Sohag Sarkar, Associate Director-Strategy & Operations, KPMG Advisory Services


Digital Economy

Digital economy is being fueled by the growth in digital infrastructure. This impetus can be attributed to all players in the value chain especially those advancing the access technologies: cable, satellite, fiber, mobile, and fixed-line, etc.

The government's vision of Digital India and Smart Cities is being realized by enabling robust digital infrastructure across India. The participation of state-owned telecom infrastructure players and private players like mobile network operators and cable and broadband service providers, amongst others, would be worthwhile to witness. This combined model would promote online citizen services as well as greater consumption of digital content or services, the net impact being a healthier economy which is positively impacted by digital commerce and services.

Digital Paradigm Shift

The consumer market is witnessing a digital paradigm shift on account of expanding smart device penetration (India is one of the fastest growing market across the globe); increasing average broadband speeds (average speed of 3.6 Mbps and peak connection speed of 26.1 Mbps, as per Akamai Q2-2016 report, India ranks 113th and 109th respectively across these two parameters); and wider adoption and availability of digital content and services.

Mobile and Internet service providers (ISPs) are witnessing an increase in their average data consumption per subscriber, which is primarily fueled by the increased viewing of video content. The rise of over-the-top (OTT) video services is transforming the future. Today, it might be termed as a second screen but in the near future, this terminology in itself might be challenged by the OTTs.

The OTT video services market in India is primarily driven by changing preferences of viewers toward watching content as per their convenience and individual choices. Given that close to 90 percent households have a single television set in India, watching TV and other content on smart devices based on individual choices has been a key trigger for increasing adoption and usage of OTT services. Though OTT video consumption has grown tremendously in just a short span, there is quite a long way to go, especially as we rank lower amongst countries as per the global average Internet speeds. The increase in screen size of smartphones has also propelled this shift.

Additionally, entry of digital-oriented companies, vertical integration by traditional media and telecom companies across the value chain to offer their won OTT services, and increasing focus on video by social platforms are further contributing toward the adoption of OTT video services.

OTT Video Business Models

Traditionally, OTT video service emerged as a video-on-demand (VOD) service. This service was not linked to the linear television schedule, which is determined by the broadcast company or service provider.

  • Live TV: Some of the OTTs today service live streaming content like popular sports events. Facebook live is yet another example of user-generated live streaming video.
  • Video-on-Demand (VOD): Today, VOD services are being offered under unique business models:
  • Subscription-based VOD (SVOD): It provides unlimited viewing of video content for a limited period (contract) for a defined subscription fee. The known examples are Netflix, HBO Go, Amazon.com Prime, etc.
  • Catch-up TV: Some of the OTTs are offering catch-up TV, which records and provides retrieval of TV channel-wise linear scheduled content (typically for x' days). Example: JioTV.
  • Transactional VOD (TVOD): It provides selective viewing of showcased or catalog video content. This business model is more popular for watching movies or subscribing for sports series. The popular players include iTunes and Google Play. TVOD further includes two categories:
  • Electronic sell-through (EST): Where customers can permanently access the video content purchased; and
  • Download to rent (DTR): Where customers can access the content only for a limited time upon renting.
  • Advertising-based VOD (AVOD): This service is free for the users; however, in return it provides the content owner the required eyeballs for their brand. The users would be exposed to TV commercials. The best example is YouTube.

As per a research organization, there are about 66 million unique connected video viewers per month and around 1.3 million OTT paid-video subscribers. Other than the organic OTT players, this space is being crowded by media houses, publishers, film production companies, TV content producers, telecom/DTH operators, TV broadcasters, TV distributors, VAS players, amongst others.

 

YouTube continues to lead with maximum share of the online video viewership and online video advertising revenue amongst other OTT players. According to Google (parent company), YouTube's total viewing duration has grown by 80 percent over the last year and 55 percent of the watch time is coming from mobile devices. The Indian viewership related to entertainment (TV, films, and music video) is as high as 59 percent amongst the top 100 channels of YouTube.

OTT Video: Key Trends and Value Drivers

OTT has transformed the hitherto popular video content viewership pattern. Two of the key phenomenon include:

  • lSpace shifted: The proliferation of mobile devices and high-speed broadband networks have enabled the shift of traditional broadcast content to Internet-enabled or streaming devices.
  • lTime shifted: Viewers are not restricted to the linear schedule of TV and now can view their content of choice anytime, anywhere.

Adoption of traditional TV and film content over new platforms: TV broadcasters and film producers are porting their digital content and movies to digital platforms or OTTs.

Live event broadcast or streaming: However, this channel is being explored not just for VOD but also for Live TV. Sports matches are the best example in this regard. During 2015 edition of IPL, the OTT reach was around 19 percent of the total TV reach for matches in the top six metros. This has resulted in online rights for sports events being sold separately.

Original video content over OTT platforms: Until recently, VOD service used to offer re-run of already broadcasted or launched content. However, to create a differentiated offering from traditional TV, platform or content owners are showcasing exclusive content over OTT. Such content may range from episodic web series, stand-up comedy, sketches, movie reviews, and short films. Examples include: Y-Films (youth content division of Yash Raj Films) cameo web series – Man's World and Bang Baaja Baaraat (BBB) – and Star India's 20-episode AIB which was released first on Hotstar. ALT Digital (Balaji Telefilms' OTT platform) plans to offer original and curated premium content. Similarly, Viacom18's Voot OTT platform is currently showcasing the live 247 feed of reality show Bigg Boss Season 10.

Background buffering and offline feature: Another popular feature that has been witnessed includes the concept of downloading the content in the background (during non-peak Internet hours or using Wi-Fi hotspot) for viewing the content later on or offline without the need to load or stream the content from a server (i.e., without using an Internet connection). This allows the user to download the video content within their local device (with copyright protection) and also saves Internet charges.

OTT Player

Primary Group Company/Investor

Hotstar

Star India

ditto TV

Essel (ZEE) Group

Sony LIV

Sony MSM

Eros Now

Eros International

Box TV

Times Group

Hungama

Hungama Digital Entertainment

TataSky Mobile

TataSky

DishOnline

Dish TV

Pocket TV

Airtel Digital TV

JioTV

Reliance Jio Digital Services

Voot

Viacom18 Media

To conclude, OTT video is one of the fastest-growing services on digital platforms, with everyone from traditional media companies to new-age media companies to telcos betting on online video consumption going mainstream. On the demand side, there is a growing demand for flexibility in terms of space and time of content consumption. On the supply side, there are a multitude of OTT services catering to different customer preferences amid declining smartphone prices, and improving mobile broadband infrastructure is removing roadblocks for OTT video consumption.

OTT platforms are betting on producing and acquiring original content to gain and build a loyal customer base. Currently monetization is largely advertisement-driven and the growth of paid models would be driven by the perception of bandwidth cost vis--vis cable TV or DTH.

 
 
 
 

 

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carl-zeiss

BroadcastAsia 2017

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