What is OTT and What is Its Future in India?
Over the top (OTT) media service covers a wide range of online content providers that provide streaming media as a product. OTT usually refers to video-on-demand platforms, but it can also cover areas like audio streaming, online voice-calling solutions, and messaging services.
The OTT service doesn’t require the traditional media distribution channels like cable TV providers and telecommunications networks. This service can be accessed as long as you have access to internet connectivity.
India, one of the largest video and other content consuming markets in the world, is a lucrative market for OTT platforms. The digital and smartphone revolutions have played their roles in giving a huge boost to this segment in the past few years. The future of OTT is also promising in the country with the largest number of young people in the world.
During this Corona period, it is all the more important to offer something substantial in mobile entertainment to the consumers. OTT is playing a big role in bringing latest movies, shows and even stand up comedy right on the mobile devices.
Before studying the present and future of this platform in this country, it is important to know more about OTT.
OTT Content & Its Delivery
OTT platforms follow an internet-based delivery system. A consumer requires compatible hardware and internet connectivity to access the content. The content delivery system requires the following devices:
- Mobile Device: OTT apps can be installed on mobile devices.
- Smart TV: New smart TVs have pre-installed OTT applications. You can also download such apps on these TVs.
- PC: Most PCs can allow access to OTT content through browsers or applications.
- Digital Media Player: Apple TV and other third-party devices support a variety of OTT solutions. Such content can also be accessed on the latest gaming consoles.
There are different ways in which OTT services have been monetized. This includes paid subscriptions, in-app advertising, and in-app purchases.
Types of Content
OTT services mean much more than video-on-demand. It includes a wide range of online content types, including the following:
- Video: When it comes to OTT media services, video streaming is the first thought that comes to mind. YouTube, Netflix, Amazon Prime, and iTunes are the best examples here.
- Audio: Examples of audio streaming through OTT services include online podcasts and radio stations.
- VoIP: Skype is a voice-calling service that uses the internet. Similarly, WeChat is also a VoIP OTT service.
The Current Indian OTT Industry
India has a thriving and flourishing OTT industry that continues to grow at a fast rate. There are many local players that benefited from the early-beginner advantage and established their dominance in this huge market. Interestingly, India is still mostly an untapped market. Major OTT platforms from the US and other Western markets are vying to gain an edge here. And names like Netflix and YouTube have tasted success so far.
With everyone vying to get a share of this market, the Indian OTT market has become a jumbled sphere of players and services. The biggest players have the capital to create their own fresh and quality content. They can also promote their platforms to the audience. Then, there are players that follow a different approach to reach their audience.
There is also a complete segment of platforms that is backed by movie studios and television channels. These more traditional players consider this an opportunity to benefit from the digital push. The good thing is that most of these players are doing good in this market.
Also Read: 11 Audio/Video Streaming Trends for 2020
Consumption of OTT in India
Some of the interesting consumption statistics relevant to the Indian OTT industry are as follows:
- Counterpoint Research reports that 89% of the target audience in this market is under the age of 35
- Hotstar is the leading player. The other players include Netflix, Amazon Prime, and SonyLIV.
- India’s 5 metropolitan cities account for 55% of the country’s entire OTT-consuming population. This shows the size of the untapped market in its other tier cities, towns, and villages.
- Around 65% of the consumers in these top 5 metropolitan cities use Netflix and Amazon Prime.
- ErosNow is the biggest player in the OTT Smart TV consumption segment. Xiaomi is the biggest OTT player in the smartphone segment.
Some of the biggest OTT platforms in India are as follows:
Disney-owned Hotstar has over 300 million monthly active users (MAU) and is the largest OTT platform in India. It provides content in a wide range of Indian languages. Sports events, especially cricket matches, play a big role in its popularity.
- Hotstar has the rights to stream Indian Premier League (IPL) matches online
- It also streams the ICC World Cup and various domestic cricket events
- Hotstar also streams the EPL in India
The OTT platform also streams many of the popular Indian TV serials, TV shows, movies, and other original content.
2. MX Player
The Times Internet-owned MX player began operating as an OTT platform from the beginning of 2019. Before its information, this offline video player was installed by over 350 million users in the country. The move to being an OTT platform saw it creating original content and streaming its content online. It creates original regional content in many Indian languages. Interestingly, the company’s strategy has been to reach out to an audience that has mostly been ignored by other streaming services.
Netflix is the largest streaming platform in the world, but it is a relatively new player in India. The quality of the content it offers means and its quick adoption so far in this market means that it has a great future here. By the last count, it had around 11 million MAUs. It is still in its early years in the country. Interestingly, Netflix has been able to get much greater feedback compared to the market leaders. There are clear indications that it has struck the right chords with Indian consumers with the help of its original and high-quality content.
