Video On Demand: The War to Entertain You

"Filmein sirf teen cheezon pe chalti hain… Entertainment! Entertainment! Entertainment!"… Aur main Entertainment hoon!"

This dialogue from the Bollywood blockbuster The Dirty Picture succinctly sums up the reason behind the proliferation of OTT video streaming services in India, with over 30 players, as per my last count, hankering for a share of mind (and wallet) space from the 'ever-so-hungry-for-entertainment' Indian.

Video On Demand: India's Transition from Linear Broadcasting to Narrowcasting

From being a country of single-screen households with cinema houses as the only other alternative to the drawing room TV until the late 1990s, to now having multiple screens in the form of portable devices like smartphones, laptops and tablets, broadband and mobile internet have surely opened more gateways for Indian consumers to access entertainment in the form of videos.

While the satellite TV revolution of the 90s ushered in the post-Doordarshan era of multiple broadcast options, the growing tribe of OTT video-on-demand players that we see today signals not just multiplicity of entertainment choices for the average Indian consumer, but also marks the coming of age of India's transition from broadcasting to narrowcasting. What this much-talked-about OTT revolution has brought about for you, as the end consumer, is the availability of video content in the genres and languages of your preference, along with the convenience of accessing it on-the-go at a time of your choice rather than on a set schedule.

Promising Opportunities Magnetising Market Entry

India presents itself as a unique market with opportunities and challenges on the infrastructure and consumer behaviour front. It's a market with mobile penetration of over 77 per cent and internet penetration of 28 per cent. More than 80 per cent access the internet via mobile devices.

By 2020, the Cisco Visual Networking Index (VNI) has forecasted that total internet video traffic will rise from the present level of 51 per cent to 75 per cent of the total Internet traffic - equivalent to consuming 12 billion DVDs per year, 1 billion DVDs per month or 1 million DVDs per hour. This growth in video consumption will be facilitated by a growth in the number of connected devices from 1.5 billion to 1.9 billion, along with faster broadband speeds of 12.9 mbps with the introduction of 4G. These indicators underline the business rationale behind the influx of global 'Video On Demand' heavyweights, the proliferation of national and regional OTT players, video aggregators as well as VC-funded video streaming start-ups in India.

With video being a data intensive medium, telecom service providers too have jumped into the OTT fray with an aim to boost their data revenues, which are set to grow from Rs 27,450 crore in FY 2015/16 to Rs 95,500 crore in FY 2020/21 as predicted by research firm ICRA, implying data upstaging voice revenues (60:40).

Television channels and content production houses too have ventured into the OTT space with the objective of holding on to the interest of the viewers of their shows across multiple channels. A host of smartphone manufacturers are bundling apps of OTT video players, while some are going the extra mile to develop their own video and music content aggregation platforms. Investors too are seen backing video start-ups with VCCEdge data showing 27 early-stage funding deals amounting to $35.24 million in the past three years.

Reality Check

With so much going in favour of this sector, what is it that gives a tinge of circumspection to my optimism? The reality is that Indian consumers are not even off their starting blocks in their "On Demand Video Journey." I base this statement as a function of the 3 Cs: Cost, Content and Convenience of user experience.

Cost

The biggest hindrance to VOD adoption is a price sensitive India. Let's look at the facts. Vuclip's Global Video Insights for 2015 had revealed that only 23 per cent Indians indicated their propensity to pay for video content, due to which downloads via Torrent are more dominant than through subscription-based video websites or apps. Besides the subscription cost, the biggest cost inhibitor to watching videos online are mobile data costs, which are one of the highest in the world compared to consumer income. This has made the Indian consumer one of the most ferocious and relentless Wi-Fi hunters in the world. What is the first thing we do when we enter an office or a restaurant? We seek Wi-Fi. However, thanks to Mukesh Ambani's vision and commitment to bringing Reliance Jio to Indian consumers, finally democratisation of mobile data can be a reality with costs heading in the right direction, making it affordable for a majority of the Indian consumers. While it will take time, we will get there sooner rather than later.

Content

A VOD service's catalogue will drive the demand for its service. The more exclusive and talked about the content, the greater the propensity to watch it on the platform at a given cost. With most VOD services having content tie ups with the same set of content partners, there is not much differentiation between the catalogues of a vast majority of the existing service providers. A differentiated content strategy with a focus on regional content, production of 'Originals' and value added short form content catering to different genres, is the need of the hour to drive sustained consumer interest and engagement on the service.

Convenience - User Experience

While the attempt by some of the new OTT players to club video services with e-commerce offers and discounts to lure new viewers is indeed a good effort to win subscribers, it will not make a difference if the promised user experience in terms of content discovery, platform navigation and video optimisation for unbuffered viewing aren't delivered. This is one area where converting user data insights into delivering viewer delight gains precedence. Moreover, with a majority of Indians still not open to digital modes of payment such as credit cards or net banking, facilitating subscriptions continues to be a challenge.

Crystal Ball Gazing

The VOD revolution in India will happen, but not overnight. This is a journey of many years and will take a decade to go mainstream. There will be multiple players in the market, but the ones who win will be those that have the following fundamentals:

 

•     'Compelling' content strategy that gives a reason for consumer to go to and make it a habit
•     'Frictionless' on-boarding of consumers to experience and enjoy the service without having to pay or commit to pay at the start
•     'Deep' pockets of investment in content, technology and marketing for many years to come
•     'Real' Technology expertise rooted in delivering superior consumer experience
•     'Entrepreneurial' culture that is maniacally focused on consumers and not valuations

Currently, there is an intense and overtly premature war for winning the OTT space in India. The grim reality is that during a war, it is only the arms dealers who benefit. Right now the arms dealers are the smart content owners. We are in a bubble caused by the emergence of many "wannabe" OTT companies who will, mark my words, not just fizzle out, but collapse in a heap due to the lack of the aforesaid fundamentals.

 

As we await a phase of major consolidation in the OTT VOD space, let's grab a tub of popcorn and see the entertainment unfold.

The writer is President & COO of Vuclip Inc.