Ad-dendum: Indian VOD market on an upswing, says Rajiv Vaidya

Updated: March 29, 2016 2:10 AM

With VOD platforms in India seeing mobile consumption in excess of 70%, the opportunity for growth in this area is immense

An exploding smartphones market. Falling data prices. The onset of 4G connectivity. Content built for the smallest screen. The online video space in India may still be at a nascent stage, but it has all the ingredients of a space that promises to be full of action in the next five years. Even in these early days, some trends are becoming apparent. Worldwide and in India specifically, mobile matters. YouTube recently disclosed that 50% of its consumption is on mobile. In a market such as India, which is primarily a single TV household, mobiles provide a personal content viewing experience. Video on demand (VOD) platforms in India see mobile consumption in excess of 70%.

Smartphone penetration — the game changer Cisco’s report mentions that India is expected to have 650 million smartphones by the year 2019. In contrast, India had 16 million TV households in the country in 2014 as per the FICCI-KPMG Media & Entertainment report. So in a few years, India will have more people walking around with TVs in their pockets in the form of smartphones, than the number of TV sets in the market. It is this kind of tectonic shift in consumption that will forever change the entertainment industry.

When it comes to online video streaming, India has finally come of age in the last couple of years. And why wouldn’t it, with the surge in the volume and availability of smartphones in the country. Where smartphones used to be a luxury, they are now available at less than $100, and they come with cheap, pocket friendly data plans. This has changed the way Indians are consuming entertainment and information ‘on the go’. One no longer needs to be around a TV or computer screen to watch content of one’s choice. With the entry of multiple players in the video on demand space, we can see that video content is now being created and marketed specifically for the web and devices.

According to estimates from Cisco, video will account for 66% of mobile data traffic in India by 2019, up from 36% in 2014.

The use of smaller screens on personal devices will fuel ‘personal escapism’ or watching content individually, with 45% of all content consumed expected to be on the small screen by 2020. The next wave of growth in internet penetration will come from tier 2 and tier 3 cities, enabled by wireless mobile internet.

With more smartphones in the hands of the people, there is wider potential to provide diverse content for players in the VOD space. Through the emphasis on Digital India, the government is playing a vital role in the development of mobile usage and sale of devices. The implementation of multiple schemes, Digital India initiatives and collaborations with internet and content users together is an umbrella programme that encompasses providing internet access to all. Based on the report by Internet and Mobile Association of India (IAMAI) and KPMG, India is the third-largest internet user base in the world, with more than 300 million users, of which more than 50% are mobile-only internet users. Mobile phones will become one of the greatest mediums of change — providing banking and financial services which will further accelerate the growth and usage of payment wallets. Due to this, there is expected to be a significant increase in subscriber base.

Challenges for the industry

While the opportunity for video on demand to grow in India is immense, it needs the right infrastructure to take off. Network inconsistency that leads to videos being buffered while streaming, is a universal problem for the VOD industry. Additionally, video streaming is data intensive and entails data costs. These were barriers to viewers consuming long form content and will continue to be if they aren’t dealt with in innovative ways. Rural India is still catching up with 3G/4G, and telecom operators are investing heavily on high speed technologies to tap growing demand in urban India.

From a technology infrastructure perspective, India typically lags behind developed markets by a few years, but we expect that the next five to 10 years will see immense changes in this space. Another challenge that haunts the VOD industry is piracy; it continues to be a scourge. Having said that, content owners have definitely become vigilant of piracy on streaming sites such as YouTube.

The reach of TV and video content on smartphones has increased significantly over the past few years, and two out of 10 consumers regularly watch linear TV on their smartphones. All in all, the average time spent watching TV and video on mobile devices, including tablets and laptops, has increased by three hours a week over the past three years. Mobile video consumption is going through the roof.

The author is CEO, Spuul India

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