For India’s TV industry, surviving the onslaught of online video apps is perhaps the most crucial challenge they will have to rise to, with 38 percent online users surveyed for the latest report by KPMG India-Eros Now titled ‘Unravelling the digital video consumer’, considering pulling the plug on their TV sets.
Thanks to the diversity of content and its around-the-clock availability on over-the-top (OTT) apps, a staggering 80 percent of the respondents to the survey across different city tiers and income brackets admitted that online videos were more than sufficiently addressing their entertainment needs, driving 38 percent of these respondents to consider cutting the cord in the immediate future. Nearly a third of these users are in the age bracket of 25-50 years.
The survey was commissioned across 1,458 OTT users in 16 Indian cities, which included the top three metros, five tier 1 cities and eight tier 2 cities.
While respondents in the highest income bracket of above Rs 10 lakhs were found to have a higher inclination towards cutting the cord, nearly a third of respondents earning less than Rs 5 lakh rupees annually were also considering the same, indicating the success of OTT platforms in democratising their content and making itself accepted across a wide spectrum of audiences.
Across tier 1 and tier 2 cities, the percentage of online users contemplating pulling the TV plug was identical at 33 percent. These users showed a higher propensity to let go of their TV subscription when compared to those in metros, showed the data.
“In tier 1 and 2 markets, audiences typically tend to be subscribers of free content on Advertising Video on Demand (AVoD), those who typically watch catch-up movies and TV programmes, whereas metro users have a higher propensity towards subscription-based models. With telecom providers such as Reliance Jio providing 1GB/day bundled plans (voice+ data+ content) for merely Rs 200 a month, it is highly conducive for tier 1 and tier 2 users to unsubscribe from TV and watch the catch-up content on their apps,” said Girish Menon, Partner & Head, Media and Entertainment, KPMG India.
Content is the proverbial king, with 39 percent online users rating ‘quality of content’ as the reason why they would kick out their TV, followed by the ease of watching content ubiquitously on apps and their value for money. While the most preferred category of content for those willing to snap the TV line was movies and music videos, catch up TV content was the most preferred category for those not willing to give up on TV.
“Movies and catch up content were of primary importance to potential cord-cutters, with the preference for original content being lower than for non-cord-cutters. This outlines the fact that potential cord-cutters are probably not digital-natives but consumers who could look to online video for the ease it provides, while still remaining true to their traditional video choices. However, the lower preference for online originals among cord-cutters could also be a function of low supply that originals suffer from currently in the market,” said the report.
When asked if the new regulatory framework for TV, under which consumer ARPUs have risen 30-70 per cent, is a driving factor for potential cord-cutters, experts have differing viewpoints.
“The OTT industry is in a hyper-growth mode, so it’s difficult to distinguish whether it is the new framework or the infrastructure in a particular city or state being established that has led to the surge in online users, and which could similarly drive the decision of potential cord-cutters,” said Ali Hussein, COO, Eros Now.
“Cord cutting by lower-income consumers in the wake of the NTO would be an inversion of global trends. This cannot be called an intended outcome. It is inexplicable why a competitive broadcasting market is subject to regular micromanagement; economic regulation must be reserved for market failures. The regulator must now look to preserve economic value,” said Vivan Sharan, Partner, Koan Advisory.
Despite the unnerving prophecy, experts say it is far from doomsday for the TV industry, which caters to 197 million households in India, 98 per cent of which are single-TV households. “At the moment, the decision to cut the TV cord is a family decision, not a singular one. Only 5 per cent of daily online video watching takes place on Internet-enabled TV/ smart TVs which can cater to the full family’s viewing experience. Secondly, the cost of online apps for family viewing is still far from favourable when compared to cable/DTH TV,” said Menon.
“Most broadcasters have realised where the future is and are fast evolving from pure-play TV content creators to multi-platform content studios catering to TV, OTTs, telcos and other platforms. In that sense, the content value chain is being separated from the distribution supply chain,” he adds.
That said, Menon accepts that the rapidly changing content ecosystem, supported by Fibre-To-The-Home (FTTH) plans and the launch of 5G could catalyse the migration to online apps by significantly rewriting the economics for online usage for TV-watching families.
On the back of cheap mobile data and growth in smartphone users, India’s online video ecosystem will reach a critical mass of 325 million users by December 2019, a figure that is expected to touch 550 million in 2023, states the report. On the supply side, the number of OTT platforms have grown more than three-fold in six years, from 9 in 2012 to more than 30 in 2018.