#Forecast2021: OTT magic will continue to hold sway

However, breaking even is still a distant prospect on the horizon.


KOLKATA: Most industries had little cause for cheer last year, but the OTT business wasn’t one of them. Engulfed by an outpouring of love and support, OTTs truly came into their own in 2020. These streaming platforms not only gained paid subscribers in big numbers, but became a staple of the Indian culture and lifestyle in the past year. 

Several reports highlighted the manifold growth clocked by OTT platforms across metrics. 2021 may not see a similar level of growth in terms of subscribers or other percentages in terms of year-on-year basis. But there is more to the narrative than numbers. All the contenders in the OTT ecosystem are looking to go more aggressive on the back of premium original content, attractive pricing models, distribution deals, and deeper foray into regional markets.

From now on, the OTT star will only rise higher and higher.  

Time spent on OTTs to go up further:

Equating Covid2019’s impact on the OTT industry with demonetisation on digital payments, MX Player CEO Karan Bedi says the streaming industry has scope to more than double its user base in the next few years. However, the focus will now move more towards time spent over user reach. “The user base has grown quite a bit. What is happening now is as users have gotten comfortable with the platforms, they are spending more time,” he notes.

Elara Capital VP research analyst (media) Karan Taurani forecasts double digit consumption growth for OTT platforms. He explains that when the industry saw stupendous growth in last April, catch-up TV content, sports content was not available due to the lockdown. With that not being the case this year, the platforms are poised for higher consumption growth this year. Additionally, more people will be in transit as offices reopen, resulting in on-the-go consumption.

Higher investment in content:

India OTT content investment reached $700 million in 2020, which is projected to grow at 18 per cent CAGR. At the outset of the 2021, all the leading platforms revealed a promising line up. International players will not only increase their number of original shows, but broadcaster-led OTT platforms are also expected to follow the same route. According to a report by Omdia, they are expected to launch more than 400 originals this year as compared to less than 200 titles in 2020.

“It’s no surprise that in India, we have a big appetite for entertainment. In 2021, we will continue to cater to our audience by building a robust slate of differentiated stories that are suited to the different moods of our members. At Netflix, we love to invest in original and licensed content, across genres and formats and have a very exciting line-up this year,” says a Netflix spokesperson.

Ekta Kapoor-led ALTBalaji will focus on building a content catalogue that serves inclusive and individualistic viewing.

“Homegrown content is sure to make it big in 2021. As per an IBEF report, around 90 per cent of consumers prefer watching content in regional languages while only seven per cent spend their time on English movies and series. Hence our focus here is more restricted, only content. We also envisage celebrated artists to take the digital route, which will further help the OTT medium grow big,” ALTBalaji marketing, direct revenue and analytics senior vice president Divya Dixit comments.

Newer content formats:

Along with higher spending, there will be newer formats and trends in OTT content. Viacom18 digital ventures COO Gourav Rakshit claims ‘free to consume content’ will become more immersive, interactive and have high levels of audience engagement. A Zee5 spokesperson adds that with content becoming more real-time and interactive moving forward, the industry will witness a rise of gamification for fiction and non-fiction shows.

 “On the original storytelling side, there will be a shift from sensational visualisation to sensational stories. The audience has become accustomed to sensational visualisation and dramatisation, I think there will be a shift towards more unique and compelling stories itself,” Rakshit adds.

 According to Bedi, while content on OTT was limited to drama, crime, thriller, the storytelling will evolve this year with rise in family dramas, romances. He also mentions that MX Player is bullish on international dubbed content, the segment that is seeing high growth on the platform.

Global streaming giant Netflix is also working to create content that reflects more lives from all corners of India, and develop a talent pipeline to give new voices a chance to be heard on screen, the spokesperson reveals.

Since non-fiction content has emerged as a success story across the world, Indian OTT players are also betting big on the genre. Deloitte India partner Jehil Thakkar states that the investment in non-fiction content will go up. MX Players’ Bedi, who is of a similar view, says the structure will be different compared to TV.

Regional to go mainstream:

With streaming bigwigs marking their entry into the regional space, and the launch of several localised OTT players last year, regional content will grow significantly in 2021. Voot’s Rakshit says the platform is looking at emerging as “regional first”.

Though regional has been a buzzword for some time now, it has not grown that much yet, highlights PwC India media, entertainment and sports advisory partner and leader Raman Kalra. He is optimistic that the segment will grow much faster this year, adding more subscribers.

 “Regional is the theme across media and entertainment, not only confined to OTT. Spend on regional content will grow. Indians continue to sample content from other languages and countries as well. That is an indication of people going beyond their boundaries,” Thakkar shares.

