While streaming services are having a field day and putting on award-winning shows today, there was a time when the video/CD/DVD business flourished. That is how Blockbuster started out and lost to Netflix, which did what looks very obvious today but was not back then — started putting videos online for people to watch without bothering about renting equipment at all.
YouTube still has plenty of people who very kindly put up movies free of cost for everyone’s viewing pleasure, and much to the producing companies’ displeasure. I have been happy to see so many Agatha Christie and Alfred Hitchcock classics in this way. As a bonus to those reading this, here’s a link to a
free movies site, with superb quality print. Enjoy!
There are three kinds of business models for over-the-top (OTT) video producers to make money from consumers. They are via subscription (Amazon and Netflix), advertising (YouTube) and transactions (iTunes). There is also the sponsored content route and the freemium model that has been adopted by Voot and Hotstar. This mix of free content for non-paying viewers and premium content — like ‘Game of Thrones’ — being available for subscribers.
There is also no regulatory framework governing them presently, but the Telecom Regulatory Authority of India (Trai) did try to put some thoughts down on paper, which hasn’t been made into any concrete policy for now. The foreign service providers have to only adhere to some foreign exchange structure. However, in 2018, the Central government did release a comprehensive regulatory framework on net neutrality, which emphasised that the internet would remain free and open in India.
A PricewaterHouseCoopers (PwC)
report stated, “Globally, the OTT market (TVOD+SVOD) is set to grow at a CAGR of 10.1 percent during the period 2017–2022. During the same period in India, the segment is expected to grow from $297 million (Rs 19,328 million) to $823 million (Rs 53,630 million) in 2022 at a CAGR of 22.6 percent.” Data spends on the rise
According to a report by the Internet and Mobile Association of India (IAMAI), the average monthly spend on voice services was Rs 214 in 2013 compared to Rs 173 spent on data. In 2016, this was reversed, and spending on voice services fell to Rs 124, while data spends rose to Rs 225. Even the Nokia Mobile Broadband Index 2018 stated that video streaming constitutes roughly 65–75 percent of the traffic.
Most of India’s population lives in rural areas and this segment can’t be left out, if any of these video content providers seriously want to expand their database and revenues. Currently, India has just about 5.3 percent penetration and this is expected to rise to just about 10 percent in 2022. So, there is definitely a demand-supply gap here that is waiting to be fulfilled.
Overall, video streaming on social media and other platforms is set to boom and they will see the money flowing in rather than the publishers. The PwC report stated that, “With a CAGR of 22.6 percent during the period of 2017–2022, the Indian video OTT market is poised to outperform the global video OTT market, which is pegged to have a CAGR of 10.1 percent during the same period. Also, by 2022, the Indian video OTT market will be amongst the top 10 markets globally with a market size of $823 (Rs 53,630 million). The entertainment and media industry is projected to grow at a CAGR of 11.7 percent from $30,364 million (Rs 1,978,045 million) in 2017 to $52,683 million (Rs 3,432,044 million) in 2022. Television, cinema and OTT will collectively account for 46 percent of the overall growth in the Indian entertainment and media industry for the period from 2017 to 2022.”
But for this to happen, more revenue streams need to be found. Data analytics and relevant new technology should also be in place. Since consumer devices are always connected, and especially mobile devices can make streaming content available at any time and any place, videos are going to keep everyone entertained for some time to come. End user experience is also key to retaining customers and content in vernacular languages may just be what makes them keep coming back for more. This is very much on everyone’s mind, which is why Netflix is expected to invest Rs 500–600 crore per year in original content. Similarly, Amazon announced that it would be investing about Rs 2,000 crore on original content as well.
Right now, apart from laptops and phones, Blu-ray devices and game consoles can also be used for our viewing content but apparently, Netflix has approved TVs which can stream their stuff too. So look out for the ‘Netflix Recommended TV’ logo to confirm that the TV can do what your mobile devices do. This means, at the press of a button, and there is a Netflix button on the remote control of such TVs, all the functions pop up, that you would expect from the app when you use it on your phone or computer.
In India, services need to be priced right as well as be bundled along with other services. Which makes sense because both the telecom and video service providers are aiming for the same person’s wallet. Hence, consumers have seen Jio partner with ALTBalaji, Tata Sky with Netflix and Amazon Prime with Airtel.
As of now, cinema and TV are not threatened as both provide a different viewing experience. Both are communal in nature but TV is economical as well. The pleasure of widescreen viewing of a movie will never really be diluted by VoD (video on demand), or at least that is the hope, as long as demographics remain in their favour. Right now, there are people still alive who want to watch movies like this. When the ‘cord never’ generation comes of age, (the generation which views VoD almost exclusively) and has their own disposable income, what they do with it, will be an entirely different story.
So, if you are sitting in an Ola cab reading this, and want to switch to watching a movie, it is very likely that they have very thoughtfully and smartly provided you with a tablet, with curated content at no additional cost.
Manali Rohinesh is a freelance writer who explores financial and non-financial subjects that pique her interest.