OTT in India - A perspective for evolution in India

Quick Facts around OTT in India:

Market - 

• Indian OTT market is slated to grow to 10 times to $5Bn by 2023. 
• Bulk of the market (82%+) is currently driven by AVOD (Ad based Video on Demand revenue model); however SVOD (Subscription based model) would grow to sizable chunk by 2023.

Players -

• There are 35+ OTT apps available in India; ~70% users have 2 or more apps. 
• Top Players include Netflix, Amazon Prime, Disney-Hotstar, Voot, SonyLiv amongst others.

Users - 

• Young Indians, under 35 years of age, account for 89% of the total Indian OTT video content platform users. (Male 79%: Female 21%). 
• Out of 89%, equal cohorts between 16-24 and 24-35 years of age. 
• Salaried employees are the largest consumer group, followed by students, business owners, housewives, etc.

From where they come from? Top 5 metro cities account for 55% of the total OTT video platform users, while Tier I cities ~ 36% of the users. 

Behavior - 49% of India’s youth (< 45 yrs) spend 2-3 hrs; 4 hrs by Millennials & Gen Z. 

Screen Size - 90%+ video consumption on Mobiles & rest on connected TVs.

The tailwinds for the OTT market have become stronger with covid19 fueling entertainment in-house entertainment needs and TV entertainment industry grappling with paucity of new content. Cheap data, cheaper smart phones and demographic dividend of India were anyways big drivers of this exploding industry.

Users & Usage is one thing; revenue is another. For any dominant AVOD model, users growth & engagement on platform is going to bring in the ad revenue. Efforts can be seen to push SVOD model from most players; and with habits changing in post-covid world, things look promising. 

Users Acquisition - Most of the players are thus looking at acquisitions thru bundles with telecom/broadband partners (recently Jio is offering Big 3 together (Netflix, Prime and Disney/Hotstar) in a single plan). This will be a key driver of subscribers growth in India as digital ecosystem grows through smart phone subscribers/broadband users. Bundles contribute to ~60% of users in India.

Traditional approach to woo the consumers via content backed advertising has also seen significant push. OTT players are offering content backed advertising with marquee shows/movies especially when cinemas were closed (Special Ops, Arya, Gulabo Sitabo, Masaba Masaba, The Kargil Girl etc).

With Covid19 impact, we as consumers have changed our long-staying habits (6 months is more than enough time to build habits). A lot of Indians have started subscribing to digital apps Vs using them for free. For eg, Newspapers being read on platforms like Magzter, cricket matches seen on a budget subscription - Hotstar VIP or entertainment watched on mobiles with budget subscriptions by both Netflix and Amazon Prime (Student edition). I see even most of newspapers websites now coming up with thier online/e-paper subscriptions which was a joke earlier.

As more apps join the party; the niches will develop as it happened with the cable/DTH industry where in there were channels for targeted users (Kids, GEC, Devotional, Regional, etc). A lot of parents have this barrier of kids exposed to unfiltered content on OTT and that is why recently a lot of players have come up with kids safe logins or targeted apps (YouTube Kids). Even currently a lot of apps are focusing on regional niches and delivering content basis languages or appealing to regional taste (Sun Nxt in South, Alt Balaji has one third viewership from Kolkata alone).

Usage - To boost the usage of OTT platform, players have realized that exclusive and high quality content is a key lever for engagement. That is why the focus on building partnerships with marquee directors and actors to keep users hooked to OTT. I expect a lot more engaging content getting delivered on OTT before probably things come back to normal.

Building the selection is another key driver to keep the catalogue of content refreshed frequently. Race to get movie rights or even launch own originals is a key factor to get users fixated on one app.

The space is exciting enough like any other digital backed youth opportunity. Lot more apps will get launched and then get consolidated as well to offer a broader selection and target a wider audiences. Ultimately, the game is both ad revenue basis high subscription base and engagement as well as subscription/Transaction based revenue where in users will subscribe to best 2-3 apps basis their needs or leader apps and then may choose to watch a content/movie by paying for that on any other app.