No FDI limit for OTTs brings clarity to broadcasters
The govt’s decision will indirectly disrupt the market in which the digital media companies operate
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New Delhi: The broadcasting ministry’s announcement that the 26% foreign direct investment limit on digital media will not apply to OTT (over-the-top) platforms streaming news has provided clarity for broadcasters such as Zee Entertainment Enterprises and Viacom18 Media Pvt Ltd.
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While general entertainment, and not news, remains the biggest draw on streaming platforms, the decision paves the way for another distribution channel.
That said, the biggest traction for news remains on platforms like YouTube and Facebook, where they gather maximum eyeballs and advertising.
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“This clears the air for platforms that otherwise function as linear TV channels and have permission from the I&B ministry for the same. It means that OTT will not be seen as a news platform since it is simply hosting linear content," said Kaushik Moitra, partner at Bharucha & Partners. Even though the number of people who turn to OTT platforms for news is relatively low, the category has its own big draw, Moitra said, adding that it does, however, make things difficult for purely digital news publishers, and this may be seen as a step towards getting them into the licensing framework. A senior executive at a streaming platform agreed this is good news, given that it hasn’t been smooth sailing for news as a category. “English news is still seen as niche, while the Hindi space is totally cluttered. So even while there are no new entrants in the space, this will at least allow existing players to gain more funding," the person said, requesting anonymity.
The notification and clarification on FDI on digital media companies and lack of clarity on their applicability to OTT platforms had forced operators such as Disney+ Hotstar and SonyLIV to remove the live feeds of third-party TV news channels from their platforms, said Pranav Srivastava, a partner at Phoenix Legal. “India has seen a massive shift of viewers from traditional sources of media and television to OTTs. This decision will enable OTT platforms with FDI to increase their revenue stream by introducing live streaming of news and current affairs. This will also greatly benefit the Indian OTT viewers who, before this decision, had to continue their cable television subscription or subscribe to additional OTT platforms (with no FDI) only to be able to access news feeds," Srivastava pointed out.
While the decision does not directly impact digital media companies, it will indirectly disrupt the market in which they operate. “With the shift of consumers from traditional sources of media and television to OTTs, there was also a shift of viewers of TV news channels to digital media platforms. With the main OTT platforms (which had FDI) not being able to host live feeds of third-party TV news channels on their platforms, many viewers were relying on digital media platforms for consuming news and current affairs. However, with the introduction of live feeds of TV news channels on major OTT platforms, many of these viewers may not be interested in accessing digital media platforms and may move back to TV news channels being hosted on OTT platforms. This will give a boost to both OTT platforms as well as traditional TV news channels, which will be able to recapture some of their market share from the digital media platforms," Srivastava said.
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He added that digital news publishers would likely suffer from increased competition owing to the fact that OTT is becoming the primary source of entertainment and content in India.
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