Entertainment Goes Online- India’s $5 billion video streaming opportunity

  • Divya Premkumar
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  • Published Date : 20 February , 2019
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  • Updated Date : 23 April , 2019
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    • 6 min read

The Over-the-top (OTT) content is the next big thing in video content according to the report  ‘Entertainment Goes Online’ published by the Boston Consulting Group. OTT is video content consumed over the internet as opposed to traditional media. The report states that the OTT market is estimated to become a $5 billion market by 2023. This shift in the market is a result of various elements such as the rising affluence in the country, an increase in the infiltration of data and smartphones into rural areas and the adoption of this data across numerous demographics in the market including older generations and women. In recent years, the OTT space in India has become incredibly competitive and is attracting various players with different business models such as Netflix and Amazon.

Why has the OTT market increased in India?

The study Entertainment Goes Online is a consumer survey report that aims to understand the reasons why consumers prefer OTT content over traditional forms of media. The results of the survey show that there is a demand for different forms of OTT like SVOD (subscription-based platforms), AVOD (advertising-based platforms) and TVOD (transaction-based platforms) where these models can not just co-exist but thrive as well. There are many reasons why OTT content has become so popular in India:

1. Improved connectivity in rural areas and a fall in data costs

Thanks to the introduction of Reliance Jio, data has become more affordable and accessible to people all over India. Research has shown that after the introduction of Jio, the quarterly consumption of data has increased by tenfold with the growth driven primarily by the consumption of data on a mobile device. On-the-go data consumption is more efficient and the Reliance Jio has made this accessible for all thereby creating a large market for OTT consumption.

2. Increase in the use of smartphones

In the last 5 years, there has been a large growth in the usage of TVs and smartphones in India and it has become an integral part of everyone’s lives. There are 3 billion smartphones worldwide with 450+ million of them in the Indian market. Smart TVs have also become increasingly popular and do not require a setup box allowing consumers to watch content on the web, on a mobile app or on their Smart TVs.

3. The supply of content

Indians usually consumed video content on Youtube but the OTT market started off with content from local market players. With the entry of global companies such as Netflix and Amazon, Indian consumers are prepared to pay more for compelling content. The variety of content available on these platforms has led to the growth in viewership around the country which has fed into an increase in online video advertising as well. In India, the OTT content platform Hotstar has had a massive reach in the audience and a 10x growth since its launch in 2015. Till date, there have been 350Mn installs, 180 Mn monthly active users with each user spending 43 minutes on the platform each day.

4. Favourable demographics

India is witnessing a large shift in the income distribution in the country with an increase in its affluent population. This upward mobilisation and increased access to smartphones have led to greater online consumption via OTT. One of India’s major media platforms, Hotstar, gets 88% of its traffic from the age group of 18-34. Additionally, the availability of internet in rural parts of India has expanded the demand for OTT content. Research shows that by 2020 50% of internet users will be from rural areas in India. The favourable demographics create a large market for OTT to take off in India.

Key learnings from the study

The study conducted by BCG identified three types of viewers in the Indian market:

  • Traditionalist- These consumers usually consume content on conventional forms of media. They watch TV but not OTT and account for 60% of those surveyed.
  • OTT experimenter- These are people that consume content on OTT and traditional forms of media. They are avid watchers of AVOD and account for 30 per cent of those surveyed.  
  • Early adopter- This is a person that consumes content on OTT platforms only. While this is still an urban phenomenon, more people will join this group in the upcoming years. They are heavy watchers of SVOD and accounted for 10 per cent of those surveyed.

By 2023, it is estimated that 48% of India’s internet users will be from rural parts. This will provide a largely untapped market for new OTT players who will have the opportunity to tap into rural markets that have access to the internet. ‘‘Indian content, including music, Bollywood content and cricket, have a large following in the Indian diaspora also. OTT players with Indian content have the potential to tap into this market too’”, said Gaurav Jindal, Principal at the Boston Consulting Group.

According to Kanchan Samtani, a Partner and Director at Boston Consulting Group, ‘one of the key insights in the study were that although OTTs use top-notch hero content to attract consumers, these customers do not stick on for long unless they are engaged by strong marketing efforts on the part of the OTT.’

How can OTT players capture the Indian market?

Although the market for OTT companies is large, there is still a long way to go before the market catches up to its counterparts in the western world. The BCG report examines six ways OTT companies can penetrate the Indian market:

1. Breaking the clutter: A strong marketing challenge

Many consumers today are faced with a choice of more than 30 OTT platforms that they consider to be mostly homogeneous. Many companies assume that consumers are rational and can decide which platform is right for them, but in reality, it is the duty of the companies to guide customers to their various choices and let them know how the platform can meet their entertainment needs.

2. Differentiated content is king

The best way for OTT platforms to gain customers is to differentiate themselves from other companies. There are many companies that provide the same type of ‘hero’ content so in order to be successful OTT, companies need to create an identity for themselves and provide unique content. There are still numerous untapped ‘niches’ in the Indian market such as music and programs for kids. There is also a desire to view and listen to Bollywood music which is still a feature that is not available on most OTT platforms along with a lack of kid-specific content on the platforms.

3. The strategy needs to be geographically focused

Creating more content in a regional language that is more culturally specific is in demand among consumers in India. The vernacular content can help the OTT platform cover smaller segments such as news, religion or spiritual content. There is also a market for ‘relevant focused religious plays’ in various parts of the country. Therefore it is important for OTT companies to leverage this to their advantage and pick important markets and invest carefully. Additionally, focusing on regional content can help an OTT platform differentiate themselves from their competitors. The OTT platform Hotstar offers over 40K hours of regional programming. It is estimated that up to 40% of their users consume content in Tamil, Telugu, Bengali, Marathi and Malayalam.

4. Consumer data, consumer insight, big data and analytics

Big data has become increasingly popular in recent years and it helps companies gain a competitive advantage in the market. Analysing data can help gain an understanding of consumer insights and the data analytics can help monetize the OTT platform.

OTT creates a large amount of data and it is vital for companies in the industry to understand where consumers come from and what they watch. This can help predict consumers interests moving forward so they can provide a service in the most cost-effective manner. Understanding customer interests at this granular level can help companies take their platform to the next level.

5. Establishing a new currency for the OTT industry for measurement

OTT companies need to create a currency to measure the impact of advertisers is synonymous with the value added. The currency is especially useful for AVOD models where the currency can help take a more holistic approach to the value and analyse the quantum, quality and segments. A common currency will also bring more acceptance among ad buyers which can help increase the number of OTT watchers.

6. Invest in the right tech, create a user-friendly, economically viable product

Consumers demand a lot from online platforms and are often influenced by various touchpoints. OTT platform companies need to be able to understand and address their concerns on technology in an effective way in order to scale their business. The companies need to create a user-friendly platform to help build critical mass. This critical mass will help platforms improve their overall customer service experience across different devices.

There is a big opportunity in the over-the-top market in India. It is important for companies to scale their business and monetise this opportunity which can help result in significant gains. With the rise in the affordability and accessibility of platforms, there will be a lot of competition in this market and only a few companies may emerge victorious.




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