India’s video streaming wars set for an interesting inflexion point

Filippo Giachi, VP – Asia Pacific, Middle East & Africa

When Disney+ launches its new OTT service in partnership with Hotstar, owned by one of its subsidiaries, in India by the end of March, it will enter not only one of the most competitive domestic markets for OTT video streaming in the world but also one of the largest and fastest-growing.

A study jointly carried out by Associated Chambers of Commerce and Industry of India (ASSOCHAM) and PwC - Video on Demand: Entertainment reimagined – estimates that the market for OTT subscription video on demand (SVoD) and transaction video on demand (TVoD) services in India will be worth US$823m by 2022, having seen a CAGR of almost 23% since 2017 (far above the global average of 10% in the same period). Mobile advertising video on demand (AVoD) revenue in the country too is expected to expand at a CAGR of almost 33% to be worth US$317m by 2022.

India has among the highest online video consumption rates in the world, at 8.46 hours a week, higher than the global average and those even in the US and in Singapore, the report estimates. And this consumption will only trend upwards thanks mostly on account of access to the cheapest mobile data in the region if not the world. No surprises then, mobile phones are the preferred access device for most especially outside of the tier-1 cities. According to the FICCI Media & Entertainment report 2019, Indians spent 38% of their time and 70% of their data on mobile phones for entertainment, of which watching videos was the second most popular activity after browsing social media networks.

With a population of almost 1.4bn people and an estimated 629m mobile internet users in the country at the end of 2019, 69% of which use entertainment or video apps, it’s no surprise that competition for VoD subscribers is already fierce. Anything up to 30 different providers were delivering OTT video streaming services in India at the end of last year, a commercial bearpit that prompted PCCW-backed Viu to exit the market, having decided that it lacked the investment resources to challenge bigger rivals like Netflix, Amazon and Hotstar last December.

Whereas globally the OTT VoD industry may have seen a shift in emphasis from content and distribution to differentiation via the user experience, India is still a market where content remains king, and specifically customised regional content to suit the many different languages that its citizens speak besides English.

Consequently, it’s not global market leaders Netflix and Amazon Prime that dominate activity in India. Homegrown, Star India-owned Hotstar, now owned by the Walt Disney Company, - which initially launched in 2014 with an ad-supported service closely aligned with coverage of Indian IPL cricket - is the clear leader in terms of subscribers. According to market research firm Oddup, Netflix had about 5% share in October 2019 whereas Hotstar had 29%, JioTV 23% and Amazon Prime 10%. A further third of market revenue is taken by a broad mix of smaller players, mostly regional.

Reliance Industries-owned telco Jio too, which offers fixed and mobile telephone voice and broadband data services to an estimated 370m Indian subscribers, also offers film and TV streaming in partnership with Balaji Telefilms after the latter sold a 25% ownership stake to Reliance Industries in 2017. Out of an estimated 493m active Internet users in India around 331m are Jio subscribers and the company has enjoyed considerable success in bundling access to its video content with its fixed and mobile telephone and broadband packages.

Offering its services for the same price as in other, wealthier parts of the world appears to have hampered Netflix’ growth since its debut in 2016 however. The company offers monthly subscriptions ranging from around US$7 to US$11 depending on the length of the plan and number of screens that can be viewed simultaneously.

The launch of a mobile-only plan exclusive in India priced at under US$3 per month last July, tied to bundling partnerships with local mobile network operators (MNOs) and revamped library of local, original content does appear to have belatedly helped accelerate Netflix revenue growth (reputedly by 700% year on year in November 2019). Netflix has also worked to introduce various tools designed to overcome the patchy cellular data connections in rural areas of India that accommodate large swathes of its population and customise its platforms specifically for mobile users.

In contrast, Amazon Prime entered the market with subscriptions about 12% of the price it charges in the US for the same service while owner Jeff Bezos has promised to significantly increase the company’s investment in content customised for the Indian market announcing seven new local content out of 24 new releases tailored for Indian language speakers.

But the remainder of the OTT video streaming market in India is dominated by either local companies or those offering content from elsewhere in Asia. Zee Entertainment Enterprises has joined forces with ALTBalaji, the OTT video streaming subsidiary of Bollywood movie maker Balaji Telefilms, to bundle their content with mobile phone services. Zee owns India’s largest private broadcast network, offering movies, exclusive TV content and over 90 live channels on its ZEE5 platform, partial access to which is free for subscribers to Bharti Airtel’s mobile phone plans with additional, premium content charged at a rate of around US$7.

Singapore-based MX Player too, acquired by Times Internet (the digital media division of Times Group) for US$140m in 2018, has an estimated subscriber base in India of around 175m monthly users (and many more outside the country). The privately held company received US$111m of funding led by Chinese Internet giant Tencent in October last year [2019], destined to help MX Player produce more of its own content whilst expanding licensed TV shows and movies from third party companies for streaming on its free ad-supported mobile app which also supports local playback. A premium, ad-free version is available for around US$5 a month.

Voot, the online arm of TV broadcaster Viacom 18, offers an AVoD platform via IOS, Android and JioPhone KaiOS apps as well as a PC web browser, with mainly movie and TV content available in multiple languages like Kannada, Marathi, Bengali, Gujarati, Telugu and Tamil. Elsewhere Eros Now debuted its media streaming and VoD services as early as 2012, MUBI launched a library of curated arthouse films and documentaries in November 2019, SunNXT specialises in content for the South Indian market.

Retailers too are getting in on the OTT act as they strive to drive online purchases linked to specialised content. Walmart-owned online retailer Flipkart launched a free OTT video streaming service via an Android App to coincide with Diwali last year for example, since supplementing its Flipkart Video platform (populated by content from the likes of Voot, Arre, Viu and TVF) with Flipkart Video Originals which will feature unique shows produced specifically for Flipkart. The service is mostly an ad-supported model that includes recommendations on recipes and ingredients, and the platform demonstrates the growing trend for digital ads to be placed where buyers are making their purchasing decisions (Amazon Prime being another case in point).

Food delivery startup Zomato began its own web streaming service in September 2019, starting with 18 original shows available under a “Videos” tab in its mobile app (though the content is almost exclusively tied to food-related themes in comedy, reality, fiction, advice and celebrity interviews as well as recipes and restaurant reviews).

Despite the size of the market opportunity, It seems inconceivable that so many different OTT providers will continue to exist, and some consolidation seems inevitable. And one important factor in deciding which remain is likely to be how quickly and easily they can take their content to new audiences within the country through appropriate distribution channels and partnership deals.

Telecommunications providers have already played a big part in the fortunes of successful providers, as evidenced by JioTV. Netflix too has seen its customer base increase after it signed a direct carrier billing (DCB) partnership with Vodafone and Airtel in India, as did Amazon for its Prime video streaming service with Bharti Airtel, Vodafone and BNSL.

For the moment Hotstar only supports recurring subscriptions through credit cards, debit cards and iTunes. But it may need to expand those methods to include partnerships with MNOs and digital wallets, particularly if it is going to deliver Disney+ to a broader audience beyond the tier-1 cities. Exciting times to be a consumer in India!