Over-the-top (OTT) video streaming market that accounts for 7-9% of India’s entertainment industry is expected to grow at a CAGR of more than 20% to hit $13-15 billion over the next decade riding on investments in original content and pricing innovations.
Paid subscribers, too, are estimated to increase at a CAGR of 17% to reach 224 million by 2026 from the current 102 million, said a report ‘All About Screens’ by multinational professional services network Deloitte which is part of its TMT (Telecom, Media, Technology) Predictions 2022.
The growth in the OTT industry will be driven by heavy investment in original content, pricing innovations, low data costs, and the rise of short-form content. OTT platforms invested an estimated $665 million in content in 2021, with Netflix, Amazon Prime Video, and Disney+ Hotstar leading the pack with a combined spend of $380 million, according to the report.
The share of regional language consumption on OTT platforms is expected to cross 50% by 2025 from 30% held in 2019, easing past Hindi at 45%, it added. The market for providing video streaming services in India is highly fragmented with more than 40 streaming players vying for the customer’s wallet. Global streaming service providers (such as Amazon, Disney-owned Hotstar, SonyLiv, and Netflix) compete with domestic service providers (such as Zee5, Voot, and MX Player), as well as a host of regional and ultra-localized players. Demand for OTT streaming content based on geo-demography is on the rise, both within India and internationally from the considerable Indian diaspora. The country is witnessing a boom in regional content and platforms created to address this demand.The report said, in the early stages, India’s OTT market was dominated by pricing structures suited to advertising-led video-on-demand (AVoD) services to maximize consumer acquisition. However, the future is set to see the subscription-led video-on-demand (SVoD) model emerge stronger, with paid subscribers in India estimated to increase at a CAGR of 17%.
This progression for OTT from the early stage to the mass stage might come at a cost to the broader media industry as subscribers, especially in tier-one and tier-two cities, may switch to streaming platforms from traditional linear TV even though India has largely escaped cord cutting for now as TV viewership is on the rise, the report said.
However, AVoD or advertising led platforms are expected to continue to pull in more revenue than SVoD, increasing from the current $1.1 billion in 2021 to $2.4 billion in 2026.
Over the same period, SVoD is expected to grow from its current $0.8 billion to $2.1 billion in 2026. SVoD subscriptions may also be affected by the bring-forward effect of covid-19 as the currently accelerated growth rate may taper with the pandemic subsiding, the report added.
“The global OTT market may be saturated but continues to see churn which means platforms will have to invest in tentpole content and customer acquisition. India is early into the ecosystem but the Western trajectory is a pointer to what could follow here,” Jehil Thakkar, partner and media and entertainment sector leader, Deloitte India said.
Early adoption of SVoD platforms has already happened in the country, Thakkar said and in order to limit losses going forward, services will have to leverage distribution partnerships and or come up with hybrid models.
Each paying customer in India has, on an average, 2.4 subscriptions. However, given the price sensitivity, Indian customers may not continue to pay for multiple OTT streaming services. App aggregation and bundling can play an important role in expanding the market by bringing considerable value to consumers in terms of affordability, useability (single sign-on, single window content discovery), and compatibility with existing devices, the report said.
Globally the market for NFTs or Non-Fungible Tokens (NFTs), unique digital identifiers that use blockchain to record ownership of media, is growing at an exponential rate and India is seeing initial action in the area with NFTs on favourite moments of movie superstars and memorable cricketing events getting initiated. An NFT marketplace for just cinema and sports in the country has the potential to cross $1 billion in value in the near future, subject to conducive regulatory policies, the report said.
The NFT market in India is expected to be volume-driven; an average traded value of an NFT would be lower than the global average. The growing market for NFT has the potential to bring non-millennials to active digital channels, according to the report, besides giving rise to innovative financial transaction models.
“While the NFT wave is led by Bollywood stars or cricketers right now, it could soon evolve into a stronger fan engagement tool,” Sreeram Ananthasayam, partner, Deloitte India said. Live Mint