New OTT rules may hasten industry consolidation

The government has announced fresh guidelines to regulate digital news platforms and OTT (over-the-top) video streaming services. Its three-tier regulation mechanism or what it calls a “soft-touch regulatory architecture”—which was unveiled on Thursday—will involve first getting the platform itself to put in place a self-regulation mechanism. The second tier will enable content publishers to form a self-regulatory body which will be headed by a retired Supreme Court or high court judge or some other eminent person while the third tier calls for an inter-departmental committee to be established by the information and broadcasting (I&B) ministry for hearing grievances.

“The idea is to create a level-playing field for all media, since print and television already worked under certain restrictions,” Union minister Prakash Javadekar said at a press conference.

“The government had asked OTT platforms to come up with a code of self-regulation multiple times, but the last draft had not allowed for a third-party intervention. While freedom of the press is absolute, it needs to come with certain responsibility,” he said. The government said that these new guidelines will be referred to as the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021.

According to the new rules, publishers of news on digital media shall be required to observe Norms of Journalistic Conduct of the Press Council of India and the Programme Code under the Cable Television Networks Regulation Act—which are the same rules that regulate the print and TV industry.

A digital website or content publisher shall have to appoint a grievance redressal officer based in India who will have to act upon a complaint within 15 days, the new rules say. They are also mandated to classify their content according to different age-based categories: “U” or universal, 7+, 13+, 16+, and 18+.

The industry feels that there is still a lot of ambiguity in how these new guidelines will be executed. Industry body The Internet and Mobile Association of India (IAMAI), said that it was “dismayed” over the government’s plans to frame such guidelines without consulting the association or any of their stakeholders. In September 2020, the IAMAI had brought out an implementation toolkit based on the Universal Self-Regulation Code which was signed by 15 OTT players including ZEE5, Disney+ Hotstar, Amazon Prime Video, Netflix, and MX Player, among others. It has appealed to the central government to initiate a public dialogue with the stakeholders.

Industry experts feel that the new norms may lead consolidation to intensify for video OTT platforms in India. According to Karan Taurani, vice president (research analyst), Elara Capital, the regulations will create something of a level-laying field for the TV industry vis-à-vis OTT players, which was absent earlier. These rules could lead to consolidation in the OTT industry much earlier than expected, as these could shut down small or niche OTT apps relying on objectionable content, he said. This would “augur well for large global OTT players and TV broadcaster-based OTTs,” he added.

The situation is similar for the news genre as well. Larger news broadcaster groups may have an edge over the smaller news aggregators, Taurani said.

“Basis the regulation, we don’t expect any negative impact on consumption for digital media (on social media or OTT) as all other demographics like cheaper and faster data, increased smartphone penetration, and large youth audience remain favourable for India,” he added.

Taurani said that there are certain factors like no blanket censorship that work in favour of digital platforms. “Digital platforms will continue to command a big pie of ad spend. Consolidation within the highly fragmented OTT market of India will be good in the long term. Sports and gaming platforms [such as Disney+ Hotstar and SonyLIV which stream live events], too, could benefit from regulations over OTT platforms, with some shift seen from video towards these mediums,” he said. Fortuneindia