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Vying for Eyeballs: OTT players set to change the entertainment game

April 06, 2018

Of late, over-the-top (OTT) services have gained traction across the globe. OTT players are carving a niche for themselves on the back of original and gripping content. Globally, major television channels have come up with their own OTT platforms in a bid to attract customers by offering them the freedom to select when to watch, where to watch and what to watch. Simultaneously, a number of independent players have also mushroomed in the space.

 

In the Indian context, the proliferation of fast and affordable internet connectivity has paved the way for the emergence and growth of OTT content providers. According to the Internet and Mobile Association of India, there were around 481 million internet users in India as of December 2017. This figure is expected to cross 500 million by June 2018. Further, according to a new study by US-based media agency Zenith, India will have nearly 530 million smartphone users by end 2018. As a result of the rapid internet penetration and growing smartphone uptake, content consumption is also changing in a big way with video content being at the forefront.

As per industry estimates, the Indian OTT market is currently valued at $280 million with close to 100 million subscribers, and is poised to grow at 35 per cent annually. The Indian OTT market is a combination of television companies, media production houses, telecom companies and independent OTT players.

tele.net takes a look at the trends and challenges in the OTT space in India…

Key trends

Original content creation

OTT players are working towards creating original and exclusive content for their customers in order to differentiate their offerings from those of their competitors. This strategy seems to be working well for them. For example, Amazon Prime Video’s maiden show, Inside Edge, garnered the company as many paid subscribers in 30 hours as it would normally have in 30 days. Amazon has approximately 18 such original shows in the pipeline. It has also signed exclusive deals to showcase new movies a few days after they hit theatres. Another player, Netflix relies heavily on in-house content and has become popular among customers for providing interesting web series as well as movies.

Offerings by telecom operators

With ARPUs and profitability declining, telecom players have entered the fray and launched their own OTT platforms in a bid to diversify their revenue streams as well as differentiate their products. For instance, in December 2017, Bharti Airtel offered its entire OTT content portfolio on Airtel TV free of cost to its prepaid and post-paid customers until June 2018. It has also collaborated with other players such as Eros Now, SonyLIV and HOOQ to augment and improve its content library. Recently, Airtel has started providing free Amazon Prime subscriptions for a year  exclusively to its customers. Meanwhile, Vodafone India is giving free subscriptions to its OTT platform, Vodafone Play, to all its customers as a bundled offering. In September 2017, it partnered with ALTBalaji to provide original content on Vodafone Play.

Vernacular content

With internet penetration nearing saturation levels in urban areas, the next phase of internet adoption will be driven by rural users, who prefer accessing content in vernacular languages. According to a report by KPMG and Google, the vernacular internet user base will be two and a half times that of the English internet user base in India by 2021. As of 2016, the number of vernacular internet users in the country stood at 234 million compared to 175 million English language internet users, which is expected to increase to about 536 million and 200 million respectively by 2021.

In order to cater to the surging user demand for vernacular content, Indian players such as Hotstar, Eros Now and Voot are streaming regional content from popular channels and media houses such as Star India and Viacom 18 as well as Bollywood movies. Bharti Airtel, meanwhile, is offering content in almost 15 different languages in a bid to ramp up its OTT user base. While other players like Netflix have been making efforts to increase their vernacular content, a lot needs to be done in this direction.

Live streaming

With increasing competition in the OTT space, companies are now live streaming sports and other events. Star India has invested around $192 million in its digital content arm, Hotstar, which is the largest player in terms of active subscribers. It has won the television rights for the Indian Premier League (IPL). The first 13 IPL matches of the last season recorded a cumulative viewership of 295 million. With other sports gaining popularity, OTT players will be vying for live streaming rights in order to increase the appeal of their content and reach out to a larger audience.

Free content

At present, Indian audiences are reluctant to pay for OTT services. This is evident from the small percentage of subscribers that is actually paying for these services. Approximately 2-3 per cent of Hotstar’s total subscriber base is paying for the services while the rest access free content. In the case of Netflix, the numbers are a little higher with around 6 per cent of paying subscribers and the rest availing of free trials. Of late, many independent media houses have been releasing web series over independent platforms or YouTube that can be accessed free of cost. Owing to the availability of good quality free content, it is becoming increasingly difficult to create content that is interesting enough to make people pay for it.

Challenges

With a plethora of options to choose from, consumers have become more demanding and less tolerant in terms of a seamless user experience. According to a report released by Limelight Networks, close to half of the global users abandon a website or a platform if the loading time is longer than 5 seconds. In the Indian context, this percentage stands at a stark 66.6 per cent. This presents the challenge of maintaining agile content delivery in order to retain customers. OTT players, therefore, need to ensure that they have reliable infrastructure for seamless content delivery.

In addition, OTT players are competing with each other to create interesting content that viewers are willing to pay for. Content creation is cost-intensive and demands a lot of capital. For instance, Amazon is spending Rs 10 million-Rs 20 million per episode on its web series,  while a TV show with good production value typically spends Rs 1.5 million-Rs 2 million per episode. OTT players also have to deal with cybersecurity concerns in order to make their platform secure for consumers. Providing regional content is another challenge owing to the regional diversity in the country.

The way forward

The expected growth in data consumption is a massive opportunity for OTT players in the near future. Moreover, government initiatives focusing on extending connectivity to unconnected areas will usher in more opportunities.

Going forward, OTT players will need to provide more interesting and engaging content in a variety of languages, as well as devise attractive and innovative revenue models in order to attract more paying customers and churn profits.

 
 

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