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What is the future scope of video-on-demand?

India has primarily been a TV set household. It is the second-largest subscription-television market in the APAC region. Today, over-the-top (OTT) video is the unusual alternative, which is gradually becoming a mainstream entertainment destination in the midst of growing internet users.

Before 2007, one did not really have many options for viewing video content. Cable and satellite were pretty much the only options. Video streaming was in its infancy and internet speeds were much slower. Netflix and Hulu started offering streaming packages in 2007.

The video-on-demand (VoD) market is forecast to gain from the rapid penetration of internet in the undeveloped nations. Fortune Business Insights a report suggests that the overall VoD market is expected to grow from USD 43.9 billion in 2017 to USD 87.1 billion by 2025 at a CAGR of 9 percent.

The last few years have been revolutionary for the Indian media and entertainment (M&E) industry as it underwent a structural change, particularly in terms of media consumption, which shifted from traditional sources (TV and cinema) to OTT services. The overall M&E industry grew by ~13 percent each year in 2017 and 2018 to reach `1.67 trillion. In these years, digital media sector grew by ~30 percent and 42 percent to reach `169 billion. This growth has led to a significant increase in the share of digital media in the overall M&E industry, up from 7 percent (2016) to 12 percent (2018).

In India (a price sensitive country), AVoD is a more prevalent category as it offers free content to viewers. Further, as per a report published in December 2018, around 82 percent of viewers watch free content on AVoD platforms, while only 18 percent pay for the content through SVoDs.

With the advent of VoD services, Indian viewers are moving away from daily soaps and repeat movies to Indian and international content available online. Hotstar (February 2015) and Netflix (January 2017) were the first ones to introduce this digital world to the Indian audiences. This trend picked up its full pace in late 2017 and early 2018, when multiple Indian as well as international platforms like Voot, Amazon Prime, Altbalaji, Zee5, and SonyLIV entered the market.

Netflix’s Sacred Games which is considered to be the game changer for this industry as it prompted various production houses to invest heavily in content. Since then, many big banners have launched several shows. The need to provide relevant and intriguing content to the local audience has been recognized by international players as well. They have tailor-made their content portfolio to better suit the Indian preferences, be it in terms of language, regional content, or more niche, new-age, and relatable stories.

However, both OTT and TV will grow together as TV still remains the primary source of entertainment for Indian thouseholds and OTT acts as an additional source of entertainment. While the Indian television industry is expected to grow by 10.6 percent (CAGR) from USD 13.3 billion in 2017 to USD 22 billion in 2022, the OTT market is forecasted to grow by 22.6 percent (CAGR). Hence, entertainment options are expected to grow multifold in the near future.

Marketers need to be able to prove that the right audience is watching their ads, and so be sure that the ads are have the right impact for the brands based on the goals they have set. I believe OTT will continue to expand and lead to an exciting place for advertisers to utilize and connect with the audience. This means advertisers will follow the audience, and leverage the platforms that are ad-supported. OTT services will also move to an ad-supported model to captivate the audiences at a scale that will be profitable for them in the long term. And brands will focus on adding OTT platforms to their media mix. Sponsorship will also thrive, making the future an interesting time for all.

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