Consumption, Content & Challenges: 3 C’s That Will Decide The Fate Of Indian OTT Video Services

While wired broadband continues to be a constraint, mobile is paving the way for the Over The Top services in India. But, content will be the deciding factor for these OTT video services

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Unless you were living under a rock, you must have followed the rampant proliferation of Over The Top (OTT) video services. With 2016 starting off, Netflix’s Co-Founder and CEO Reed Hastings, announced the global launch of Netflix into 130 new countries, making it live in more than 190 countries worldwide. India featured in the new list of countries and social media was quick in welcoming the world’s largest Internet TV streaming service to India.

Post that we’ve seen Vuclip launching Viu, Viacom coming up with VOOT, and Zee following suit with OZEE like its competitors Sony (Sony Liv) and Star (Hotstar) had already done last year. We already have dominant players like TVF Play, Yupp TV, Lukup Media, among others. Very soon Alt Digital Media Entertainment Limited, a subsidiary of Balaji Telefilms will be joining the bandwagon with its own OTT player. Balaji has already promised around Rs 150 crore in the venture so far.

Read also: Mobile & Video Advertising Driving the Growing Indian Digital Advertising Spends

Very soon, I’m sure you will forget the count, the market is growing and has immense potential. While it is a true fact that 90% of households in India have a television set, still watching other content on laptops and smartphones based on individual choices has been a key trigger for increasing adoption and usage of OTT services. Besides, improvement in mobile broadband infrastructure, gradual reduction in the cost of internet and increase in smartphone screen sizes are driving consumers to shift their viewing preferences to mobile.

The video on-demand market in India is at a cusp of a meteoric take-off, thinks Gaurav Gandhi, Chief Operating Officer, Viacom18 Digital Ventures. He adds that the numbers already are substantial, but the next 24 months will drive this up manifold driven by much improved mobile data speeds, reduced data prices, fixed line broadband growth and large OTT services investing heavily on marketing and content.

This growth is happening at a time when the country has the slowest average Internet speeds in Asia Pacific. Among, Asia Pacific countries surveyed by Akamai in 2015, India had the lowest average broadband speeds of 2.5 Mbps, with penetration of connections with speeds above 4 Mbps also the lowest at 6.9 percent.

Mobile driving video consumption

While wired broadband continues to be a constraint, mobile is paving the way for video consumption, states the market research and audit firm KPMG and lobby group Ficci (Federation of Indian Chambers of Commerce and Industry).

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“Mobile data traffic grew 50 per cent in 2015, driven by 85 percent surge in 3G data traffic. This growth is largely on the back of surging consumption of videos, with approximately 40 percent of mobile data traffic being driven by video and audio consumption.”

These findings are a part of the recently released annual report on the media and entertainment (M&E) industry by KPMG and Ficci.

The report titled ‘The Future: Now Streaming’ was launched at the annual media and entertainment industry event, Ficci Frames in Mumbai. (Download the extensive report here)

Despite this growth, 3G device penetration in India is still at 32 percent in 2016 and of these only 38 percent have 3G connections, indicating the tremendous growth potential for high speed mobile data growth. Broader adoption of 4G in 2016 is expected to provide further impetus to video consumption on smartphones and mobile networks.

YouTube leading in viewership and revenues

While there is a proliferation of new players who will have to gain the trust of the Internet audience, YouTube, the grandfather of video social networks, continues to lead with maximum share of the online video viewership and online video advertising revenues.

According to Google:

“YouTube’s total viewing duration has grown 80 per cent over the past year in India with ~55 per cent of YouTube’s watch time coming from mobile devices and hours of content uploaded from India growing by 90 percent. On YouTube, entertainment-related content (film, TV and music videos) continue to take the lions share, contributing 90 per cent of viewership on the Top 100 YouTube channels. Education and health-related videos are growing and likely to be the future growth drivers on YouTube.”

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The report also highlights the growing interest from traditional TV broadcasters; film producers are currently leveraging the opportunity provided by OTT services by porting existing TV content and movies to digital platforms and launching their own OTT platforms.

“GEC content is the most popular genre on OTT platforms as well, with catch up TV being the most common reason for users to view online. Other TV content such as sports and news content are also gaining traction, but largely for live TV streaming, given the nature of content.”

This has resulted in online rights for events being sold separately from TV rights, and digital ads for sports events being sold separately. Star India’s online video-streaming platform which owns the exclusive digital rights of IPL expects to cross 100 million viewers in the ongoing edition, from approximately 41 million users last year.

“If you compare Hotstar viewership for large sporting events with Star Sports television viewership over the last six months, it has become 40-45 per cent of TV’s watch time in the relevant target group. What it means for advertisers is that if they are to reach the ‘very engaged sports audience’, they will have to associate with Hotstar,” informed Ajit Mohan, president and head, Hotstar to AFAQS.

The platform has already attracted 10 brands such as Flipkart, Raymond, Axe Deos, Volini, among others. “Over the past couple of years, we have seen a consistent increase in the reach of the tournament on digital. The IPL reached around 28 million in 2014 on starsports.com. This increased to approximately 41 million in 2015 and this year, we are hopeful of reaching 100 million viewers on the digital platform,” he shared.

Original content – the decider

Content will decide the success of the new OTT players. For instance Viral Fever became a big hit on YouTube because of its original content, a refreshing break from the boring vanilla television content. Speaking to Live Mint, Arunabh Kumar, Founder and CEO at The Viral Fever and TVF Media Labs, said, “We think of stories first and then pitch to suitable brands. It has to be done in a way that the brand doesn’t stick out. And that is the toughest form of writing.”

OTT players understand this all too well, and for the same reason Balaji Telefilms will only have content produced exclusively for the platform, which would be about 35 titles in the first year. “We will not be pushing Balaji’s soaps or movies here. Everything will be made for this platform and keeping the specific user base in mind,” COO Sunil Nair said, adding that the content team will have some big names from the industry. The plan is to offer something new every fortnight.

Vuclip’s Viu Originals has already started off a cricket comedy chat show series ‘What The Duck’, to be hosted by Vikram Sathaye and produced and co-created by Fluence. Viacom also has plans to have original content from content producers such as Endemol Shine India, Saurabh Tiwari Films, Colosceum Media, among others.

Subscription VOD (SVOD)

While it is too early to talk on monetization, the new OTT players are focusing on digital advertising. Meanwhile YouTube is currently taking the lion’s share of video advertising in India. Besides content sponsorship, opportunity for Subscription VOD (SVOD) will be there in the coming future. However issues with pricing, higher data costs, lack of convenient payment mechanisms are some of the barriers in getting customers to pay for online content.

Undoubtedly, OTT video is one of the fastest growing services on digital platforms, with everyone from traditional media companies to new-age media companies to telcos betting on online video consumption going mainstream. The only concern apart from tech challenges will be the ‘content.’

With the success of TVF and AIB, now every player wants to create viral web content. While video is the future, the challenges are also immense in a country like India. It’s the same kind of irrational excitement which e-commerce firms had two years back and food tech had last year. So, this year is about irrational stupid excitement about video added Arunabh.

“The honeymoon will not last beyond December 2016 and everyone will realize the challenge and the fact that it’s not easy and they will leave it for people like us to build further.”