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Competition intensifies in the Indian VOD market as more media giants prepare new offerings

by Brice Longnos | Mar 06, 2018

Rising competition in the Indian VOD market is an indicator that some of the key barriers to the growth in digital video content consumption in India, notably the limited availability of low-cost reliable broadband connectivity, are being successfully addressed.

In addition to rising smartphone ownership, 4G penetration, companies like fastfilmz introduced the delivery of video over 2G networks, thanks to the integration of V-Nova’s PERSEUS compression codec. In 2016, Reliance Jio introduced disruptive mobile broadband pricing and currently offers its prepaid users 2GB per day of 4G data to democratize bandwidth-intensive services like video viewing. With its suite of entertainment apps, including live-streaming and video-on-demand services JioTV and JioCinema, being available for free, Jio has created a comfortable environment for consumers to growth their video consumption over mobile broadband. It claims that, as of 2017, customers consume 9.6 GB of data per month, driven mainly by video. As a consequence competing operators in India (e.g. Airtel and Vodafone) have been forced to respond with competitive mobile broadband pricing to subscribers in addition to promotional pricing for their video services. For example, in December 2017 Airtel announced its postpaid and prepaid customers have free access to Airtel TV until June 2018.

Therefore, it’s no surprise that new regional players are eyeing a launch of their own OTT services:

  • Times Internet is looking to re-enter the market, following its acquisition of Korean video player app MX Player in January 2018;
  • In 2016, Alibaba, which acquired China’s then leading VOD platform Youku Tudou, is aiming to launch its own UGC-focused VOD service, leveraging the success of its mobile internet browser UCWeb and payment gateway Paytm in the Indian market;
  • Facebook is readying the roll-out of Facebook Watch to India by March 2018, which is already Facebook’s first market in terms of active users.

At the same time, all the incumbents in the OTT video scape have explored strategies to grow their audiences in the face of an increasingly competitive landscape, mainly through telco partnerships and investments in original contents.

  • Telco partnerships: Most OTT players, with the exclusion of VOOT (whose strategy is web-based) and Viu, have tied in with at least two or three telecom operators (see exhibit 1), bringing their experience delivering video and increasingly differentiated content offerings to wider audiences.
  • Local content: On the other hand, Hotstar, ALT Balaji, Viacom18’s VOOT and Sony Liv have built up their offerings on mostly local contents in various local dialects (Tamil, Punjabi, etc.), Amazon Prime Video have been ramping up large investments into local series to complement their predominantly foreign content offerings, and Netflix has just announced its first three Indian original series.

Exhibit 1: Top OTT players in India and telco partnerships, as of February 2018

OTT Player

India Telecom Operators Partnerships

ALT Balaji

Vodafone India for Vodafone Play, Reliance Jio (originals only), ACT Fibernet; in talks with Bharti Airtel for Wynk

Amazon Prime Video

Vodafone India, Bharti Airtel

fastfilmz

Bharti Airtel¸ ACT Fibernet, Aircel

ZEE5 (combined Ditto TV and OZee)

Vodafone India, Idea Cellular for Idea Movie Club, Bharti Airtel for Wynk, BSNL

Eros Now

Bharti Airtel, Vodafone India, Reliance Jio, Idea Cellular

Hotstar

Reliance Jio via Jio Play, Bharti Airtel for Airtel TV

HOOQ

Bharti Airtel, Vodafone India, ACT Fibernet

Hungama Play

Vodafone India , ACT Fibernet

JioTV

Reliance Jio

Sony LIV

Bharti Airtel, Videocon d2h Videocon d2h for its HD Smart Connect Set Top Box

Netflix

Bharti Airtel for Airtel Digital TV, Videocon d2h for its DTH service, Vodafone India for Vodafone Red customers

VOOT

Google for Progressive Web App (PWA)

YuppTV

Vodafone India , ACT Fibernet

 

Through these approaches, Indian OTT players hope to grab a larger share of the OTT video revenues which Strategy Analytics expects to reach $2 billion in 2022, up from $529 million in 2017 (CAGR of +30.4%). Getting viewers to pay for subscriptions has been a challenge in India so far: only 3% of Indians subscribe to a VOD service in 2017. As such, immediate opportunities lie in the ad-funded models, where Strategy Analytics estimates revenues on mobile to reach $350 million in 2022. However, we expect mobile video subscription revenues to catch up and reach $317.1 million at the end of this period.

The new entrants, Times Internet (the internet subsidiary of The Times of India and largest digital publisher of India), Alibaba and Facebook are focused on ad-funded models, as mobile video advertising is expected to grow at a CAGR of +72.6% between 2017 and 2022. Times Internet, learning from the failure of SVOD service BoxTV, may focus on leveraging its 270 million monthly visitors base, while Alibaba has a powerful gateway for browsing and payments, and Facebook hopes to replicate the success of Watch in India, where it has 1 million more active users than the U.S., as a Morgan Stanley survey has found 40% of U.S. Facebook users access Watch weekly.

As the evolution of the Indian OTT video competitive landscape intensifies further it raises a number of questions for players in the VOD sector to address, including:

  • How mature is the VOD market?
  • What business models should VOD providers adopt to grow users and revenue?
  • What distribution channels are more efficient to drive subscriptions and/or viewing - through app, web (e.g. VOOT’s progressive web app) or operator portals?
  • What content mix is most suitable for the target audience, as local content has proven critical in the success in the Indian market?
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