New OTT platforms turn cautious on India push

Fierce competition from big streaming platforms and rising production costs are making new foreign streaming services watchful of their investments in Indian originals in this market.

While HBO Max has deferred its launch to 2024, others like Paramount+ and the already operational Hayu are turning cautious as costs of local production are too high to achieve sustainable average revenue per user or ARPUs anytime soon. Media analysts said India is a diverse and complex market and most new services are likely to focus on American programming first.

“Most platforms are looking to dip their toes into the market first and make studied calls. The element of caution comes from the lessons they have learnt from other international players who’ve shown that in India, you either go big or go home,” said Jehil Thakkar, partner at Deloitte India. Foreign players have realised that in order to stay in the India market, they will have to play the local content game, which is turning out to be very expensive, Thakkar added.

OTT platforms invested an estimated $665 million in content in 2021, according to a recent Deloitte report, with Netflix, Amazon Prime Video, and Disney+ Hotstar leading the pack with a combined spend of $380 million. Without local Indian programming, a service may tend to be niche and cater only to the top of the pyramid. It may be a calibrated strategy, media experts said.

While players like Netflix and Lionsgate Play are still struggling to crack the Indian market, an entity like Amazon has been able to benefit from its diverse businesses, Karan Taurani, senior vice-president at Elara Capital Ltd pointed out. “The economics don’t support a full-fledged launch (of new international platforms) because content differentiation comes with hefty losses for at least three to four years,” he said.

On the other hand, licensing existing titles is just another way to milk them. For instance, HBO Max originals are now available on Amazon Prime Video. Sunder Aaron, co-founder, and principal of production company Locomotive Global Inc said Amazon and Netflix are seen as general purveyors of content, whereas subscribing to add-on services can enhance a viewer’s options.

Shahir Muneer, founder and director at Divo, a Chennai-based music and media company said there was market for international content in India, as a lot of OTTs including Amazon Prime, Netflix and Disney+ Hotstar already have programming from leading American studios like ABC, AMC, HBO and SHOWTIME. "With increase in demand for this content and with the Indian OTT market growing, these studios see India as another potential market," Muneer said.

India’s streaming video market is in its second growth phase with a revenue of $3 billion in 2022 expected to more than double to almost $7 billion by 2027, said Mihir Shah, vice-president, at advisory, consulting and research services provider Media Partners Asia (MPA). New players with deep pockets are gearing up to carve a share for themselves. 

“Companies like HBO Max and Paramount have the advantage of established legacy businesses and relationships in India. For instance, television channels owned by the newly merged Warner Bros, Discovery and Viacom 18. The latter also has a joint venture with country’s largest telco – Jio. There are many nuances to the Indian market. India is a very local market of price-sensitive but value-conscious consumers, so there is a lot to learn for new players and recalibrate their offering on content, tech and pricing,” Shah said.

HBO Max may be launched in India only after the WarnerMedia-owned platform and discovery+ complete the process of merging them into a single streaming brand. Media experts say it’s natural for any platform to take time. There are many nuances to the India market, such as the fact that it is entirely mobile-centric and not English-speaking so there is a lot to learn even on the tech and product side.

Hayu did not respond to Mint’s queries on its strategy for India. However, in an earlier interview, Hendrik McDermott, managing director, direct-to-consumer, global at NBC Universal that owns the service, had said the company will focus on content distribution and not production at the moment, admitting there are no plans for local Indian originals yet.

“We have access to some of the world’s largest franchises and we want to focus on bringing these to different markets and adding to our libraries,“ McDermott had said. Warner Bros said it had no comments while Viacom18 did not respond to Mint’s queries.

In a recent earnings call, Robert M. Bakish president, chief executive officer and director, Paramount Global said in markets like India and Eastern Europe, the company is focused on balancing long-term market growth with a smart allocation of capital, as exemplified by its deals with Viacom18 and Reliance, with whom it is partnering to bring Paramount+ to India. “So IPL, that is, India cricket…is a deal that was done by our joint venture in India, Viacom18, which recently had a transaction where they brought in Bodhi Tree as an investor and capital infusion. It’s going to be part of a streaming offering for the Indian market that Viacom18 is going to launch in 2023. Paramount+ is going to launch with it essentially as another form of hard bundle, a tier, and we’re really excited about it because we get the very material benefit of cricket which is top of the food chain in India, and so it’ll be a real engine for streaming. And then Paramount+ will benefit by being part of that,” Bakish said.