Video is the big opportunity everyone wants to cash in on, but who is paying?
The Cisco Visual Networking Index (VNI) says India’s internet video traffic will grow nine-fold from 2013 to 2018, a compound annual growth rate of 55%, to reach 2.2 exabytes per month. In 2013, this figure was a lowly 250 petabytes. Just to ensure that you don’t underestimate this figure, one petabyte is 1,000 terabytes, and 250 petabytes is roughly the total amount of data Facebook had in its data centres in 2013. Now, you should get the kind of scale we are talking about when we say 2.2 exabytes, as one exabyte is 1,000 petabytes. You can gauge the kind of business opportunity it presents. Cisco VNI says internet video traffic in India will grow to 72% of all internet traffic in 2018, up from 45% in 2013.
There is a lot tied to the growth of video as a segment. You now have better smartphones that can process internet video faster and without lag on full HD screens because this is where a lot of companies are going to make their money in the coming years. It is good to think they just want us to enjoy great video content, but let us not keep ourselves oblivious of the bigger picture. Even when Google announces that YouTube videos can now be played online, after being downloaded when the device is connected to a network, the idea is more to get people hooked to the more rewarding internet video.
There is no doubting the entertainment value of the internet video, especially for those who have no access to a television or cinemas in a country like India. The only problem is that internet video will never really come free. While you will initially start by paying for data to access free content, companies want you to gradually graduate to paying for premium content.
Video services like Spuul make most of their money from a content-hungry diaspora spread across the world, but have seen a growing willingness in India towards paid content. “Often we are cutting the pirates out of the equation, particularly in the case of independent movies.
Our intent is to make content available at price points at which people are willing to pay,” explains Subin Subaiah, CEO/director of Spuul. He says Spuul has been trying to offer something for the person who is willing to consume content that has been paid for by an ad, as well as the consumer who is willing to spend $10 for premium content.
Subaiah says there is a clear shift from web to mobile, but most people are still stuck with linear content on both platforms. “I think video on demand changes that equation. What is the point of having a smartphone when you are still a victim of time. You want to watch what you want to watch when you want to watch it,” he adds. Incidentally, Spuul data shows that 80% of their content is being consumed on mobile devices in India. Subaiah says all the drivers for web video are going up, “but yes the first thing users are looking for is how much it is going to cost him.”
So operator billing for micro payments could end up as being that little nudge that India needs to start paying for content consumed on their mobile devices. “We are working on those partnerships and have already put a few in place in the Middle East,” says Subaiah.
Another nudge could be the lure of premium content that is not available anywhere else. Globally, companies like Netflix are creating superior content for which users won’t mind paying. The popular made-for-web production House of Cards is a good example. Once a certain scale is achieved, you will see many video services try to woo users will premium made-for-web content. In fact, we are already headed for a situation where large-screen televisions are feeding on these services instead of cable or satellite which are still stuck in the everyone-watches-the-same-thing mode. As Android televisions become cheaper, a lot of users might just unplug their cable networks and opt for video-on-demand-based net services. Even in India, companies like Lukup Media have tried to cash in on this with a hardware-software solution. But, at the moment, Indians prefer to stream their content free off YouTube, preferably using a Wi-Fi connection.