NEW DELHI: Entertainment platforms such as broadcast and video streaming services will continue to co-exist in India although the plethora of options will soon lead some consumers to make a choice, according to Deloitte India.
The consulting firm said in its Technology, Media, and Telecommunications Predictions for 2019 report that the TV segment is expected to sustain its growth momentum, driven primarily by its spread to an underserved population, increase in electricity supply, low cable and satellite rates, and low ARPU (average revenue per user). But the over-the-top (OTT) video segment comprising services such as Netflix, Amazon Prime and Hotstar are also expected to grow significantly in the coming years, according to Deloitte.
“While both platforms will largely co-exist, there will be some degree of overlap between the entertainment options available and will push some people to choose not entirely between the categories, but some genres," said Jehil Thakkar, partner at Deloitte India.
He said the recent ruling by the Telecom Regulatory Authority of India (Trai) to have consumers select and pay for individual channels instead of fixed bouquets previously offered by broadcasters will lead some households to cut the number of channels they buy.
India is still a long way from cord-cutting, or the cancelling or forgoing of a pay television subscription in favour of an alternative Internet-based service. But audiences will look to restrict the number of English entertainment, movie and music channels they pay for eventually. This will obviously be aided by the number of Internet platforms offering content in these specific genres.
To be sure, Deloitte estimates the online video audience in India to grow from 350 million in 2018 to 500 million by 2020. Key factors driving this penetration are a young population (65% of the population is born after 1980, of this, 443 million are millennials), smartphone penetration (rose from 21% in 2014 to 36% in 2018, resulting in a base of 478 million smartphone users), low-cost broadband (Reliance Jio’s launch has led to a significant decrease in the price of wireless broadband, from $3.50 per GB in 2016 to $0.33 per GB in 2017), large number of OTT players offering good quality content and the emergence of a strong digital payments ecosystem.
However, the growth of new media is expected to be largely additive, where it co-exists with older systems rather than replacing them. India remains an under-penetrated TV market, covering 87% urban and 52% rural households.
Like the print industry, TV is another traditional medium that remains a big opportunity at least for the next five years, especially for advertisers. The highest bid for India TV rights ( ₹1,105 billion by Sony) of the IPL (Indian Premier League) was 2.8 times the highest bid for digital ( ₹390 billion by Facebook) for a five-year period (2018−2022). Further, for traditional broadcasters, OTT also acts as another platform (and monetisation opportunity) for delivering catch-up content. Overall, the launch of OTT has created a parallel ecosystem, raising both the quality and quantity of the content pool.
The same holds true for the Indian film industry that is estimated to grow to ₹206.6 billion by 2021 from ₹166 billion in 2018. In the Hindi film industry, 13 movies entered the ₹100 crore club in 2018 versus 10 in 2017. The box-office revenue generated from top 10 Bollywood movies released during the year grew nearly two times compared with the top 10 movies in the previous year.
Historically, domestic theatricals have been the primary source of revenue but thanks to technology-enabled advancements, newer monetisation opportunities have been created for content creators.
The use of visual effects (VFX) may still be in the early stages in India with an average Indian movie spending 12−15% of its budget on VFX. Deloitte estimates VFX spending to grow at a CAGR of more than 30% until 2021 as the industry matures.
There are also online platforms that have opened new revenue streams for several production houses which are struggling with declining satellite rights on TV. Accounting for 75% of the new video audience, rural India will drive the growth of the digital segment. Further, with increased smartphone penetration in rural India, regional content in the OTT space will attract greater investment and the revenue from regional content will increase from ₹9.2 billion in FY2018 to ₹12.5 billion in FY 2019.
Along with long runs in overseas territories like China and Japan, increased investment in domestic exhibition and cinema infrastructure will improve screen density and increase average ticket prices. Growing acceptance for Hollywood and non-Hindi language local films (recent hits include Rajiniknath’s 2.0 and Kannada period drama KGF ) will aid the evolution.
“Filmmakers have realized there is a market for all kinds of content but the quality has to be upped. People will come in either for larger-than-life spectacles or where there is significant word-of-mouth," Thakkar said.