By Mihir Shah
After tiding over multiple waves of the pandemic, and having surpassed a billion vaccines, we are better placed to deal with the situation, while ensuring the economy gains full momentum. The year 2022 in many ways could be the year of full recovery.
The pandemic has exponentially increased consumption of content through connected devices. It has shifted the industry from push to pull, with more economic and leisure activities moving online. It is a BC-AC moment (before and after Corona) in the country’s history, an era that marks India’s digital renaissance, aided by low-cost but high-speed broadband connectivity, and seamless and secure payment infrastructure all backed by buoyant primary and secondary capital markets.
Big on video
Video will remain the primary use case for consuming data. India’s online video ad revenue market surpassed the billion-dollar mark this year. Over the past 24 months, besides YouTube, Facebook and the large BVOD direct-to-consumer brands, we have seen new categories of AVOD players expanding the market. Short video platforms are a hit in rural India and serve as an important conduit for advertisers to reach audiences in these markets.
Similarly, telcos that are proving to be future gatekeepers of content are now slowly looking to monetise their reach. As these players across various buckets of AVOD services build scale, the market for online video advertising will continue to expand. On SVOD, subsidised telco bundles as well as growing investment in local original content have opened the subscription market opportunity. By 2026, India will have more than 200 million direct SVOD subscriptions or, let’s say, one in every four broadband subscribers will pay for online entertainment and sports content.
The traditional video model has been disrupted. India, today, has 130 million active pay TV subscribers. In the natural order of things, there is no reason why the TV audience cannot move to 200 million households over the next five years; but the industry is shackled by regulations, compelling broadcasters to move content online or to free-to-air platforms.
What 2022 holds
We see the overall broadcasting market, including television and online video, growing at 9.5% CAGR over the next five years, to reach $18 billion by 2026. A buoyant economy will drive ad revenues both for television and online video. However, subscription revenue growth for the sector will largely come from online video.
How the video landscape shapes up will be determined by the content investments coming in. During the pandemic, as television and films struggled, online video platforms were aggressive, and acquired fresh content and rights to movies with digital-first windows. Since 2019, the contribution of online video to total industry content investments, including television and films, has nearly doubled. Overall content investment across these sectors will surpass the 2019-level next year.
As the market expands, we will continue to see more consolidation, particularly in the traditional television sector; but, at the same time, entry of new foreign players will continue to expand the video pie and the share of online video.
Beyond professional content, we have seen an explosion in user generated content, thanks to a slew of homegrown short video services that are identifying new audience cohorts and creating much deeper engagement in rural India. Over the past 18 months, these platforms collectively have secured nearly $2 billion worth of investment; much of it is used to fuel India’s burgeoning creator economy.
Going into 2022, the rights for three marquee cricket properties — ICC, IPL, and BCCI domestic cricket — are coming up for renewal. The final value and ownership of each of these rights could alter business dynamics and the current pecking order of players in both television and online video.
On the distribution front, fibre home broadband and 5G will accelerate growth for connected TV devices and CTV advertising as well as subscription opportunities for premium OTT services. Competition in telecom is shifting to capture the large pool of the feature phone market by bundling a plethora of services in low-cost smartphones with high computing power. This will enable new use cases of data, while also expanding TAM for emerging segments like gaming, short videos, music, edtech, and fintech.
The author is VP, Media Partners Asia