India’s paying OTT subs base expected to touch 40-50 mn by 2023: BCG

MUMBAI: The Indian over the top (OTT) market has the potential to touch $5 billion in revenue by 2023, according to a Boston Consultancy Group (BCG) study ‘Entertainment Goes Online’.

To realise this potential, the Indian OTT players need to ensure the availability of relevant differentiated content, development of regional markets and many others.

The study also noted that both ad-supported and consumer pay model will continue to co-exist. It expects the paying OTT subscriber base to touch 40-50 million by 2023. Further, the advertising video on demand (AVOD) services are expected to have 600 million users by 2023.

The consumer pay model could take many different shapes ranging from pure OTT SVOD to telco drive aggregator model as well as TVOD particularly in categories such as films and sports.

BCG expects SVOD to become a substantial part of the market driven by strong content development and ability to pay.

The study noted that OTT in India has several growth drivers improving connectivity and fall in data prices, increased smartphone penetration, favourable demographics (age, affluence), and building up of content supply.

By 2020, the study estimated that India will have more internet users than the population of the G7 countries combined.

It also stated that 16% of media consumption in India is already happening on digital media. In the case of Indian youth, it is already higher at 25%.

The study further stated that the digital consumption in India has been additive and not cannabilising traditional media consumption. It pointed out that between 2016 and 2017, overall media consumption grew for all segments of consumers.

While the OTT phenomenon is five years old, the year 2017 saw the first burst of “big money” being deployed behind Indian content on OTT. Heavy investments are now underway across multiple players. Furthermore, the numbers of players in the Indian OTT market have witnessed a 3.5x increase in the last six years growing from just nine players in 2012 to 32 in 2018.

“Investment for original content by OTT players is increasing at a fast clip. In addition to live sports rights, the nature of shows produced is also evolving—tentpole properties built for OTT are at a cost per hour of the 3-4X cost of traditional TV content. The need to differentiate to attract eyeballs is enabling aggressive bets on original content,” the BCG report noted.

The investments are in happening varied forms of content with different propositions. These include tent poles or hero content: heavily marketed, premium content (higher cost of production)—meant to bring new eyeballs on the platforms, Hit movies: expensive to buy, but attract, eyeballs, high profile sporting events, syndication of international content, original content/web series (Hindi, English and regional): build up library of differentiated content, and CAC (Content around content) specifically around reality TV, sports and others also covered on traditional TV.

The BCG report also noted that most consumers (81%) have up to three video/OTT apps on their smartphone. Further, all platforms struggle with retention of consumers— on an average 50% of OTT apps installed are uninstalled in the first 7 days of installation. The competition for user share is intense—every OTT platform is vying to be among the top 3 of the consumer’s attention.

The report also underlined the fact that there is a need for the OTT industry to establish a “currency” that can help measure and understand the impact of advertising for different types of advertisers and price in line with the value created. This is essential for the long-term growth of AVOD models in the country. A new currency can help represent value more holistically and capture the audience delivered (quantum, quality, segments) more sharply and holistically by moving towards an industry common understanding e.g. BARC has established an industry standard understanding for TV, triangulate across sources, and capture quality of audience.

“Most importantly, a common currency will bring a larger degree of acceptance among the overall marketing machine across the key ad buyers and allow the overall potential of the OTT watchers to be unlocked,” the report stated.

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