2022 was a mixed bag for OTT

Mumbai: Over the last few years, India’s over the top (OTT) media services sector has more than doubled in size. According to the Ormax OTT Audience Sizing Report 2022, the Indian OTT audience universe now stands at 424 million people. In India, 119 million of these are active paid OTT subscriptions and increased by 20 per cent between 2021 and 2022. As per the Ormax Media Report, three out of 10 Indians watched online videos at least once in the last month.

The Deloitte Report, states that the OTT market will grow at a CAGR of 20 per cent over the next decade, generating a staggering $13 billion-$15 billion in 10 years. According to a 2022 report, Indian subscriber numbers will grow at a 17 per cent CAGR to 224 million by 2026, up from 102 million.

The Dentsu report, further adds, the ad-funded video platforms (AVoD) are set to overtake subscription channels (SVoD) with time, as major streaming platforms are adding ad-funded tiers.

Also read: Revisiting OTT's top-level movements in 2022

According to Elara Capital senior vice president Karan Taurani, the new-age content platforms have undergone a 30-40 per cent erosion in ad revenues. The FMCG and auto sectors which are the largest advertisers are seeing a lot of inflationary pressures, which is impacting their growth. Therefore, most advertisers are cutting their marketing costs. 

He says that the festival period typically sees 13-14 per cent growth in advertising revenue for most content platforms as well as TV channels, but this time around the festive ad revenue bump up has just been six to eight per cent.

The OTT platforms are seeing a dip in advertising revenues not only in India but also globally, there has also been a dip in subscription revenues. This has made the platforms rethink their content acquisition as well as create fresh content. The acquisition cost across all platforms stands at 80 per cent of the overall cost.

Most platforms decided to go slow on most projects and decided to greenlight tried and tested content genres. The days of experimenting with new content and content writers took a back seat, platforms were happy to go to marquee producers who had a legacy of producing good content.

MX Player business head - SVOD & business partnerships Abhishek Joshi opines, “OTT platforms as a whole have continued their steep growth curve this past year as well. From an estimated 85 million subscriptions in 2021 we have reached 100 million subscriptions by the end of 2022. Some latest reports even go as far as to say that the number is close to 120 million subscriptions with a paying user on average accounting for 2.5 subscriptions.”

He added, “The overall OTT market is estimated to be worth three billion dollars in India which is driven by around 400 million unique users, a majority of which are still AVOD consumers. Almost all the major players in the space have realised the potential of AVOD and the emergence of hybrid models is a testament to that. From pioneering digital native brands that were early adopters to established brands in the current scenario, we have seen AdEx grow substantially on OTT over the past few years.”

Joshi goes on, “We as an industry know the importance of looking beyond the metros as one-third of our subscriptions are from the top six metros but the metros only account for around 10 per cent of our overall universe. To tap into the remaining universe, hybrid models will be the torchbearers. All of the aforementioned goes hand in hand with quality content and the ever-improving tech stacks.”

He states, “Content investments have been steadily growing at a 15-20 per cent CAGR over the past couple of years and we see the same trend continuing with an increasing flavour of regional content moving ahead. As you go deeper into the country, you realise the importance of regional content to grow the overall OTT pie and that is why it is expected that regional content consumption will account for more than half the overall watch time on OTT platforms by 2025 from an estimated 30 per cent back in 2019. In closing notes, it’s still an early dawn in the OTT space and it will just get brighter from this point forth.”

Today more and more advertisers are looking at some form of integration in OTT content, and that spend has been growing steadily, as most urban households have become cord-cutters and OTT is the only form of entertainment. Advertising in OTT also targets the brand’s TG exclusively and the ROI for an advertiser increases. There are an estimated 0.5 million cord-cutters in India at present however reports estimate 13 million households cutting the cord by 2026. This trend has been fully utilized by TV manufacturers as there is a demand for smart TVs, major players in this market are Samsung, Haier, TCL, etc.

This year also saw a slowdown in the global economy due to the war; many new-age companies who spent heavily on digital platforms held back their spending and we may also see slower growth in the first quarter of FY '23. Under the current economic headwinds, the ad market is estimated to grow by six to eight per cent in FY'23. In FY'22 the ad spending on digital was 53 per cent of the overall spending. 