In a similar vein, Zee5 addes: “Regional content in Hindi followed by other three languages, will continue to be the growth driver. Being one of the largest content destinations, when it comes to content in your own language, we aim to make South-Asian content across languages popular, not only in India but also internationally.”

Along with national platforms, regional players like Aha, Hoichoi are also ready to scale up their library in 2021.

Direct-to-digital releases to continue:

One of the most noticeable trends that emerged globally during the pandemic is the direct release of films on the OTT platforms. Deep pocket players like Disney+Hotstar, Amazon Prime Video went aggressively after Bollywood as well as regional movies. While some reports indicate that most of these releases could not create much buzz, analysts believe that the trend will continue this year.

PwC’s Kalra is of the view that the direct-to-digital model is here to stay, despite being viewed as an interim measure by some part of the industry. Obviously, there will be theatrical releases when the government allows 100 per cent occupancy. According to him, there is enough market for theatrical only release, digital only release or parallel release, especially due to lower screen density in India.

By contrast, Taurani thinks that big budget producers will not go for direct-to-digital releases as the situation improves and the OTT platforms will also focus more on episodic content for better stickiness.

Subscription to lead the growth:

Subscription-based online video services benefited significantly in 2020 as the country went into the lockdown, a report from Media Partners Asia (MPA) says.

“What has happened over the course of this last one year is a lot of people have sampled OTT services and have converted to pay. The conception people had that Indian don’t pay for content has been dispelled. While it is still difficult to get people and they fleet in and out of SVoD services, subscriptions services will continue to grow in 2021,” Deloitte India’s Thakkar says.

In the past, international platforms were only opting for subscription based-model. The three market leaders – Disney+Hotstar, Amazon Prime Video, Netflix – account for 80 per cent of India’s overall SVoD revenue. With changes in the ecosystem, homegrown players are also upbeat about subscription revenue. Rakshit claims Voot Select will see anywhere between 100-150  per cent growth in subscribers, given the fact that it is a newly launched platform.

Meanwhile, Zee5 has set its sights on breaking even in the next two years. “In terms of revenue, we are aiming for the pie of Rs 2,000 crore which is about 15 per cent of the total Indian OTT market. Further, while our AVOD services will continue to offer catch-up TV content, our focus will be on SVOD,” a spokesperson for the platform shares.

On the other hand, ALTBalaji has been working on a subscription driven model since the beginning. It’s goal is to double direct subscriptions to double-digit figures this year and witness some good international viewership numbers. Dixit adds that the platform’s price points reflect the affordability that heartland India desires and it has associated with multiple partners to provide cash-backs and discounts.

More experiments with pricing models:

In a major shake-up, Netflix introduced a mobile-only plan in India in 2019 which has yielded good results for them. Following in Reed Hastings’ wake, Amazon Prime Video has also unveiled its first mobile only plan in collaboration with telecom player Airtel. A few small players have tested the waters with the pay-per-view model. The ecosystem will see more affordable, language-customised packs in the coming year. Kalra believes it is necessary to play with pricing models to grow the subscription revenue.

Mixed view on ad spend growth:

Despite the growth in other metrics, some experts are not bullish on advertising revenue growth. Taurani explains that social media has the lion’s share in digital advertising till now. After that sports content attracts a huge chunk of advertisers but most premium web-series are behind a paywall. While it boils down to broadcaster led OTT platforms, Taurani says aggregators like MX Player will have an edge over others thanks to bundled offering.

The MPA report states that YouTube dominated AVoD with an estimated share of 67 per cent in 2020 in the country. Its contribution is forecast to decline to 55 per cent by 2025 as broadcaster-backed OTTs and short form video platforms gain share.

“I think the next year will be all about resetting the base. We will have to catch up to the base that we lost, and it will take at least a year to bring it back to what it was,” the Zee5 spokesperson adds. However, Rakshit is optimistic about ad revenue growth. If we take 2020 as the base, 20-25 per cent growth can be expected from industry, he notes. He shares that consumer product brands have been consistent spender throughout the year while digital only brands also emerged as a big category.

“Every brand is now going to be a digital advertiser. Within digital segment also, video is the fastest growing area. Within time spent on the internet in India, entertainment and video is the biggest thing apart from chatting. So, advertisers have to come here because we can give him reach, targeting, brand recall,” Bedi comments with confidence on ad spend growth in 2021.

Although India’s romance with OTT is going well at the moment, the platforms are still far from profitability. Most players are currently in investment mode for premium content, better product, deeper distribution, and breaking even is a distant prospect on the horizon. Moreover, there have been on and off talks about the government stepping in to regulate digital content. It will not be an easy task for OTTs to counter the challenge with self-regulatory mechanism. 

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