How OTT Can Speed Up Digital India's Success

by Priyanka Pugaokar    Mar 30, 2016

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The revolution in the Over The Top Content (OTT) or Video On Demand (VOD) industry in India is somewhat similar to the exponential growth of satellite TV during 1990s, thanks to the globalization policy of the government. Today, the Digital India initiative is set to accelerate the OTT and VOD players. Due to the factors like exponential growth in the smartphones and a rollout of 4G services, the OTT industry is set to flourish and prosper in India.

Current Scenario

Digitization has transformed the television viewing experience. Thanks to the smartphones with larger screens and better video quality, VOD is gaining popularity among Indian customers. According to estimates, India will have about 170 million smartphone users by 2016. Eyeing on the huge market, several telecom operators have rolled out 3G and 4G services at an affordable price, making it accessible to every strata of the society. Here VOD or OTT players intend to leverage on the market opportunities. The recent research report by Deloitte states that with a greater roll out of 4G services in the country, consumer demand for online content will increase rapidly in the coming years. Further, low-cost smartphones bundled with low tariff will help in boosting the Internet usage in India over the coming years.

Read more: 4G To Boost India’s Online Content Demand

According to a Media Partner Asia (MPA) report, India’s active OTT video subscribers in 2014 were 12 million and expected to grow to 105 million by 2020. Even though at its nascent phase, the VOD market is highly competitive in India. Media companies like Star, Sony Pictures Networks, Zee, Eros and Reliance Entertainment already present in the OTT market. Similarly, platforms like YuppTV and Hotstar, PressPlay TV, Viu, Netflix, etc. Are also in the race. Joining the list, India’s one of the prominent multimedia company Viacom 18 has entered in the OTT play with the launch of its digital platform called as ‘Voot’.

“Indian consumers consume a considerable amount of data. As per our study on the data consumption pattern among Indians its 750 MB data per user every month. This indicates the huge business opportunities for VOD players like us and we want to leverage on that”, said, Sudhanshu Vats, Group Chief Executive Officer, Viacom 18 Group.

Currently, most of the OTT players are generating revenue through ad supported models. However, VOD players lure unique visitors with free subscriptions at the initial stage to make them paid subscribers.

The Bandwidth Play

India has become the third largest country in terms of Internet users. According to Internet and Mobile Association in India (IMAI), the Internet user base will cross 500 million by 2018, with rural Internet users alone being almost 210 million. Therefore, the market potential for online content consumption is enormous. Factors such as smartphone penetration, 4G rollout and categorization of content are key to drive the VOD industry. Cisco’s Visual Networking Index Report (VNI) forecasts that online video traffic will contribute approximately 65 percent of all IP traffic in India by 2018.

Read more: Netflix Makes India Debut; But Will It Work?

Despite of high Internet penetration, it stands merely stand up to 20 percent and is restricted to Metros and Cities to a large extent. The broadband speed and pricing factor also influence the consumption of internet among the users. The unsatisfactory customer experience, including buffering has largely affected the adoption of VOD services. Also, in certain VOD models, VOD on internet streaming are limited by lack of availability of high speed broadband connections. Bandwidth cost to the consumer for video and media consumption over broadband is extremely high, hence, restricting it to a certain class of users. Significantly, most broadband plans in India are data usage based, therefore, its serves as a obstacle for video consumption on broadband.

OTT and Net Neutrality

The Net Neutrality has been most disputed and debated topic in India over the past few years. The biased approach by Internet Service Providers (ISPs) and Telecom vendors in giving access to any particular service or website is widely condemned in the country. OTT players like WhatsApp and Skype have also received flak from the protesters. Taking the cognizance of the growing voice for Net Neutrality, Indian Government is now in final stages come up with the net neutrality policy and has asked the regulator TRAI and telecom department to submit recommendations for the same. On the issue of OTT services, which are widely criticized by telecom operators for eating their revenues, DoT had recommended to keep a “regulatory insight” on such services.

The future of OTT or VOD industry is bright in India. Companies offering video-on-demand services are betting on the huge business prospects, and framing their content and business strategies keeping Indian consumers in mind. The industry is already flooded with multiple players that have already made the competition tough. Therefore, VOD players will always look for value addition to convert free subscribers into paid ones. Ultimately, consumers are going to be the king in the VOD play.