Video on Demand – OTT Platform players

July 10, 2020 / Divya Mary

We only hear about disturbing news these days. Our Research team thought that they would put together a note on one industry that is bringing smiles to our faces while we are all at home – Video on Demand Players who have seen their business uptick in these times

Covid-19 and Lockdown made us all homebound. A number of businesses suffered while few of them flourished.  There is a long list of businesses that have suffered but one of the industries that came out smiling is OTT Platforms. A number of these players have seen a spike in their subscriptions/ viewership. Let’s look at the industry a bit in length:

  1. What is OTT? 

OTT(Over the top) services refer to applications and services that are accessible over the Internet and ride on an operator’s network. Though the term is commonly applied to video-on-demand platforms, it actually covers a broad range of web-based content:

  • Video Streaming: This is the most widely recognized OTT Media service and is currently synonymous with players delivering film and television content g. players Netflix, MX player, etc.
  • Audio Streaming: Audio streaming includes radio stations as well as podcasts
  • Messaging: OTT-based instant messaging services connect users directly through internet connections, without mobile SMS networks eg WhatsApp, Viber
  • VOIP: Voice over the internet or ability to make calls using the internet instead of regular network providers eg skype, Whatsapp calls, etc. This has further advanced to video calls now like Zoom, Skype, Google meet, BlueJeans, etc

Other segments that have grown as part of OTT are – Online Gaming, Education, Health-based content delivery.

How are the services delivered?

OTT services are delivered via a high-speed Internet connection rather than a cable or a satellite provider, that are typically accessed via websites on personal computers, as well as via apps on mobile devices (such as smartphones and tablets), digital media players (including video game consoles), or televisions with integrated Smart TV platforms

  1. Video Streaming Industry

For this report, we will confine ourselves to the Video Streaming Industry

The total number of internet subscribers in India has grown substantially over the last few years. As of Dec-2019, the number of Internet subscribers stood at 72 crores registering a 3-year CAGR of 22%.  Internet adoption across India has made the OTT space reach an inflection point for growth. Nokia’s annual Mobile Broadband India Traffic (MBiT) Index study reports a 47% increase in overall data traffic in India in 2019, driven by continued 4G consumption. The report highlights that the average amount of time spent on OTT platforms in India is about 70 minutes a day and an average single session lasts for about 40 minutes.

The table below highlights the trend in the growth of Internet subscribers in India over the years.

Growth of Internet Subscribers

Video on Demand (VOD) through OTT Platforms has caused huge disruption in the content consumption space over the last few years. From an Indian perspective, where having multiple cable connections in a single Indian household was a distant dream, OTT platforms have enabled individual viewership. OTT platforms today provide the comfort of viewing content at one’s convenience in terms of time, place, and device. Some of the key drivers that have aided growth in the OTT space include:

  • Improved connectivity in rural areas and a fall in data costs
  • Increase in smartphone penetration
  • Favorable demographics in terms of increase in its affluent population
  • Improvement in Payment Ecosystem
  • Supply of varied content
  1. History of VOD in India

The first Indian OTT platform was BIGFlix, which was launched by Reliance Entertainment in 2008. In 2010, Digivive launched the first mobile OTT app – NexGTv – providing both live TV and on-demand entertainment content. NexGTV was the first app to live stream Indian Premier League matches on mobile phones in 2013 and 2014. Later on, apps like Zee-owned DittoTV and Sony Liv were also launched in 2013, which helped grow the Industry. But the OTT industry in the country really expanded only after the launch of Netflix in 2016 and Amazon Prime Video by the end of the same year.

2. Size of VoD industry

According to recent coverage on LiveMint, that was sourced from the latest Global Entertainment & Media Outlook report released by PwC India, India’s OTT VoD market was valued at Rs 4,464 crore as of 2018 and is predicted to grow at a CAGR of 21.8% to Rs 11,976 crore in 2023. Of this, Subscription video on demand

(SVoD) is expected to grow at a 23.3% CAGR from Rs 3,756 crore in 2018 to Rs 10,708 crore in 2023. As per the report, this makes India poised to become the eighth biggest market in the world by 2023.

3. Categorization of players

There are more than 30 players in India and they can be categorized on the basis of their monetization methods. There are broadly 3 models of monetization –

  • Subscription-based VoD (SVoD)
  • Advertising based VoD (AVoD)
  • Transaction based VoD (TVoD)
Digital Video Consumer

Digital Video Consumer

Currently, the most preferred category of content consumption in India is via AVoD. However, subscription services are catching up too. People have warmed up to the idea of paying for content, which was not the case just a few years earlier. The above monetization models are distinct from telco-backed OTT platforms like Jio Cinema, Jio TV, Airtel Xtreme, etc., which are largely aggregators of content from other broadcasters and online video platforms.

4. Key distribution partnerships for OTT players in India

KPMG Report

5. Key Metrics

6. Regulations

India currently does not have any regulations governing OTT service providers. Any regulatory framework, in general, could impact the model of operations, the structure of transactions, and funding arrangements. Indian OTT service providers procure rights to Hollywood content and pay fees for such rights. This would be a typical content licensing payment and subject to regulations generally applicable to any import of service. In the case of foreign OTT service providers with no presence in India, advertising revenue directly collected from Indian advertisers/ad agencies or subscription revenue from Indian subscribers would be subject to import regulations as applicable to any other import of service. However, with most regulators around the globe working towards governing OTT players, the future of VoD cannot be imagined without a regulator. Regulations on content classification can be expected in the near future.

      7. Conclusion

 By 2023, it is estimated that 48% of India’s internet users will be from rural parts. This will provide a largely untapped market for new OTT players, who will have the opportunity to tap into rural markets that have access to the internet. Moreover, the impressive scale of the market and a liberal foreign investment environment will continue to be attractive to global streaming platforms looking to capitalize on the country’s fast-growing digital consumption.

Going forward, Indian players can focus on certain aspects to realize this opportunity:

  • Companies need to guide customers to their various choices by marketing their specific propositions and let them know how the platform can meet their entertainment needs
  • Instead of vying for the same target market with minimal differentiation, platforms can establish a distinct identity by untapping niches like ‘Music’ and ‘Program for kids’
  • Focusing on regional content can help an OTT platform differentiate themselves from their competitors, as the Indian audience seems to have more affinity towards regional shows or items
  • Analyzing a large amount of data OTT creates, can help gain an understanding of consumer insights and the data analytics can help monetize the OTT platform
  • With user experience being a key differentiator, investing in the right technology will play an important role in the coming years.

About Probe

  • Probe is an independent Information Services company focused on providing financial information on Unlisted and under-covered companies in India
  • The Probe42 platform has been extensively used by Banks and Corporates
  • Our Customers have found value in using to enable their decisions involving identifying prospects, sales preparation, credit and competitor analysis, etc.
  • Please reach out to us if you need information on ANY of the ~ 1,207,000 companies in India