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Streaming platforms take to hybrid model
Video streaming platforms are increasingly looking to augment their SVoD (subscription video-on-demand) offerings with AVoD (advertising video-on-demand) programming, having realised that the hybrid model works best for price-sensitive consumers in India, according to a new report from professional services network Deloitte.
SVoD revenue in India is expected to grow at a CAGR of 19% to reach $2.9 billion in 2027 from $1.2 billion in 2022, while AVoD could increase from $1.15 billion to $2.42 billion in the same period, at a slightly lower CAGR of 16%, the report said.
However, as OTT service providers in developed markets move rapidly to offer AVoD tiers, they are likely drawing insights from how the Indian OTT market has reshaped and adapted for price-sensitive Indian customers. AVoD revenues in India grew at a much higher rate than mature markets, as customers were willing to opt for the flexibility to watch content across multiple platforms at a lower price. India’s OTT audience universe has grown to 428.3 million viewers in 2022. Of this, only 30%, i.e., 130.2 million viewers are SVoD, Deloitte said. India’s OTT market revenue was about $2.35 billion in 2022 and is expected to reach almost $5.3 billion by 2027.
“The developed world is following in our footsteps for pairing of portfolios now. OTT platforms are going back to the drawing board and revisiting the breadth of content and budgets,” Jehil Thakkar, partner and media and entertainment sector leader, Deloitte India said explaining that most OTT services have realised that SVoD alone isn’t enough to sustain business in markets like India. A lot of movies had begun to take the direct-to-digital route but services have now begun to refrain from paying crazy sums to acquire these films, Thakkar added. This could lead to more free content offered by platforms, and appointment viewing as advertisers look to target audiences at specific points of time, he said.
Demand-side dynamics are dictated by searching for the highest-quality content at the lowest possible prices. This is especially true in the Indian context, where the fragmented market has resulted in price wars among multinational giants, and national and regional players. Smaller regional platforms typically invest $0.4- 0.5 million per season of content, whereas larger multi-national players invest $5-7 million in marquee shows, the report said. In total, OTT platforms in India invested roughly $500 million in original content in India in 2021. Even as investments in content production increase, ARPUs remain low.
Further, more than 50% of India’s 73 million SVoD subscriptions in 2021 were from OTT aggregators. It is estimated that aggregators can add at least 20-30% of subscribers to the existing base of the streaming platforms.
The Indian sports market is estimated to touch $100 billion by 2027 from $27 billion in 2020, a CAGR of over 20%, or about twice as fast as the global sports market, Deloitte said. In 2022, sports viewership impressions made up to 3.17% of the total audience viewership and have grown by about 20% on a YoY basis, from 2.97% in 2021. Of this, growth for live sports telecast, including repeat telecast, is about 12%.
Cricket telecast and streaming rights generate the highest value in the Indian market. For instance, the ICC media rights was won by Disney+ Hotstar for $,3.1 billion, up from previous the four-year rights bid of $2.02 billion. The rights are for a four-year tenure and include Women’s ICC cricket events as well. Similarly, the most-watched IPL cricket rights had a growth of over 5.5 times in its valuations over the last three bidding cycles, the report said.
The total advertising revenues generated by sports is estimated at about $750 million in 2021. The lion’s share of this falls with cricket at 88% and other emerging sports at 12%.
Digital streaming rights for sports have helped OTT platforms increase their subscriber base in a short time and drive higher subscription and advertisement revenues. Disney+ Hotstar, the OTT which owns the IPL streaming rights grew its user base 42% on a YoY basis as of November 2022. Revenue over the IPL rights period (FY18 to FY21) increased almost three times from Rs. 5.76 billion to Rs. 16.7 billion.
“Streaming platforms are looking at sports as the carrot that will bring audiences in and lead to increase in valuations. They will continue to invest in sports rights for now, as there is much headroom for adoption,” Thakkar said. Livemint