By Megha Tata
India will have over one billion video screens by 2024, 85% of them with high-speed internet capability. A projected future of this magnitude is reflective of the structural changes that digitalisation has brought about in M&E. Estimated to clock a CAGR of 10.75% in the next four years, the industry has become a hotbed for innovation and experimentation. Linear TV expanding into OTT delivery systems, streaming players heavily investing in local content creation, global production houses entering into exclusive partnerships in the country are some of the trends already at play.
All of this has resulted in a burst of content choices, and given rise to a multi-screen video experience phenomenon. As the market is shifting towards serving its audiences wherever they are, the debate around digital vs TV is fading into irrelevance. It’s the ‘content and distribution’ game that will now define the dynamics within the industry for years to come.
The latest Media Partners Asia report highlighted that TV held the largest share of the pie in terms of video content investment in 2020. Out of $3 billion, two-thirds of the investments in content have been made by TV alone, followed by OTT. Needless to say, linear TV remains the dominant source of entertainment for Indians. And what makes it attractive even for the future is its steady expansion of subscription base with a significant headroom for growth. The penetration of TV in India (about 70%) is not even close to what it is in the US (92.7%) and China (99.3%), according to CII. Moreover, the strong ARPU lead of TV over OTT, despite the recent pick-up in subscription pace for digital players, makes the medium stable and secure for the long term.
As the post-lockdown recovery in advertising revenue picks up for TV, some estimates also suggest the revenue could double by 2026. These favourable indicators reinforce our belief that TV will continue to drive the growth in advertising for many years to come, while SVoD will expand the subscription base.
The hybrid potential
With more content choices, content distribution that provides a consistent and most reliable delivery path will be the key competitive advantage for players. The availability of multiple choices has pushed viewers to bundle services, consequently dropping platforms that aren’t consistently delivering content they want. To address this latent consumer need, DTH and telecom companies, among others, have begun rolling out hybrid STBs/ dongles to offer easy access points to consumers, while the sale of connected devices and Smart TVs are on the rise.
In just about four years, the growth of hybrid TV subscriptions is expected to reach six-times its current size. Multiple broadcast players are now exploring new technologies to enable them to bring their content to viewers anytime, anywhere. And the rapidly emerging hybrid TV solution is proving to be one such direct-to-consumer gateway.
With digital and TV catering to diverse consumer cohorts and markets, it’s only obvious to have a hybrid revenue stream. Since some of the digital arms of broadcasters have sprouted within the same ecosystem, the new advertising model has started to work like a magical potion to retain advertisers.
The emerging blended model is bringing together the best of both worlds — the impact and stability of TV, and the flexibility and personalisation of digital. Hence, building both advertising as well as subscriptions will remain core focus areas for broadcasters in the near future. Standalone digital may reach 40% of the ad-share within the next five years (as per industry estimates), but the combination of the two will become a powerhouse for the industry.
The author is MD – South Asia, Discovery Inc