BL Research Bureau

Penetration of the television market in India is at 64 per cent and is intensely competitive. Television networks such as Zee, Sun and Star continue to increase their programming hours, offer new content and TV shows in many genres. However, with cheaper internet and less expensive mobile data plans, more people are taking to watching video content online through mobile phones and tablets rather than on television. A recent KPMG-Eros Now report says nearly 87 per cent of daily online video content is viewed through mobile phones. Over-the-top platforms such as Netflix, Amazon Prime and Hotstar, are trying to gain more eyeballs to challenge traditional TV platforms’ dominance, but this might not be as easy for them as it seems.

Growing OTT market

Data consumption in India has increased 32 times in the last five years to 9.06 GB. The KPMG Eros Now report says that Indians, on an average, spend 70 minutes a day per person on video platforms. That’s 8.2 hours per week on OTT platforms such as Netflix, Amazon Prime or Zee5.

Read also: Are OTTs impacting multiplex business?

OTT (over-the-top) companies, as part of their distribution strategy, are forming alliances with telecom players and content creators. They are also partnering with DTH operators such as Tata Sky and Airtel. Some of them, including Amazon Prime, Hostar and Zee5, are partnering with smart TV makers.

Many OTT platforms are pushing the envelope in the quality of content that they commission to garner people’s attention, with Netflix releasing Sacred Games and Amazon Prime recently releasing Family Man, which features big Bollywood stars.

Zee5 and Alt Balaji, rivals in the OTT space, also have an alliance where they have agreed to co-create original content series in Hindi. This will be exclusively available for subscription video-on-demand (pay) subscribers on both their platforms. Similarly, Netflix has partnered with Karan Johar’s Dharmatic Entertainment for exclusive TV shows and movies. OTT platforms are making capital commitments to build libraries of diverse original content and in multiple regional languages.

Read more: Streaming platforms fight it out for the OTT pie

With the increasing threat from internet content, TV networks, including Zee, Star and Sun have launched their own OTT platforms to retain their urban and rural audience and expand their viewership. Over 85 per cent of Indians prefer to watch content in regional languages, according to the KPMG Eros Now report. This makes it more comfortable for players such as Sun TV and Zee TV to reach a captive viewer base through their OTT platforms.

Price point

While original content is a differentiating factor for OTT platforms, it is the pricing of this content that makes OTT players stand out. For instance, Amazon Prime Video is available for ₹999 per year (inclusive of Amazon’s Prime shopping service), while the standard plan of Netflix is available at ₹499 per month. To reduce its price point, Netflix recently came up with a mobile-only plan for ₹199 per month. It is still a premium offering compared to Amazon Prime and Hotstar. Besides, a 1-year free Amazon Prime subscription is also bundled with many plans that telcos such as Airtel and Vodafone Idea offer. Some of them include a free 1-month Zee5 and 3-month Netflix subscription.

Telcos use these OTT partnerships to boost their average revenue per user by driving up data usage. Similarly, to retain existing customers and lure new users, some internet service providers, including Hathway and ACT Fibernet, have partnered with OTT platforms by bundling their subscription services with their monthly internet plans.

Subsidy to change

The price points at which multiple OTT platforms are operating are expensive compared to monthly cable/DTH charges that users must pay. Some DTH players, including Tata Sky, have partnered with OTT players to offer content to their customers. Amidst this churn, it would take considerable time for OTT players to replace cable TV and DTH operators completely.

The one change that might hasten this transformation of video consumption could be the high monthly bills that some cable TV and DTH users had to pay after TRAI allowed TV channels to offer their services on an a la carte basis. TRAI is currently reviewing the implementation of this policy. But if the monthly cable/DTH bills stay at elevated levels, the shift to OTT will be faster.

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