Full steam ahead for India’s OTT video sector | Media Analysis | Business
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India’s over-the-top (OTT) video viewing is feeling the benefit of 4G roll-out and falling data costs, with digital advertisement spends set to rise by 30.8% CAGR between 2016 and 2021.

Inside Edge Amazon REVIEW 25 JulyMobile advertisement spends and social media delivered digital video advertisement spends are expected to grow at 50.9% and 40% CAGR between 2016 and 2021 respectively, forecasts The Digital First report, from KPMG with FICCI and LA India Film Council.

Video now accounts for half of India’s data traffic and is set to rise to 75% by 2020. Young Indians are now spending around four hours a week watching television compared to spending 28 hours on a mobile device – almost half of which (45%) is dedicated to viewing entertainment, said the report.

“While sharing online videos on social media and consumption of short-form video content has been the first wave of data consumption, long-form content consumption is now seeing rapid growth on the back of improved connectivity and lower data costs,” said the report. “The consumers are moving from ‘what’s on TV’ to ‘what do I feel like watching’ mind-set.”

Gaurav Gandhi, COO, Viacom 18 Digital Ventures added: “There are about 200 million online video viewers in India currently, which is set to exceed 400 million in the next couple of years. Although the catalyst for online video boom was Reliance Jio, the trend now has wings of its won.”

Data is set to be the dominant source of revenue for the telcos he added, with home broadband possibly seeing traction in the future.

According to the report, advertising video-on-demand (AVOD) remains the primary source of monetisation for over-the-top (OTT) players in India, however subscription video-on-demand (SVOD) platforms and freemium models are beginning to see traction on the back of compelling content – such as sports.

Hotstar, for example, reached close to 80 million unique users with its IPL video streams from 2016, compared to 35 million in 2015.

Many SVOD players, including Netflix, had initially targeted English-speaking viewers in urban areas. These platforms are, however, now growing their regional content.

“The next 200 to 250 million VOD users are likely to come from the middle class, the masses and regional languages,” the KPMG report said. “Consumers today spend 50 to 60% of average time on Hindi videos, followed closely by 35 to 43% on regional content videos, with a 5 to 7% on English.”

Girish Menon, co-head, media and entertainment at KPMG in India, said: “OTT consumption in India has reached a tipping point with the roll-out of 4G and related data wars which have resulted in a dramatic and rapid growth in Internet penetration and video consumption.

“This has also fundamentally altered the consumption demographics and patterns, with OTT viewership becoming more mass. Organisations can no longer afford to take baby steps and will need to wholeheartedly commit to build out their digital businesses.”

VOD players are now creating content for the mainstream middle class Indian audience, with shows such as The Timeliners and the Aam Aadmi Family.

The report found major platforms such as Star India’s online platform Hotstar and US subscription SVOD giants Netflix and Amazon are also investing heavily in building local movie libraries and original content designed with a wider and more mass appeal. Meanwhile domestic platform Alt Balaji is attempting to position itself between Netflix and successful prime time Hindi soaps.

KPMG said that out of an allocated budget of INR20 billion for original content, Amazon Prime Video has so far spent only around INR5 billion through partnerships with production companies such as Excel Entertainment and Phantom Films. The budgets for original content for Sony Liv, Voot, Eros and Hotstar are under Rs4 billion.

Although the market looks ripe with opportunities, the challenges are still significant. In particular, rampant content piracy is a constant cause for concern, while problems in obtaining measurable return on investment from digital advertising, digital advertisement fraud, and brand safety are also issues for India’s OTT players.