4. Amazon Prime Video
Amazon Prime Video has already built a base of 13 million active users in the country. When compared to other market players, Prime Video has access to almost limitless resources in the creation of original and quality content. However, its wider presence in different markets seems to have diluted its focus on just the Indian market. Other players like Netflix, Hotstar, and ZEE5 are focused solely on the content market in India.
It is expected that creating a more focused approach can help Amazon Prime Video to become a bigger player in the Indian OTT market.
Zee Entertainment-owned ZEE5 is a local market player in the Indian OTT sector. It has more than 60 million MAUs and has banked upon the brand’s local fame. Interestingly, ZEE5 is available globally except in the US.
- It stands out for its affordable pricing compared to most other OTT services
- ZEE5 created the first web series in Tamil
- Its content caters to both regional and urban audiences
- Some of the well-known tech companies it works with include Talamoos, Applicaster, and Lotame
ZEE5’s technical collaborations have played a big role in improving its mobile-based OTT services.
Future of OTT in India
The Indian video streaming industry is expected to grow from 2018 to 2023 at a CAGR of almost 22%. PricewaterhouseCoopers (PwC) claims that the OTT video segment will experience the highest growth across the different sub-segments in this video streaming industry. This will be the segment that will have the biggest role in driving evolution and creativity in the country’s media and entertainment (M&E) industry.
Also Read: Top 10 OTT Trends In 2020
The media and entertainment sector in India will grow by 11.28% to reach a behemoth Rs. 4.51 lakh crore figure. It was sized at Rs. 2.64 lakh crores in the year 2018. PwC reports India to be the fastest-growing M&E market in the world. It is expected to undergo the biggest growths in the following sub-sectors:
- Online advertising
- Online gaming
The growth in these sub-sectors will especially revolve around increased digitalization and simultaneous personalization.
India’s Future M&E and OTT Growth Story
Some of the related developments projected in the M&E and OTT growth story of India can be summed up as follows:
- OTT players now realize that offering different consumption options is beneficial in this market. This includes options like unlimited usage in certain areas, different payment tiers for different services in lesser development markets, and the affordability game in some areas.
- Content creators are coming up with new and innovative ways to attract consumers
- Marketers are looking for new ways to touch consumers at the point of consumption
- Marketers also seek ways to point consumers immediately towards purchase
- Many players are leveraging the capabilities of AI in understanding consumer interests and consumption habits to create content that appeals to individual users
These OTT players are relying on consumer data like streaming music and news, and products they purchase to present them with content they will most likely consume. According to market statistics, most of the industry revenue in 2023 will be from the following two areas:
- Traditional TV: A CAGR of 11.83% and revenue of Rs. 1.23 lakh crores
- Internet Access: A CAGR of 16.02% and revenue of Rs. 1.16 lakh crores
Besides OTT, the other M&E sub-segments that will notice dramatic growth will include video games and esports growing to Rs. 17.89 thousand crores and Internet advertising at Rs. 18.44 thousand crores.
The emergence, adoption, and growth of OTT have also created new challenges to the traditional big-screen movie sector. Many recent big-ticket productions in the Hindi film industry have experienced difficulty in drawing audiences to cinema theatres. It is, however, fascinating that the old TV viewership continues to grow in the country, especially in the more rural areas.
TV subscription is expected to grow by a CAGR of 11.85% by 2023 to reach Rs. 1.23 lakh crores. The state broadcaster’s DD Free Dish (direct-to-home platform) has played a big role in the rural locale’s continual dependence on television.
According to reports, the big numbers will still be seen with digital services. In 2018, the Indian OTT market generated Rs. 4.46 thousand crores in revenue. Subscription-based VoD platforms are expected to grow to Rs. 10.71 thousand crores in 2023, a CAGR of over 23%.
Currently, the OTT market is mostly dominated by advertising-based platforms. However, subscription-based services are growing at a much faster rate.
The Indian M&E content industry is undergoing a revolution that is specifically spurred by the boom in OTT services. Even when you consider the numbers from telecom service providers that claim up to 5% growth in Average Revenue Per User (ARPU), it is apparent that the above-mentioned growth figures are fairly accurate for the future of the OTT sector in India.
The launch of 4G services at affordable prices is claimed to have played the biggest role in changing the entire OTT landscape in the country. The industry seems to be growing at almost an exponential rate in this market. Given the sheer size of the Indian consumer market, it is fair to think that it will be some time before the OTT sector will reach a saturation point here.