The year 2020 could have been one of the worst years for many, but for the over the top (OTT) industry, it was a year of celebration. As other industries suffered job losses, paycuts, and demand issues in 2020 due the Coronavirus-led lockdown, the OTT industry truly came of age this year.
In fact, some experts have even gone to the extent of equating it with the effect Demonetisation has had on the e-wallet industry. India Brand Equity Foundation, a body which falls under the depart of commerce under the government of India's Ministry of Commerce and Industry, has said that paid subscriptions on OTT video platforms grew to 29 million by July, registering a staggering growth of 31% in four months.
As 2021 approaches, OTT giants like Netflix, Amazon Prime Video, and Disney+ Hotstar are expected to up their original content investment. As per its latest OTT industry output report, the London-based business research analysis and consultancy firm, Omdia, argued that these three OTT giants are expected to spend a cumulative amount of around ₹2824.9 crore ($383 million) on producing and developing original content in India, dwarfing the ₹2080 crore ($282 million) by local OTT players. “[This] huge investment in online video is also indicative of the shift from traditional to online,” Omdia argues. In 2017–19, both Netflix and Amazon Prime Video had invested almost ₹3687.9 crore ($500 million) in India.
Omdia expects India to become a key market for growth in OTT during 2021. With international giants like Disney announcing an increase in its original production budget and other local players like Sony India committing to produce 40–50 originals per year, this seems to be right on course.
Moreover, one of the top homegrown OTT players, Zee5, has already launched more than 40 originals in the first half of FY21, and plans to launch another 35 originals in the second half of the current fiscal. “2020 was a breakthrough year for the OTT industry. We witnessed an unprecedented rise in consumption as consumers across the country scouted for stay-at-home entertainment options. While the production of new content did stall due to the pandemic, it has now picked up, and the pace will only keep increasing,” says Rahul Maroli, senior vice president and business head, SVoD, ZEE5. Maroli further argued that original content was one of the key pillars of Zee5’s business strategy.
Maroli's point is further buttressed by recent data. According to the think tank and policy organisation, Broadband India Forum, during the lockdown, over 65% of OTT content consumption was recorded in rural India. For OTT players like Zee 5, regional content is going to be a big growth driver going forward.
“Regional markets are a huge focus for us, and language content is one of our biggest differentiators. What changed this year is that OTT is no longer a metro-phenomenon. Thanks to cheap data plans, it has become the primary mode of entertainment for consumers across tier II and III cities,” Maroli explains. “While we grew 200% this year, at the back of an aggressive slate of content line-up and hyper-personalisation, we aim to make deeper inroads into Indian homes going into 2021,” he adds.
Long-form not the only one
What is interesting is that long-form content isn't the only space doing well. The trend is also slowly shifting to shorter videos with Tik Tok-like platforms such as Dailyhunt’s Josh, InMobi’s Roposo, and Times-owned MX Takatak registering a huge growth. According to a report by RedSeer, with the number of internet users in India set to grow to 970 million from current 600 million in next 5 years, this short-form video market is also estimated to grow by four times on total time spent, and reach to a whopping 400-450 billion minutes a month from the current ~110 billion minutes.
The consulting firm found that 45% of internet users used short videos, making it the fastest-growing content category. "Content consumption in India is growing faster than global growth. Users in India need free and bite-sized entertainment, which is not offered by OTT. OTT needs a high attention span and is focussed on diverse genres like drama, sports, etc. Plus, a wide gap exists between free and paid OTT users implying the need for low-cost entertainment. All these indicate a strong need-gap for short-form,” says Ujjwal Chaudhry, associate partner, RedSeer Consulting. He points out how this demand for short videos was actually created first by the Chinese app, TikTok, and after it was banned, new Indian players have led a resurgence in the sector. “As players increase their content quality further, users and retention would increase, resulting in more than four times increase in the time spent,” he says.
Regional markets are a huge focus for us, and language content is one of our biggest differentiators. What changed this year is that OTT is no longer a metro-phenomenon. Thanks to cheap data plans, it has become the primary mode of entertainment for consumers across tier II and III cities,” Maroli explains. “While we grew 200% this year, at the back of an aggressive slate of content line-up and hyper-personalisation, we aim to make deeper inroads into Indian homes going into 2021.Rahul Maroli, senior vice president and business head, SVoD, ZEE5
Newer trends, fresh strategies
India has the highest content consumption per user with users spending roughly five hours a day on their smartphone, followed by China with 4.5 hours a day. This provides OTT players with a huge growth opportunity in the next few years. “Digital studios were one of the few businesses that grew in 2020 and will continue to grow in strength even in the new year despite the challenges in content production, distribution, etc. One of the big shifts we can expect in 2021 will be the shift to a more digital first concept,” says Gourav Rakshit, COO, Viacom18 Digital Ventures.
