India is the world’s fastest growing OTT market: PwC report

According to findings from the Media and Entertainment Outlook 2020, a report by multinational professional services network of firms, PricewaterhouseCoopers or PwC, OTT video, along with Internet advertising, video games and e-sports and music, radio and podcasts are the top four segments expected to see revenue growth in the country over the next four years.

The PwC report is based on publicly available historical data collected from trade associations and government agencies as well as interviews with players and regulators. The global PwC report covers 53 countries and 14 segments including traditional TV, OTT, cinema, print, books, music and radio, among others.

While changing consumer behaviour may impact traditional sectors like cinema and print adversely, digital E&M (entertainment and media) spending, including OTT subscriptions and mobile data allowance, is being increasingly regarded as a utility and therefore, a non-discretionary expense, according to the report. India’s total M&E revenue, however is expected to grow at a robust rate of 10.1% to reach $55 billion by 2024.

Overall though, global M&E revenues will contract by 5.6% in 2020 over 2019.

“The covid-19 pandemic has brought the growth of the M&E industry to a screeching halt and amplified shifts and digital disruptions that would have only happened in the years to come," Rajib Basu, partner and leader, entertainment and media, PwC India said. Basu added that the impact of the pandemic has not been felt equally across sectors, while movie theatres and live events, for instance, have taken a hit, covid has proven a boon for OTT.

Further, the massive investments made by OTT services like Netflix, Amazon, Disney+ Hotstar and others in originals as well as acquired content will help subscription video-on-demand make up 93% of the total OTT revenue (as compared to 87% globally), increasing at a CAGR of 30.7% between 2019-2024, from $708 million in 2019 to $2.7 billion. The new at-home environment has led to the rise of new direct-to-consumer apps, local ‘bite-sized’ entertainment platforms and user-generated content formats, the report says.

Meanwhile, as the covid-19 pandemic has resulted in a seven-month shutdown of movie theatres and several producers have taken their films directly to digital platforms, OTT has seen obvious gains at the expense of cinemas. In 2018, SVoD revenues were a third of India’s total box office revenue but the shift of eyeballs to digital platforms in the medium to long term will ensure India’s movie box office falls by 2.6% over the next four years as SVoD grows by 30.7%. In fact, the report says 2020 presents a key tipping point as SVoD revenue overtakes theatrical earnings, which Basu admitted may have been a function of theatres remaining shut for most of the year.

“However, we expect SVoD revenues to be higher than box office even for the next three to four years," he added.

Gaurav Gandhi, director and country general manager, Amazon Prime Video India had admitted in an earlier interview to Mint that the covid-19 pandemic has led to a steady increase in subscriptions and engagement.

“There was a need for fresh content and we were able to provide that wholesome experience within the comfort of people’s homes," Gandhi had said. The strategy of quick premieres of films and consistent availability of new shows is important, OTT executives say, but so is the quality of content. The presumption is people will take time to go back to theatres even as they begin to reopen, but it is important for web content to also be clutter-breaking.

“All entities that only believe in quantity will have to introspect. There will be a problem of plenty if platforms are simply churning out content without making sure they have a unique bouquet to offer,"Neeraj Roy, founder and CEO, Hungama Digital Media said.

The report says that while covid has impacted overall advertiser confidence with segments like print losing advertising by 1.5%, Internet has emerged relatively unscathed, estimated to grow at a CAGR of 21.7% between 2019-2024. In fact, India is now the sixth-largest Internet ad market in the Asia Pacific and mobile will continue to be the primary driver of revenue due to increased data affordability, new mobile-first formats, and strategic targeting of consumers. Music and podcasts are seen as other big gainers, with advertising for them estimated to rise by 20%. The TV advertising model, meanwhile, continues to be impacted by the ongoing shift in consumer habits though it is estimated to grow by 2.1% by 2024 too.

Gaming and esports that capitalize on the need to bring live experiences into the home in personalized and engaging ways, are also set to benefit from the pandemic. India’s gaming market is expected to touch $3.2 billion in 2024, increasing at a CAGR of 18.8% with e-sports alone growing at 33%.

Fuelled by the uptake of music streaming brands and people turning to motivational, spiritual, fun and fitness content during the lockdown, India’s has emerged as the third largest podcast listening market in the world after China and the US, with 57.6 million monthly listeners. Further, the segment is expected to touch revenues of $1.7 billion in 2024, increasing at a CAGR of 13.5%. India will also see strong increase at 30.4% CAGR in its monthly podcast listener base over the next five years, supported by the entry of foreign players and original content on topics including news, society and culture, the report says.