If content is the king, and the customer is the queen, then the platform is the Vizier. Interestingly, the world of Vizier seems to collapsing, as the video streaming platform market is going through its very own season of mergers and acquisitions. Case in point: the rumoured acquisition of MX player by Amazon Prime, the merger of Zee5 and SonyLiv as well earlier acquisition of The Walt Disney Company of Star India which also provided access to Hotstar, among others. “The video OTT market is heading towards aggregation, just as multi-system operators aggregate TV content to increase affordability for consumers, and to reduce customer acquisition costs. The video streaming industry is inherently fully addressable, protecting the revenues of content creators, and I feel that a good bundle between Rs 1000-2000 a year will be a very attractive proposition,” Ashish Pherwani, partner – Media and Entertainment, EY India, an audit firm told BrandWagon Online.
45 million Indian households paid for 99 million OTT video subscriptions in 2022, as per FICCI-EY report. Actual OTT video users or audience could be estimated at 135 to 180 million individuals as subscriptions were shared amongst family and friends. Moreover, from 45 million households paying for one or more SVOD services, the number will grow to 52 million by 2025, if current pricing is maintained. However, the slowdown in growth will be on account of the affordability of OTT services. “In the OTT space, consolidation has a positive impact due to the market, environment, ecosystem and consumer market not being conducive to sustaining a large number of 70-75 OTT players. Most OTT platforms, with only a few exceptions, struggle to generate profit,” Abhishek Joshi, head-ShemarooME, Shemaroo Entertainment explained.
As easy as it may sound, acquisition or strategic alliance with another OTT platform, is believed to be extremely challenging in terms of integrating and consolidating the user base. This is largely because audiences for different OTT platforms are distinct, with users having their own preferences, downloads, installations, and engagement patterns. Yet experts point out that consolidation occurs when there is an additional facet to the concept, involving strategic alliances or associations. For instance, a regional OTT platform might integrate itself into a larger national player or choose to distribute its content through software development kits (SDKs) or application programming interfaces (APIs) instead of physical copies, representing a genuine form of consolidation. But at the end of the day, it will allow the Vizier to collect his very own army of audiences. “Consolidation will lead to an increase in the user base as well as the quality of the content that is being put out there on the platform which would mean more sets of eyeballs across genres. The competition against the likes of Netflix, Prime Video would be tough since these are the preferred destinations to launch a movie or a show. Consolidation might help platforms to compete as they got more eyeballs,” Nikhil Dalal, director, RedSeer Strategy Consultants, told BrandWagon Online.
It was the pandemic which fired the salvo and OTT platforms since then have gained users and continue to do so. According to a report by Statista, the OTT platforms recorded $2 billion in revenue in 2020 while estimating the figure to triple by 2026. However, it is expensive to run the show in the long run especially when it comes to managing the cost of producing content and acquiring customers, among others. “The OTT platforms are focussing on their growth trajectory. The OTT platform which has a unique offering will survive. However, those platforms with less content and a small user base are bound to collapse. I believe going forward subscription-based video-on-demand (SVOD) and advertising-based video-on-demand platforms (AVOD) would really come to the fore,” Sanjay Chhabria, founder and CEO, Everest Entertainment, said.
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