In television, India is still upgrading to HD. There is a high uptake of HD channels owing to a wider bouquet of channels and affordable sachet packages. There are over 9 million HD subscribers in the ecosystem today. However 4K is not yet on the horizon in terms of priority. SDI to IP-based workflow transitions are gradually increasing across broadcast stations in order to support multimedia delivery. Primarily there is a lot of growing emphasis on online video delivery, and therefore there will be an increasing spend on online video platforms, media asset management, content protection, digital rights management, and data analytics. Data analytics are gaining preference for gaining insight into the viewership patterns in terms of regional traffic, language preferences, and demographic indicators for over the top video delivery. Bandwidth constraints still plague the Indian market; therefore, there is still demand for sound video compression. AVC is the main video codec of choice, but more and more video delivery online will transition to HEVC.
Though smart phones are still the preferred viewing devices for OTT, there is an increase in penetration of smart and connected TVs. Broadcasters are aligning themselves with this evolving ecosystem by optimizing their content for integrated viewing across devices, formats, and platforms. They are also forging strategic partnerships with OEMs, technology vendors to distribute their content and monetize it effectively. While there is a growing adoption of cloud-based services for television playout in developed markets, this transition will take another 15–24 months in India.
Some of the market drivers include significant progress in digitization of pay TV services with set top boxes, increased penetration of HD services, and a flurry of online video application launches. These trends provide a wide range of choices to consumers. There will be continued consolidation in the industry, which will help many firms streamline their operations and reduce their losses. Challenges for the market include intense competition, price wars, and inhibited growth in broadband speeds and infrastructure.
The growth rates for the video industry including television, pay TV, and OTT video services have not been uniform over the last 12 months. After poor revenue collection for local advertising and pay TV post demonetization, some companies started to recover from the effects in 2017. Pay TV companies are focused on increasing net additions in Tier-II and Tier-III cities with their services and minimizing as much churn as possible. While TV advertising continues to grow for leading national broadcasters and a handful of regional broadcast networks, for the rest of the industry, growth is muted. This will impact spending on television equipment and services. The growth in digital TV households has challenged pay TV operators to offer innovative bouquets and a-la-carte option with value added services to remain competitive in the ecosystem. Focus on regional content and kids segment is a key driver for broadcasters. The availability of abundant free-to-air channels and Freedish could potentially dampen the revenue projections for pay TV operators, along with the rising popularity of OTT video platforms and cord-shaving opportunities.
Companies such as Voot are making significant strides in non-Hindi regional and children’s content. OTT video is gaining critical mass in India with the commoditization of data and the Jio-driven data price war. There are over 180 million online video viewers today, with a growing appetite for paid subscriptions, indicating a lucrative business opportunity for content owners, broadcasters, technology vendors, telecom operators, and even cable and satellite operators. There is a growing trend to go mobile, and offer converged services in order.
The digitization mandate has consolidated the landscape to just over 1000 MSOs, with smaller operators being squeezed out of the market. The proposed merger of Dish TV and Videocon d2h will make the entity the second largest DTH provider in the world with a combined base of over 27 million subscribers. Cable operators are also looking at broadband services as a significant revenue earner giving them an opportunity to raise their ARPUs.
Several interesting developments are expected in the OTT market and we will see some interesting acquisition announcements in 2018. Chinese companies such as Alibaba and Tencent will be expected to try and increase their footprint through video offerings.
Vidya S Nath
Frost & Sullivan