Over-the-top (OTT) services have been around for quite a while in the Indian market. These platforms let us­ers watch all kinds of films, shows and sports events on their phones, laptops, TVs and other devices.

While the first OTT platform was launched in 2008 by Reliance Entertain­ment, these platforms gained real traction following the onset of the Covid-19 pandemic. With public gatherings stopped and no other way of launching content, a number of digital entertainment producers swit­ched to OTT services. Since then, the medium has grown to the point where most viewers prefer OTT platforms over other means of consuming content.

Growth drivers

Based on industry reports, there are 20-22 million internet-enabled televisions in the country, while the OTT audience stands at 424 million. Of this, 119 million people have active paid subscriptions.

Further, according to an SBI Research report, the OTT industry has seen a massive boost in revenue and will be valued at Rs 120 billion by 2023. The report states that the rise of OTT platforms can lead to lower profits for multiplexes, given that over 50 per cent of the OTT audience use such applications for over five hours a month. The OTT industry has already appropriated 7-9 per cent of the entertainment industry’s revenue.

The industry’s growth drivers include cheaper and greater access to internet, and the bundling of OTT subscriptions with data plans by internet providers. India ra­nked 44 among 117 countries in terms of in­ternet affordability in 2022 on the affordability index of the Netherlands-based cybersecurity services firm, Surfshark.

The addition of short-form content to OTT platforms, which can be played anytime, anywhere, is also a key driver. The short-form video (SFV) format is scroll-friendly, and viewers do not face a dilemma with regard to deciding what to watch. For example, Netflix added SFVs called “Fast Laughs”, which provide brief clips from some of its trending and suggested shows.

OTT platforms are increasingly in­vesting in India. According to a report by Research and Markets, OTT platforms invested a total of Rs 55.21 billion in 2021, with Netflix, Amazon Prime Video, Dis­ney+ Hotstar being the top three spenders with a combined expenditure of Rs 31.55 billion. Moreover, as of 2022, OTT platforms in India have invested around $600 million-$700 million in original content production.

Meanwhile, the Indian market’s appe­ti­te for international content has been gr­owing, as per a study commissioned by So­ny Pictures Television. This study was conducted across major metropolitan citi­es such as Mumbai, Delhi, Bengaluru and Hyderabad. The availability of dubbed versions of popular international shows has also significantly increased OTT viewership by making these shows accessible in the vernacular.

Another major factor has been the growing awareness about OTT platforms. The promotion of streaming content on platforms with massive user bases, such as YouTube and Twitch, has significantly increased awareness among Indian viewers. This has also helped them choose custom subscription packages tailored to their own liking. Some OTT companies even freely engage with prospective users on popular social media websites, especially when they need to promote upcoming content, or can capitalise on viral topics or clips. This includes activities such as interviews with the cast members of their shows.

 The OTT industry has already appropriated 7-9 per cent of the entertainment industry’s revenue

Regulatory changes

With increasing OTT viewership, the De­partment of Telecommunications (DoT) sought to regulate these platforms as telecom operators urged it to do so to ensure fair play. These operators reiterated that the laws should be more forward-looking and address the needs arising from the co­n­vergence of various digital services, in­cluding telecommunication connectivity, carriage of broadcasting content and OTT communication services.

Later, on DoT’s suggestion, the Tele­com Regulatory Authority of India (TRAI) decided to release a public consultation pa­per to discuss the OTT regulatory fra­me­work, including internet-based calling, messaging and entertainment apps. Fur­ther, the Delhi High Court dir­ected TRAI to speed up the consultation process with all stakeholders and suggest a suitable regulatory mechanism for OTTs, covering issues related to selective banning of OTT services.

Among industry organisations, the Broadband India Forum opined that OTT platforms should be excluded from the category of telecommunication services as the government would otherwise have exclusive rights and privileges to decide, build, develop and operate such apps. Such a situation could lead to the collapse of the entire app ecosystem, which would impact the innovation and growth of the economy. Meanwhile, the Cellular Operators Association of India insisted that OTT service providers should reimburse telecom operators for rolling out networks, as it is an industry-wide belief that OTT applications utilise most of this infrastructure. As for regulation and licensing, the two organisations were of the same belief, desiring a light-touch licensing regime for communication OTTs.

Meanwhile, the Internet and Mobile Association of India strongly opposed the proposition of revenue sharing between telcos and OTT service providers, arguing that it goes against the principle of net neutrality.

 OTT platforms invested a total of Rs 55.21 billion in India in 2021.

Rise of partnerships

While the regulation of OTT services is still being debated among industry stakeholders, their uptake is rising significantly. In fact, telecom operators and internet service providers (ISPs) alike are either upping their own OTT game or entering into partnerships with OTT platforms to leverage opportunities in this domain.

For instance, Reliance Jio’s own OTT platform, Jio Cinema, which was previously a content aggregator, is now set to debut original content. The company recently unveiled a line-up of 100 upcoming titles spanning multiple languages. Some of these will also have theatrical releases.

Vodafone India Limited (Vi) has im­p­roved its content library by partnering with Atrangii and offering regional content to its users. Vi users will now be able to browse a diverse Hindi content catalo­g­ue including Atrangii’s exclusive digital co­n­tent and new releases. Meanwhile, Bharat Sanchar Nigam Limited (BSNL) has laun­ched a single-subscription video streaming platform, YuppTV Scope, in partnership with YuppTV. Under this partnership, BSNL will offer a bundle of OTT services to cater to cable TV uses.

Among ISPs, ACT Fibernet also rece­ntly partnered with YuppTV to support the OTT aggregator platform, YuppTV Sco­pe. The platform will offer users content from a variety of OTT applications, in­cluding ZEE5, SonyLIV, Voot Select and YuppTV. Moreover, ACT Fibernet partne­red with Net­flix at the beginning of 2023. ACT and Netflix will launch the #Two­GoodtobeTrue campaign, highlighting the benefits of the ACT and Netflix bundle.

 Telecom operators and internet service providers are either upping their own OTT game or entering into partnerships with OTT platforms to leverage opportunities in this space.

What to expect in the future

With the growing play of OTT in the current digital era, bigger investments can be expected in OTT platforms in the near fu­ture. Given the continuous release of new content, more and more users and adverti­sers will be attracted to this new medium of entertainment. Sports entertainment too is slowly shifting to OTT platforms, as they bring in extensive viewership. A re­cent industry report estimates that the OTT video segment’s average revenue per user will reach $8.81 in 2023, while the OTT video user penetration rate in India will rise from 30 per cent to 36 per cent between 2023 and 2027.