By: Vidya S Nath
India’s OTT market is not simple. There are more than 30 OTT video service providers in India currently and according to Frost & Sullivan estimates, 90 million active OTT viewers. The ecosystem comprises original content producers, content rights holders, broadcasters, cable TV operators, DTH service providers, international OTT content aggregators and distributors, and telecom operators. In an effort to establish their individual footprints, several OTT service providers are trying to do everything themselves — content production, aggregation and distribution.
Today, the biggest ammunition for stakeholders is the content rights they own. Based on various announcements from investors and OTT companies so far, about Rs 2,500-3,300 crore has been earmarked for OTT services in India especially for original content production with a significant stake committed by Amazon Prime. According to our 2016 estimates, OTT video viewers in India were expected to grow to 355 million by 2020. However, considering the pace at which broadband connectivity is growing since January, 2017, the numbers could increase at a faster pace.
Until high broadband services attain the ubiquity we hope, the OTT services market cannot gain as much traction as imagined. The visibility of the standalone OTT subscription video-on-demand (SVOD) market is even worse. Based on the current stage of the market, SVOD revenue and subscription in India could grow potentially at over 40% by 2020 on the upside, but it would still comprise less than 10% of the total internet video viewers.
This can change significantly only if the ecosystem transforms itself to provide converged pay video services over multi-screen, including TV, making on-demand OTT video accessible to a larger percent of consumers. India is a fragmented demographic, but the current audience for OTT viewers is concentrated in tier 1 and 2 cities. For now, the market appears to be saturated as viewers within the same demographic tend to experiment with newer service providers leading to churn from existing ones. Eventually, the market will be rife with partnerships and smaller service providers will merge with either bigger content aggregators, larger OTT companies or cable/satellite/telco pay TV providers.
The rest of 2017 will be critical for media companies to determine their video services strategy for the next five years. For now, many leading providers are second guessing the moves of three companies in the market and their interest in this space: Reliance Jio, Amazon and Netflix; before they decide their investments, core offerings and business plans. Picture abhi baaki hai…
The author is research director, digital media practice, Frost & Sullivan