Along with the established players like Netflix, Amazon Prime, Disney+Hotsatar, Sony Liv, and ZEE5, there are a plethora of regional players catering to specific regions and languages. The public broadcaster in India, DD India, signed an MoU with Yupp TV, an OTT platform that serves as a gateway for consumers of television, to increase the DD India channel’s global reach. The Ministry of Information and Broadcasting claims that this is an effort to promote Indian culture and values around the world as well as present India’s viewpoint on major international happenings.

There is a debate on what works in the OTT sector, AVoD or SVoD? India is a price-sensitive nation and everyone wants a bang for the buck, realising that the big players in the OTT segment are now offering reasonable pricing to woo subscribers. The regional market is gaining popularity among viewers, and the local players are now facing competition with the big players. Most players in the segment are offering packages as cheap as Rs 199 and even global players like Netflix are actively looking to go AVOD. 

Despite the dominance of the big players in the OTT platform space, aggregated OTT services like TATA Play Binge, OTTplay, Watcho, and ScreenHits have experienced exponential growth in 2022. Most of these aggregators are now bundling the various platforms and giving their subscribers better offers. This month NxtDigital launched NxtPlay with 3, 00,000 hours of OTT content.

Regulations

TRAI for the first time has incorporated OTT into the telecommunication services in the Telecommunication Bill 2022, which was created by the Telecom Regulatory Authority of India (TRAI). The Internet and Mobile Association of India (IAMAI) asserts that India has promoted the development of both traditional and over-the-top (OTT) service providers, as seen by the rapid expansion of the digital economy. 

A suitable legal framework for the operational features of OTT communication services was the main goal of the proposed act. It is implied that OTT players will also have to pay a license fee by including them in the scope of telecom licensing.

Telecom companies were among the first to provide an aggregated OTT service. They have bundled various offerings with their mobile tariff plans to attract smartphone users. The market is now flooded with app-based aggregators, DTH operators, and even OTT platforms.

Movies and Series that have worked in 2022

Hindi movies like Code Name: Tiranga, Qala, Chup Raksha Bandhan,  Govinda Naam Mera, Maja Maa, Darlings, Laal Singh Chaddha, and Good Luck Jerry worked. Films like Gargi, KGF-2, Vikram, RRR, Karthikeya 2, Jana Gana Mana, and Kantara were well received not only by regional audiences but also by Hindi-speaking audiences. And, as is customary, both Bollywood and South films made their debut on various OTT platforms. 

Series like Human, Apharan Season 2, Abhay Season 3, Mai, Dharavi Bank, Panchayat season 2, Suzhal: The Vortex, Criminal Justice Season 3, Four More Shots Please season 3, Khakhi, Rocket Boys, Tamil Rockers, Mukhbir did well in 2022. The fourth season of Stranger Things became quite popular in 2022. Manifest, Delhi Crime Season 2, Mismatched season 2, and Never Have I Ever Season 3 were also factors in Netflix becoming the most-watched platform in 2022.

Sports

As per a report published by the CII, KPMG, and the Indian Broadcasting and Digital Foundation (IBDF), digital sports broadcasting revenues will increase from the current Rs 1,540 crore to Rs 4,360 crore in FY26. Broadcaster-owned and independent streaming services like Disney+Hotstar, JioCinema, SonyLiv, and Amazon Prime Video signed up big-ticket as well as other sports properties to grow their subscriber bases. 

Disney Star retained ICC TV rights for India till 2027. It recorded a 31 per cent jump in viewership during T20 World Cup 2022. The digital rights for IPL were bagged by Viacom18 sports for a whopping amount of Rs 23,758 Cr and the TV rights were retained by Disney Star. Amazon Prime Video also had ad-supported cricket live streaming of the India v/s New Zealand Men’s Series 2022. 

JioCinema is the new entrant and 32 million tuned in to JioCinema on the final day of the FIFA World Cup Qatar 2022 and throughout the tournament over 110 million viewers consumed the content on digital. The big ticket for them this year would be IPL 2023.

Awards

Indiantelevision.com organised the Indian Telly Streaming awards 2022 to celebrate the content and talent on the OTT platforms; OTTplay Awards 2022 also concluded last year. Filmfare also organised a special OTT Awards 2022 last month.   

With users spending seven hours daily on their smartphones, digital platforms have a good engagement rate and per their convenience. The days of appointment viewing are still there in certain pockets but due to the advent of digital platforms, there is a shift. The rate of transition to digital platforms shows no signs of slowing.