Viacom 18 launched the popular reality show Bigg Boss with a digital-first approach this year under its subscription brand Voot Select. “The concept has garnered wide appreciation and audience patronage. Going forward the nature of stories will also change to quite an extent in this regard. Stories will also be created keeping in mind a digital first audience preference as opposed to just stories that go on to other platforms before they come to a digital platform,” Rakshit explains.
Digital industry players believe that consumers who would have otherwise taken a few more years to turn to OTT came in earlier than expected and because of this phenomenon, in terms of growth for consumers turning to OTT, the growth in subscription may not be all that high as compared to 2020. However, from a revenue standpoint, 2021 could be easily significantly better than 2020 as the appetite and access to spend continues to increase.
As per a recent study conducted by market research firm, Wakefield Research, it was Covid-19 which drove Indians to use entertainment as a way of unwinding and in their survey, 94% of respondents said they were willing to pay more for a premium subscription in order to get more enhanced video and audio quality. Consequently, the upcoming year is also expected to be big for international OTT platforms, such as Lionsgate Play that recently marked its entry in India to make premium content from Hollywood available in different Indian languages.
“We want to provide the finest, never seen before content that will captivate our audiences with bespoke entertainment drawing on the most exciting current releases and our premium library. We will be launching Indian originals in the coming months, featuring untold edgy urban stories from some of the best creative minds in the Indian film industry,” points out Rohit Jain, managing director, Lionsgate South Asia.
What is interesting is that long-form content isn't the only space doing well. The trend is also slowly shifting to shorter videos with Tik Tok-like platforms such as Dailyhunt’s Josh, InMobi’s Roposo, and Times-owned MX Takatak registering a huge growth.
Indian players argue that vernacular is a big USP for them as far as international giants are concerned. “There are various taste clusters which we have identified across different languages and geographies and to satiate viewer’s appetite for entertainment, we will continue to invest in churning out original content in various languages,” says Zee 5’s Rahul Maroli. During the pandemic, Zee 5’s viewership grew by 200% on the back of a 45% rise in its paid viewers and its monthly active users reached 54.7 million as of September. Maroli is bullish about the future and the biggest behaviour change, he argues, has been that OTT has moved from personal consumption to family consumption. “This sector has reshaped the media and entertainment industry and will continue to be ever-evolving due to the mammoth potential for consumer-centric content which it makes easily available,” Maroli says.
With the viewership and revenues going up, reports too suggest that investments are going to see a positive growth curve in 2021. As per Omidia's numbers, investment in originals will grow six fold during 2021-25 and are expected to touch ₹30,097.8 crore ($4.2 billion). “Around 45% of that investment will be spent by the U.S. giants—with the major Indian OTT video services spending much of the remaining 55%,” Omdia's report reads.
Omidia expects further more than 400 original titles to be released in 2021 from U.S. and Indian players, with the total of original productions moving closer to 1,000 per year by the second half of the decade. Viacom 18’s Rakshit seems to concur. “The need of the hour is to invest in high quality content as we enter 2021, which is underway. The pace at which we are releasing content is in line with what we would like it to be and we will continue to focus on the launch of originals,” he says.
Rakshit points out that one of biggest genres to emerge out of the pandemic was mythology. “While it kicked off on the back of the lack of original content, genres like these will continue to grow as audience base grows. This is also an outcome of having new audience turn to digital faster than expected,” he explains.
There is another development which helped the OTT space, and that was the closure of cinema theatres, pushing many film production houses to release their movies digitally first. Moreover, what is also interesting, is that this trend to release a film digital first isn't restricted just to India and is a global phenomenon. Just last week, one of the largest film production houses, Warner Bros inked a deal with streaming giant HBO Max to release 17 of the studio's films on the streaming platform first, and the titles includes some very highly anticipated releases, such as the science fiction epic Dune and the superhero film, Suicide Squad. India too saw some high profile releases going the streaming way first, such as the Amitabh Bachchan-starrer Gulabo Sitabo and the Alia Bhatt-starrer film Sadak 2.
While some are bullish of this trend, there are some experts who are sceptical of this and believe this might just be a short-term fad. “Direct digital release on OTT is a temporary phenomenon, with low success. Despite 66 films being released digitally, it will persuade OTT to rethink their strategy to pay hefty premiums to purchase these films for direct release,” argues Karan Taurani, research analyst, Elara Capital. Experts also point out that the pandemic won't be around forever and people will flock to theatres once it is safe, and they feel safe. Taurani believes that going forward, digital and cinema will have to find a way to coexist together, while regionals will grow in both aspects.