With the entry of Netflix, the over-the-top (OTT) space in India may be seeing a flurry of activity, but when compared with other countries, things are still in a nascent stage.
As things stand, India’s online ecosystem remains devoid of necessary infrastructure, coupled with dismal broadband speeds. Payment wallets for subscription services are just beginning to see the light of day. While the US is a subscription-driven market and China follows an advertising-led model in the OTT space, India is still struggling to come up with a viable business model that enables returns.
As a Netflix spokesperson says, “We need to acquire rights for TV shows and movies in individual markets, localise services, ensure we can move video data around the world seamlessly to meet demand, establish a plan for customer service and establish clear methods for payments.”
Presently, there seems to be a very small ratio of pay subscribers. “One report states that there are 25 million OTT subscribers in the market today, of which pay subscribers would be less than 5%,” says Sony Pictures Networks India EVP and head of digital business Uday Sodhi.
Moreover, the price-point referencing for any subscription OTT service is of cable TV and these subscription video on demand (SVoD) price-points don’t seem very attractive for the mass market. One has to also keep in mind that a majority of the VoD consumption is happening on mobile and consumers are already paying for high data charges. Therefore, it is a challenge if content is also priced high.
As a result, OTT platforms like Sony LIV, NexGTV, Hotstar, Ditto TV, ErosNow, Netflix and the upcoming VOOT and ALT are now focusing more on developing original content as compared to just providing catch-up content.
Moreover, there are only a handful of major players in the market presently, which signifies the need for more platforms to come up for the ecosystem to grow.
“The transition to internet TV, with its greater consumer satisfaction, will mean growth for many internet TV services,” the Netflix spokesperson says. But given the low cost of cable subscription in India, can OTT video players put a compelling cost benefit proposition for mass adoption?
Because, many DTH (direct-to-home) players like Tata Sky, Dish TV and Videocon d2h are also giving competition to OTT platforms by launching their own mobile TV services or other unique content offerings.
Having said that, India is a unique market and many experts believe that comparing the Western market with India on video consumption would be unfair. “While the West moved from desktop to mobile, India has been predominantly mobile and will continue to be so,” says Milind Pathak, chief operating officer, Madhouse.
At the same time, the geographical expansion of large OTT video portals such as Netflix and HOOQ is an endorsement of the fact that India is ripe for multi-screen streaming options. “Netflix’s entry will change the Indian market where people will have legal access to premium exclusive content across multiple digital screens,” says Dave Maan, EVP·video solutions, TO THE NEW Digital.
Gaurav Gandhi, COO, Viacom18 Digital Ventures, says there is a robust growth in video consumers, with over 80 million users already streaming video and around 85% of internet consumption being done through mobile devices.
SVoD has been a very successful business model adopted in developed markets by players such as Netflix and Hulu. On the other hand, VoD players in India have adopted advertisement-backed and subscription-based revenue models. Ad rates for VoD are one-tenth of that of live television. Hence, recovering costs for licensed content becomes a challenge. Subscription-models, on the other hand, have had limited success on account of viewer unwillingness to pay.
Even with better 4G internet speeds, affordable data packs and increase in smartphone penetration, OTT players who create exclusive original content that plays seamlessly on all four screens (smartphones, tablets, laptops and televisions), with high quality streaming options (like HD and ultra HD) and all at the right price-point, will be the winners of tomorrow.
India’s online ecosystem remains devoid of necessary infrastructure, coupled with dismal broadband speeds.
Payment wallets for subscription services are just beginning to see the light of day. In the OTT space, India is still struggling to come up with a viable business model that enables returns
Resource :http://www.financialexpress.com/article/industry/companies/online-video-gets-an-ott-push/204986/