OTT video direct subscriber base expected to rise to 55-65 mn by FY24: KPMG
MUMBAI: Direct subscriber base will be a big revenue contributor for the over the top (OTT) video platforms in the future. According to the KPMG report on the media and entertainment sector, the direct subscriber base is expected to rise to 55-65 million by FY24.
This growth in direct subscriber base will be driven by the availability of high-quality content curated for different audiences; and continued growth in the digital infrastructure and the digital payments landscape in the country, it stated.
The report stated that direct subscriptions contributed around 65-70% of the OTT video revenue in FY19 and the rest were realisations from telco partnerships. The OTT video subscription revenues have registered a nearly 3x increase in FY19, totalling Rs 1200 crore, with contributions from both direct subscription revenues of OTT platforms, as well as those from the telco partnerships.
KPMG’s industry discussions indicate that there could be close to 11-14 million direct paid subscriptions in FY19, including Amazon Prime subscriptions.
Owing to the relatively higher price points and the wider e-commerce appeal associated with Netflix and Amazon Prime respectively, these two platforms accounted for a bulk of the direct subscription revenues, it added.
Hotstar also contributed significantly to the overall direct subscription revenues of the industry in FY19 owing to a robust slate of live sports, the international library and live TV content.
While direct subscriber base is crucial, the telco partnerships will remain important. The report noted that telco partnerships have also emerged as an important source of subscription/syndication revenue for the OTT platforms, with a significant 30-35 contribution to the overall subscription revenues in FY19.
It stated that platforms like ALT Balaji and Eros Now are examples of players who have substantial revenue contribution coming from telco distribution.
“While the majority of the subscription revenues are expected to come from direct subscriptions, the revenue from telco partnerships is also expected to achieve robust growth, although slower as compared to direct subscriptions,” the report stated.
KPMG also stated that distribution strategy and depth OTT players across the board have been focusing on developing a robust distribution strategy to have a widespread presence across their target audiences and across various device ecosystems. “Thus, alliances with telecom operators, Cable TV / DTH operators, Original Equipment Manufacturers (OEMs) and others are being actively forged to ensure an optimum distribution depth.”
The report also predicted that Indian language internet users are expected to grow to 536 million by 2021 from 234 million in 2016. As nine out of 10 new internet users in India are likely to be Indian language users it is vital for OTT players to cater to this audience in their native language.
As a result, OTT platforms have started to focus on building a library of regional content that includes movies and originals over the past 12-18 months. Most of the VOD platforms have content offerings in regional languages. But such content has been restricted to select movies along with a handful of original shows, if any.
However, dubbing has emerged as an effective tool for players to quickly expand the breadth of original and movie content available across multiple regional languages like Tamil, Telugu, Bengali, Kannada, Malayalam, and Marathi.
After making inroads in the Indian market, many OTT players have started to expand internationally by launch geography-specific offerings to increase monetisation for their content, the report pointed out.
“While the pricing of these SVOD players in global markets has tended to be higher than their Indian services, prices also vary across different geographies. For example, Star India has discontinued the distribution of its TV channels in the U.S.A. and Canada and offers content only through its VOD service in the two geographies,” the report said.