India’s over-the-top market is slated to reach a size of US$5 billion in the next five years as access to affordable data becomes easier, mobile penetration increases in rural markets and certain demographics are targeted, according to a Boston Consulting Group report. Video executives in the country have said the sheer volume of untapped customers, their changing video consumption habits and the diversity of the Indian diaspora will lead to plenty of opportunities for video-on-demand players. However, the market still faces a number of challenges before it can unlock its potential.
Uday Sodhi, head of digital business at Sony Corp.s Sony Pictures Networks India Pvt. Ltd., which includes its VOD platform SonyLIV, spoke with S&P Global Market Intelligence about the state of the Indian OTT market.
S&P Global Market Intelligence: There are two large international players in India, Netflix Inc. and Amazon.com Inc., competing with domestic outfits such as SonyLIV and Star India Pvt. Ltd.s Hotstar. How are local players positioned to compete with the foreign ones?
Uday Sodhi: It is a competitive market and my guess is that there are six serious players already and about 10 to 12 niche, smaller players. However, the market is big enough for more. India is on its way to more than doubling the number of digital consumers in the next three to four years, which means the amount of business generated is going to grow more than twofold. Fragmentation, not consolidation, will continue in the OTT market with more local players entering it.
Where does SonyLIV fit into this OTT landscape?
We focus primarily on live streaming sports coverage including cricket and football. We have also decided to take a demographic approach, so when you look at our portfolio, sports targets the male audience while the international and Indian shows are for the younger viewers. We have 35 million to 40 million monthly active users.
What is the ideal monetization model for VOD players in India?
The model is a mix between advertising and subscription-based, leaning heavily toward the former. The issue we face as an industry is that there is usually some lag between time taken to build a sizable consumer base and advertiser adoption as the adoption cycle is still slow. Anything between 20 million to 40 million users is a big enough size to attract advertisers.
The recent tie-up with Lions Gate India — to stream 500 hours of Starz and Lions Gate Entertainment Corp. premium original series in India on SonyLIV — is a subscription video-on-demand play. Are Indians willing to pay?
Yes, that partnership speaks to our subscription model and the idea is to align ourselves with studios with a pipeline of content. Though it is in its early days, we know the subscription video-on-demand model is going to be a big business, because as the ability to pay improves so will the willingness to pay in India. We’ve been operating the SVOD model for one year and the response has been very good due to a large amount of traction around sporting coverage and key show launches.
What other challenges is the OTT industry facing?
The country is suffering from a shallow digital talent pool. The digital industry, though new to the market, has had to use talent from the TV and film industry. This has also pushed up the cost of talent. However, once more native digital content is built, the cost will become more manageable.―S&P Global