 8 million by getting into non-Hindi languages. It forayed into Tamil originals in April and plans to launch Malayalam next year, and two more languages thereafter. Also in the works are an AVOD service, gaming and live news content for the Telugu audience. “For the 100 per cent local ecosystem, we are like the super app. You will get news, gaming, AVOD, SVOD and we’ll keep expanding [into other] languages,” says aha’s CEO, Ajit Thakur.
SVF Entertainment-promoted Bengali OTT player hoichoi has continued to bet on new original shows or movies every week, including bigger shows such as Feludar Goyendagiri. “That has built a lot of trust with the audience. If there are gaps, the audience loses patience and doesn’t want to renew subscriptions. We are consistently seeing numbers which are higher than even the lockdown numbers,” says hoichoi’s Co-founder, Vishnu Mohta.
If good content is the magnet that OTTs are betting on to attract viewers, technology is the coating that will make them stick, especially as people are on the move again. But it’s also where the Indian apps lag behind global giants Netflix and Amazon Prime Video. The lack of a smooth viewing experience is a barrier for many subscribers, says consultancy Ormax Media’s Founder and CEO, Shailesh Kapoor. “A lot of apps still have issues on how the content plays. If you come back two days later, can you start from where you left? You can’t be spending crores on content and giving sub-optimal user experience.”
It’s an expensive and time-consuming endeavour, but the streamers are pulling up their socks to get it right. Disney+ Hotstar recently launched Dolby 5.1 surround sound on its platform to enhance its ‘cricketainment’ offering, says Sidd Mantri, Head of Product of Developing Markets at Disney Streaming. Apps like SonyLIV and aha are also introducing tech such as 4K viewing and Dolby sound on their apps. “Our tech and analytics budget is almost similar to our marketing budget,” says aha’s Thakur.
Now, it’s important that OTT platforms play content well, both on TV and mobile devices. “OTT is no more a mobile phenomenon post-Covid-19,” says Thakur. Voot’s Rakshit believes that better user experience boosts viewership by 100 per cent, if not more. “It’s about viewers being able to discover exactly what they want to watch… The outside structure is very similar for all OTTs. The rules that define how you go from one place to another in the app [without getting lost] is where versatility comes in.” The platform is focussing on improving live streaming of sports and reducing latency, while MX Player has upgraded its video compression technology to halve data usage. “Data cost in India is far cheaper than anywhere else in the world. People are still very conscious of how much they use. We invest a lot of time and money in creating high compression. People can consume more content with the same amount of data,” says Bedi of MX Player.
But monetisation is a big challenge for OTTs, especially as content costs are rising. Netflix—which accounts for about 30 per cent of the revenue share in the SVOD (subscription video on demand) market—is considering an ad-supported model. Likewise, aha is also rolling out an AVOD version. “We are introducing freemium because there are a lot of people who are not paying, and we want them to continue on the platform,” says aha’s Thakur. India’s digital video audience count stands at 353.2 million, but there are only 40.7 million paying subscribers, according to Ormax data. Meanwhile, AVOD player MX Player has launched an SVOD version, MX Gold, to cater to viewers who prefer ad-free viewing. It indicates an increasing shift towards a middle ground called ‘freemium’, where a part of the content is available for free with ads, while premium subscribers can view content ad-free. From a one-size-fits-all model, the pendulum is swinging back to multiple free and paid models similar to the western concepts of completely free TV, cable, premium cable, and pay per view, among others, explains Bedi.
Thus far, OTT streaming has largely been an urban phenomenon. As the players look to expand to the smaller cities and towns, especially with their regional content, bundling with telecom operators will become inevitable, concede the players. It is harder to penetrate deeper through regular marketing methods, they say. Voot—a cousin of telecom operator Reliance Jio that has 405 million users—and MX Player with its 280 million AVOD monthly average users (MAU) have an edge over the others in distributing their content. “The distribution models are evolving. There will be a move towards aggregation, and there will be an opportunity to use the Jio platform in a strategic way,” says Voot’s Rakshit, adding that the rate of that change is not clear at this point.
For others, telecom bundling leads to cannibalisation of the user base, and reduces the already low OTT average revenues per users (ARPU), experts say. Mohta says hoichoi, which is bundled on JioFiber’s postpaid plan, has not seen its user base cannibalised. “That’s why we focussed on going deeper into that. Telecom has a massive subscriber base. It’s the only way to reach the audience at a very deep Tier II and Tier III level, at least for the next 1-2 years.” But Ormax’s Kapoor points out that the subscribers gained may not convert into increased revenues. “The revenue would be pretty low, less than 20 per cent,” he says. But hoichoi’s Mohta says that on a net basis, it’s a fair arrangement. “You might have to do a lot of marketing and other activities to acquire that customer otherwise.” His rationale is the same for getting on Prime Video Channels—Amazon’s venture into aggregation. The idea is to enable subscribers to access 12 OTT services, while the aggregated apps can get a much better reach for a fee.
Other streamers like SonyLIV are experimenting with physical sale of subscriptions in areas with high footfalls. “The OTT industry is still in its customer acquisition stage, and not retention unlike other internet companies such as food tech. The market is heavily fragmented, and OTTs are still spending a lot to acquire customers, be it through acquiring digital rights of films, or freebies, or cheap promotional plans through telecom partners,” says Karan Taurani, Senior Vice President at Elara Capital.
Amazon’s Gandhi doesn’t see the OTT market as fragmented, but segmented and growing across consumer cohorts, languages and geographies. “That’s the streaming world. It’s about realising the multiple opportunities, and going after them. Ultimately, it’s about what content you have and which consumer base you are looking to serve.”
It’s a Rs 21,000-crore pie for the taking, over the next four years. And the routes to that promised pie are many, from original content, sports, and movie acquisitions to enhanced services of gaming, shopping, interactivity, bundling, partnerships, aggregation, AVOD, SVOD or through TV-on-demand content. But the battle for eyeballs rages on.
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