(Photo: AFP)
(Photo: AFP)

India’s video streaming industry to grow at 22%: PwC Report

  • The M&E sector was valued at 2,64,588 crore in 2018
  • OTT players say Indians are still some way from wanting to pay for content

New Delhi: India’s video streaming industry is all set to grow at a CAGR of 21.82% to reach Rs. 11,977 crore by 2023. According to a report by global accounting firm PricewaterhouseCoopers (PwC), the over-the-top (OTT) video industry will record the highest growth rate among all segments and drive evolution over the next four years in the overall media and entertainment industry in the country that will rise by 11.28% to reach Rs. 4,51,405 crore.

The M&E sector was valued at Rs. 2,64,588 crore in 2018.

“India is the fastest growing entertainment and media market globally and is expected to keep that momentum. Our research shows that in the next five years India will see significant growth in over-the-top (OTT), online gaming and Internet advertising. Growth in these sub-sectors spurs from the growing trends around personalization and increased digitalization," said Rajib Basu, partner and leader – entertainment and media, PwC India.

Today's consumer can control their own media consumption through an expanding range of smart devices and curate their personal selection of channels using OTT services. The soon to arrive 5G networks will create further use cases, enhance user experiences and create disruptions leading to newer business opportunities, Basu added.

The report titled Global Entertainment & Media Outlook 2019-2023 (Outlook) outlines rates of growth for different media and entertainment segments and sub-segments both globally, as well as territory-wise. It adds that there are a few priorities shaping outreach strategies at the moment. For instance, companies are finding that it makes sense to present different options: all-you-can-eat offerings with unlimited usage in some areas, tiers of payments for different services in less developed markets, and competing on affordability. Content creators and distributors are devising new ways to appeal to consumers as individuals and marketers are figuring out how to meet consumers at the point of consumption and point them instantaneously towards purchase. Companies are leveraging the ability of artificial intelligence to understand people’s individual tastes and consumption habits to offer up the content individual users find most compelling. With consumers moving to the centre of their own world of media experiences, their personal data — from the music they stream and the news they read to the products they buy — is taking a central role.

Largest chunks of the total industry revenue in India by 2023, the report says, will come from traditional TV and home video that will record growth rate of 11.83% to reach Rs. 1,23,047 crore and Internet access that will rise by 16.02% to reach Rs. 1,16,843 crore over the same period.

Apart from OTT, the other fast growing segments will be video games and esports and Internet advertising that will notch up rates of 18.89% and 17.75% to touch Rs. 17,891 crore and Rs. 18,446 crore respectively.

Cinema, on the other hand, will grow by 8.51 % to get to Rs. 17,789 crore. Box office collections notched up by films in the country will rise by 8.54% to reach Rs. 17,292 crore while cinema advertising will grow by 7.37% to reach Rs. 497 crore. The emergence of digital streaming services has posed new challenges to the enduring appeal of big-screen movie experiences. Films, especially those in the Hindi language, have found it hard to drive audiences to theatres, as the failure of recent big-ticket productions like Thugs of Hindostan and Kalank shows. But industry experts believe big-budget spectacles along with strong content-driven narratives will pull people to cinema halls in the coming months.

Meanwhile, even as streaming services battle it out for mindshare in India’s urban homes, good old television viewership continues to grow, especially in the countryside. Television subscription will grow by 11.85% to reach Rs. 1,23,033 crore by 2023. Apart from the fact that most of India is a single-TV household, the advent of state broadcaster Doordarshan’s free-to-air direct-to-home platform DD Free Dish is hugely responsible for the continuing dependence on TV especially in rural areas today.

To be sure, the big numbers will come from digital services. As of 2018, India is the tenth largest market for OTT in the world with overall revenue standing at Rs. 4,462 crore. Subscription-based video-on-demand platforms are projected to grow at a CAGR of 23.33% to reach Rs. 10,712 crore between 2018-2023. The 34 players present in the cluttered OTT market comprise both American platforms such as Netflix and Amazon Prime Video as well as local Indian services like ZEE5, VOOT, Eros Now and ALTBalaji. Akash Banerji, head of advertising video-on-demand business at VOOT, said the OTT market is clearly tilted towards advertising right now. Advertising-led platforms are a Rs. 4,500 crore industry compared to 1,500 crore for subscription services which are incidentally, growing faster.

“The entertainment content industry is at the cusp of a revolution spurred by the OTT boom of the past two to three years. Going by telecom service providers' numbers that show a 4-5% increase in ARPU (average revenue per user) of users nationally including semi-urban and rural areas, suffice to say that the report gives a fairly accurate picture of the way forward for the OTT industry," said Manish Aggarwal, business head, ZEE5 India.

Karan Chaudhry, president and chief operating officer of online YouTube channel The Viral Fever added that the single biggest driver that changed the entire (OTT) landscape was the launch of Reliance Jio in late 2016. Data costs were slashed overnight and gave consumers the freedom to watch anything they want at a very low price.

The first interaction of India, and young India, to be specific, with the Internet would potentially be in the world of online video, added Ali Hussein, chief operating officer, Eros Digital. Vishal Maheshwari, country head, Viu India said what we are seeing is the start of a revolution in the way content is going to be consumed in the period to come, with linear clearly giving way to on-demand as a consumer choice. The industry recognizes the changing preferences of the consumer, whose need for individual-oriented content is growing ravenously. While its rapid proliferation is fuelled by cheaper technology and more accessible devices, it is content which will continue to drive growth as it tries to satiate the entertainment and information needs of many segment of consumers, in large numbers, said Sunil Lulla, Group CEO, Balaji Telefilms.

“The industry will, however, need to understand that India is not a single market but a combination of multiple markets, each with its unique characteristics. Content today is being created in eight major Indian languages besides Hindi and English. Platforms and content creators will have to work towards creating narratives that cater to each of these markets," Siddhartha Roy, chief operating officer, Hungama Digital Media.

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