In recent years, video streaming over mobile phones has gained significant traction. As internet speeds have become faster and tariffs cheaper, users are streaming movies and television series on their mobile phones more than ever before. Hypercompetition post the entry of Reliance Jio Infocomm Limited has led to a sharp decline in data rates. According to Mary Meeker’s Internet Trends report for 2017, the average cost of 1 GB data in India was $4.4 in March 2014, which came down to $3.7 in March 2016 and further down to $1.9 in March 2017.
In addition, the increasing proliferation of operator plans that offer unlimited data has given an impetus to the video-on-mobile trend. Consumers today use mobile data to watch YouTube content, movies and to stream live matches and concerts. According to a survey conducted by Bank of America Merrill Lynch (BofAML) on 1,000 consumers, 76 per cent used mobile data to watch videos online and 30 per cent of users reached their daily limit of 1 GB or 1.5 GB regularly. Further, as per the report, YouTube continued to lead the video streaming platform, accounting for 58 per cent of the total content viewed, followed by Hotstar with 38 per cent, Zee5 with 2 per cent and Eros with 1 per cent of the viewed content.
Market growth and composition
The year 2016 was a turning point for the video streaming market in India, with two of the biggest streaming services – Netflix and Amazon Prime Video – being launched in the country. In 2017, there were about two dozen streaming services in India, according to an EY report.
In the past two years, the trend of watching live television on mobile phones has grown owing to the emergence of several new apps for live streaming. Domestic platforms like SonyLIV, Zee5, Hotstar and Voot are owned by media conglomerates that also run entertainment channels on TV. These platforms have a huge consumer base comprising users that follow their television soaps and reality shows. Besides a comprehensive catalogue of widely watched current and past TV programmes, these apps also have a limited movie catalogue.
In a bid to capitalise on this trend of binge watching and live TV streaming, telecom operators have forayed into the mobile TV space. This market has become highly competitive with the launch of Jio TV in 2017, which according to the BofAML survey was the most used mobile TV app. Recently, Bharti Airtel’s video-on-demand streaming app, Airtel TV, crossed 50 million downloads on Android phones.
Emerging monetisation models
Currently, there are several popular monetisation models available for video-on-demand services. The most common is advertising based, wherein users can watch videos for free, with some advertisements being displayed. The service provider then generates revenue from the advertisements. The number of viewers is the key factor in the success of this model. Advertisers often pay large amounts to stream their ads on popular video-on-demand platforms. YouTube and Voot are examples of platforms using this model.
Next, there are subscription-based models, (used by Netflix and Amazon Prime) wherein users pay a fixed subscription fee to access a variety of unlimited video content available on that platform. Subscriptions vary in terms of duration – they can be monthly, quarterly, half-yearly and yearly. Subscription models are good for platforms that have a large variety of entertainment content such as TV programmes, movies, and various series to engage their audience on a long-term basis.
The third is a freemium model, under which some content is made available without any charge while the premium content is accessible with a subscription. Hotstar works on a freemium model and much of its content is available for free without the need to sign up, but one can pay Rs 190 per month for a premium subscription to access the rest of its content.
Free or freemium models tend to have more consumers on mobile devices.
Growing content ecosystem
Local and regional content is the key to driving the uptake of video-on-demand services. Hotstar provides a wide range of regional content. It gets its edge and popularity from live sports, cricket in particular. Netflix ensures its regional content also has a global appeal. HOOQ is another video streaming platform. However, it primarily focuses on international content. The Singapore-based service was launched in India a few years ago but did not receive much attention. The company recently announced a makeover of its service, and is now allowing users to stream movies and TV shows at an introductory price of Rs 89 for the first three months.
In order to stay ahead in an increasingly competitive market, some of the big players are partnering with other service providers to widen their reach. For instance, Netflix has recently entered into a strategic partnership with direct-to-home (DTH) player Tata Sky to enable subscribers of both services to easily access the Netflix catalogue through Tata Sky platforms.
Airtel has also partnered with other video-streaming service providers, such as Eros Now, Hotstar, YouTube and Amazon, to distribute their content on Airtel TV. Airtel has partnered with mobile advertising platform InMobi as well, to capitalise on the use of its video streaming app. More recently, ALTBalaji offered its content portfolio to Airtel TV. Apart from this, Hotstar holds the digital rights for the Indian Premier League (IPL), while Airtel and Jio have partnerships with the platform to stream IPL on their over-the-top platforms.
Focus on sports
For the past few years, live sports have prevented users in India from giving up their cable connections altogether. However, that too, is changing. The live streaming of sports has been offered on Hotstar for quite a while now – something that Amazon Prime Video and Netflix have not ventured into. Initially, it broadcast only a few tournaments and sports, but its catalogue is now expanding along with its streaming quality. Sony LIV streams live sports too, as the same group owns Sony ESPN’s suite of sports channels. For example, it provided live streaming of the 2018 FIFA World Cup.
Cord-cutting phenomenon
Before the online streaming boom in India, the market was dominated by cable TV service providers. Cord-cutting refers to the pattern of viewers cancelling their DTH or cable TV subscriptions in favour of online streaming services, which is a very common phenomenon in the US. Since the advent of online streaming platforms and mobile TV apps, people in India are also increasingly moving towards the online medium. For example, the live streaming of cricket matches on Hotstar and the 2018 FIFA World Cup on Sony Liv without any subscription has encouraged users to download mobile apps for watching live matches. According to the BofAML survey, 62 per cent of respondents were keen to get rid of their cable TV connection if internet speeds improved and online content prices declined. Moreover, growing subscriptions to Airtel and Jio TV indicate that online streaming services will overtake cable TV very soon.
Conclusion
The streaming of video over phones as a phenomenon will pick up significantly in the coming years. Users are increasingly getting used to the concepts of on-the-go and on-demand viewing. Going forward, factors such as the evolving content ecosystem, growing affordability of smartphones and cheaper data tariffs will be the key growth drivers in this space.
