India not exciting enough for foreign streaming apps; too price conscious

Foreign streaming apps new to India’s crowded market are taking baby steps, as low returns in a price-conscious market deter them from making big bets with local originals.

While Warner Bros has indefinitely delayed the launch of its streaming app HBO Max, and instead licensed content to JioCinema, Apple has tied up with Bharti Airtel for Airtel XStream customers to offer Apple TV+, which won’t have any local originals. Others like Crunchyroll, a global anime brand, operate in India, but do not make any local content.

Poor ad, subscription revenues
Industry experts attributed the platforms’ caution to poor advertising and subscription revenues, as well as the limited audience of their niche content that may not require big investments.

“For global OTT players aiming to succeed in India, understanding the complex audience dynamics is crucial,” Chandrasekhar Mantha, partner, media and entertainment leader, Deloitte India said. “Given the market’s price sensitivity, recognizing viewer segmentation and offering tailored subscription plans, along with AVoD (ad-supported video-on-demand) models, are key strategies for success. While original content production is costly, leading platforms will have to effectively balance their content slate with a mix of originals and marquee licensed acquisitions. Getting the content strategy right may be challenging for new players,” Mantha said.

New entrants also face significant challenges in competing with established OTT giants, given the substantial investments required in technology, content and marketing. Subscriber acquisition costs are high for OTTs in the early stages. Usually, initial years may have a negative or low return on investment, Mantha added.

In such a scenario, licensing partnerships and affiliations are attempted to raise penetration levels and create a strong subscriber base, before investing in localized content offerings, according to Manpreet Singh Ahuja, chief digital officer and TMT (technology, media, telecommunications) leader – PwC India.

Akshat Sahu, senior director of marketing – APAC at Crunchyroll said the company sees great potential for anime in India, as it transcends cultural barriers. “That’s why we are localizing our content in Tamil, Telugu, and Hindi, ensuring that more Indian fans can enjoy anime in their preferred languages. We believe that understanding and catering to the unique needs of the Indian audience is key to thriving in this vibrant market. We have also introduced special pricing for Indian anime fans that starts at ₹79 per month,” Sahu added.

Fewer paying subscribers
In an August report, media consulting firm Ormax pegged India’s streaming audience at more than half a billion, though paying subscribers are below 100 million. In this market, pricing strategies and local language content remain key.

“Indian audiences are price-sensitive and value-driven, requiring new entrants to match the pricing of existing players while offering great content to attract viewers. It is also essential to understand the cultural nuances and beliefs of the audience, as Indians are sensitive to religious comments and statements. Another factor foreign OTT platforms must consider when expanding into India is the linguistic diversity. Although India has a large English-speaking audience, the demand for native and local language content is high,” Mehul Gupta, co-founder and CEO of digital agency SoCheers said.

Apple TV+ could tap into a niche audience that is interested in premium global content and is willing to pay for it, Gupta said. “You will not see them investing in regionalized content for markets like India yet; they prefer betting on content that will work across borders. The overall market share of Apple TV is negligible in the Indian market with key players like Prime Video, Netflix, Hotstar, JioCinema, ZEE5 and SonyLIV and a few more regional OTTs taking up more than 90% of the market,” Gupta added.

Differentiated content
In an earlier interview with Mint, Arjun Nohwar, general manager, South Asia, Warner Bros. Discovery, had said that despite owning their own OTT platforms, companies capitalize on the wide user base of other platforms and bring differentiated content to the consumer. “This symbiotic relationship enhances OTT platforms’ content libraries, attracting a larger subscriber base, while parent companies generate additional revenue sans the costs and risks of independent platform operation in India’s competitive landscape,” he had added.

The price-conscious Indian market throws up other challenges. With multiple affordable options already available, the average consumer is reluctant to pay a premium for content. This puts pressure on foreign platforms to either match low price points or offer compelling value propositions, which may not always align with their global pricing strategies, according to Bhavesh Joshi, founder and CEO of MovieMe, a content discovery app.

“On the advertising front, while the potential is huge, the CPM (cost per thousand impressions) rates in India are significantly lower than in western markets. For foreign platforms used to higher returns on ad spend, this could impact the profitability of launching ad-supported models in India. Furthermore, advertisers in India have diverse expectations when it comes to ad targeting and audience segmentation, which requires platforms to be highly adaptable and innovative. An abundance of advertising networks has created a highly fragmented landscape in India, which can be difficult to monetize properly,” Joshi explained. Livemint