International streaming companies wary as competition heats up

Fierce competition from big streaming platforms and rising production costs are making new foreign streaming services watchful of their investments in Indian originals in this market.

While HBO Max has deferred its launch to 2024, others like Paramount+ and the already operational Hayu are turning cautious as costs of local production are too high to achieve sustainable average revenue per user or ARPUs anytime soon. Media analysts said India is a diverse and complex market and most new services are likely to focus on American programming first.

“Most platforms are looking to dip their toes into the market first and make studied calls. The element of caution comes from the lessons they have learnt from other international players who’ve shown that in India, you either go big or go home,” said Jehil Thakkar, partner at Deloitte India. Foreign players have realised that in order to stay in the India market, they will have to play the local content game, which is turning out to be very expensive, Thakkar added.

OTT platforms invested an estimated $665 million in content in 2021, according to a recent Deloitte report, with Netflix, Amazon Prime Video, and Disney+ Hotstar leading the pack with a combined spend of $380 million. Without local Indian programming, a service may tend to be niche and cater only to the top of the pyramid. It may be a calibrated strategy, media experts said.

While players like Netflix and Lionsgate Play are still struggling to crack the Indian market, an entity like Amazon has been able to benefit from its diverse businesses, Karan Taurani, senior vice-president at Elara Capital Ltd pointed out. “The economics don’t support a full-fledged launch (of new international platforms) because content differentiation comes with hefty losses for at least three to four years,” he said.

On the other hand, licensing existing titles is just another way to milk them. For instance, HBO Max originals are now available on Amazon Prime Video. Sunder Aaron, co-founder, and principal of production company Locomotive Global Inc said Amazon and Netflix are seen as general purveyors of content, whereas subscribing to add-on services can enhance a viewer’s options.

India’s streaming video market is in its second growth phase with a revenue of $3 billion in 2022 expected to more than double to almost $7 billion by 2027, said Mihir Shah, vice-president, at advisory, consulting and research services provider Media Partners Asia (MPA). New players with deep pockets are gearing up to carve a share for themselves. “Companies like HBO Max and Paramount have the advantage of established legacy businesses and relationships in India. For instance, television channels owned by the newly merged Warner Bros, Discovery and Viacom 18. The latter also has a joint venture with country’s largest telco – Jio. There are many nuances to the Indian market. India is a very local market of price-sensitive but value-conscious consumers, so there is a lot to learn for new players and recalibrate their offering on content, tech and pricing,” Shah said. Live Mint