India's online video space will predominantly be an advertising video-on-demand market even though subscription video-on-demand shows higher growth on a low base
A few days ago, Hong Kong-based advisory, research and consulting firm Media Partners Asia came up with a report on online video revenues for the Asia-Pacific, which it said will touch $35 billion by 2021, at an average annual growth of 22%.
According to the report, China will remain the largest market, accounting for 76% of the revenue for the Asia-Pacific. Japan, Australia, Korea and India will also be significant, accounting for 17% of regional online video revenue by 2021.
The report, titled Asia Pacific Online Video Distribution, covered 14 markets, tracking the growth of advertising- and subscription-based online video, as well as mobile and fixed broadband. The numbers start to look interesting when Mihir Shah, vice-president (India) at Media Partners Asia, shares the India-specific details. In Shah’s view, India’s online video market will contribute $1.2 billion in revenue by 2021. The advertising video on demand (AVoD) services will see a compound annual growth rate (CAGR) of 38% between 2016 and 2021, while the subscription video on demand (SVoD) services will see a higher CAGR at 64% for the same period, he points out.
AVoD services are supported by advertising, within or around online video streams, or on a website or app. SVoD services are supported by consumer subscription payments, either as a stand-alone offering or as part of a bundle with an existing pay-TV and/or broadband service.
Online video refers to the over-the-top (OTT) video streaming services delivered over an Internet or broadband connection. OTT brands in India include Hotstar, Sony LIV, Netflix, YuppTV, PressPlay TV, Spuul, Voot and many more.
India’s online video space will predominantly be an AVoD market even though SVoD shows higher growth on a low base, says Shah. Online video advertising will be driven by increased penetration of high-speed broadband and smartphones and greater volume of exclusive content, leading to differentiated services which can command premium ad rates and sponsorships. The key drivers for SVoD services include a growing acceptance of payments via digital wallets and an increase in fixed broadband adoption.
India is projected to improve its fixed broadband subscriber numbers from 16.6 million in 2015 to 28.3 million by 2021 and the wireless broadband subscribers from 120 million to 622.1 million during the same period, according to Shah.
Such projections explain why OTT firms in India are betting on this market.
For instance, ALT Digital Media, the OTT video streaming firm of television and film production company Balaji Telefilms, which is eyeing an October launch, plans to produce more than 200 hours of exclusive original Indian content in a year. This is about twice the volume of original, exclusive content available in the Indian online video market today, claims ALT Digital’s chief executive Nachiket Pantvaidya. This, he says, will lend scale to the business.
Currently, ALT Digital is firming up distribution partnerships with mobile phone manufacturers, telecom firms and Internet services providers. The company will follow a SVoD business model as it intends to move away from interruptive advertising to provide a value-for-money immersive viewer experience. However, it will work with select brands to integrate them seamlessly into its shows.
Voot, the video-on-demand service from Viacom18 Digital Ventures that launched on 29 March, has, meanwhile, got more than 1.5 million unique visitors between its app and the website. Gaurav Gandhi, chief operating officer, is pleased with the response and the watch time that the service has clocked. From this month, the company is expecting advertising on its platform since it has tied up with a couple of large media agencies.
Unlike ALT Digital, Voot’s business model is AVoD based. And by advertising Gandhi means ad spots, AFPs (advertiser-funded programming), branded content as well as in-programme/in-show brand integrations.
PressPlay TV, another independent OTT service, launched its iPhone app and desktop/Web browser version earlier this week. Anand Sinha, co-founder and chief executive, says this will have a twofold impact: increase the number of users and significantly enhance the average time spent per user on the platform. For content, the company is moving beyond Bollywood and has firmed up licensing arrangements with content innovators such as The Viral Fever, The Raghu Dixit Project, LiveFame, Fame, POPxo, Byju’s, Shudh Desi Endings, Sportskeeda TV, Lybrate and NewsMeme, among others.
Although advertising is the key driver for PressPlay TV, the company will introduce SVoD and TVoD (transaction video on demand) models shortly. It has already begun experimenting with “premium content", which is TVoD. PressPlay currently has more than 1 million active users per month. It is looking to increase this to 10 million monthly active users by the end of the year.
Voot’s Gandhi expects the digital video market in India to explode and largely be ad-supported in the near future. He believes that digital video advertising is a $1 billion opportunity in the next five years. PressPlay’s Sinha, too, feels that a pure-play transaction model could deter the user from coming on to the platform. Therefore, a hybrid freemium (free+premium) content offering is the way to go.
Although the subscription market is very small, it will pick up once data prices come down and payment gateways evolve. In the next 8-12 months, developments such as penetration of 4G services, rationalization of data prices and greater use of alternative payment models will help the freemium, SVoD and TVoD business models to emerge.
Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.