Sunil Kukreja, Senior Manager Distribution, Shop CJ

The Over-The-Top (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 of households have a single television set in India, watching TV and other content on laptops and smartphones based on individual choices has been a key trigger for increasing adaption 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, with poor Internet bandwidth and high data charges remaining some of the biggest roadblocks to growth in online consumption of video. Improvement in mobile broadband infrastructure, gradual reduction in the cost of Internet, and increase in smartphone screen sizes are driving consumers to shift their viewing preferences to mobile.

The smartphone growth in India has ensured that Internet consumption via mobile data constitutes 15 percent of all Internet consumption in 2016, projected to rise to 30 percent by 2021. Further, declining prices of smartphones that are currently under Rs.9000/-, and increasing sizes of smartphone screens at a current average of 5–5.5 inch, have resulted in the mobile becoming a screen of choice for media consumption.

TV and Film Content Driving Adoption

Traditional TV broadcasters and film producers are currently leveraging opportunity provided by OTT services by porting existing TV content and movies to digital platforms and launching their own OTT platforms. TV content is available on OTT platforms, as video-on-demand (VOD), live TV, and catch up TV (specific VOD service where users can watch recent episodes of current TV series for a certain period of days after the original television broadcast). GEC content is the most popular genre on OTT platforms, with catch up TV being the most common reason for users to view online. Other TV content such as sports and news content is also gaining traction. 

For films, the digital rights are currently sold bundled with the TV rights. However, digital is expected to soon emerge as an independent revenue stream. Producers are also leveraging OTT platforms for marketing initiatives. With the entry of multiple players, the syndication revenues are expected to increase and digital is expected to emerge as a strong revenue stream for films.

Original Video Content on OTT Platforms Has Arrived!

While a majority of videos available online are either re-runs of TV shows or movies or user-generated content, platforms and content creators are beginning to leverage the growing viewership to offer original content for the Internet audience. These made-for-digital video offerings are varied – with everything from episodic web series, stand-up-comedy, movie reviews, and short films being tested to cater to this growing audience.

With traditional TV shows continuing to focus primarily on family dramas during prime time, original web-series offer a lot of potential, especially since the demographics of the online audience in India is different from the traditional TV viewing audience.

Advertiser Interest in Digital OTT

Video advertising is fast gaining prominence as advertisers take to reinforce their marketing messages across multiple screens. Video advertisements as a segment contribute to 18 percent of the overall digital advertisement spend in 2016 and are expected to grow at 40 percent by 2021.

SVOD – Sustainable Model Going Forward

Subscription VOD (SVOD) has so far not taken off in India. Given that data consumption charges are still very high in India, consumers are paying for Internet consumption and not for the content, and as a result there is a lack of willingness to pay for content on top of the bandwidth. Even if viewers are willing to pay, they see additional value in terms of exclusivity or timing or availability. Hence, for paid versions of OTT services to be successful, it is essential to provide differentiated content.

Growing consumption has seen advertiser interest rising steadily, with the digital advertising market having grown to Rs.76.9 billion in 2016 and envisaged to increase by nearly 4 times to Rs.294.5 billion by 2021.