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Indian OTT market to reach $5 bn in size by 2023: BCG report

Over-the-top (OTT) content market in India is at an inflection point in India, as per the latest report by The Boston Consulting Group titled ‘Entertainment Goes Online’. The report pegs the Indian OTT market to reach $5 billion in size by 2023. This growth is being driven by rising affluence, increase in penetration of data into rural markets and adoption across demographic segments, including women and older generations. 

The ‘Entertainment Goes Online’ report is based on a first-of-its-kind consumer survey that seeks to understand consumers’ motivations in adopting OTT content over other conventional modes of content delivery. Survey results showed that there is a room for many types of OTT models such as SVOD (subscription-based platforms), AVOD (advertising-based platforms) and TVOD (transaction-based platforms) to succeed in the market. 

“Majority of India has a single TV per household. Affordable data has created an alternate medium where consumers, for the first time, can tap into content basis individual preference at a time and space convenient for them. Whilst the current market operates with a largely advertising paid content paradigm, consumers are not averse to paying for convenient content access that OTT unlocks,” said Kanchan Samtani, Partner & Director, The Boston Consulting Group. Affluence and wide variety of content being developed for OTT market, including diversity in genres and language, gives OTT market a favourable edge over it traditional counterparts. 

The study identified three archetypes of customers in the Indian market:

  • Traditionalists – who primarily consume on other than OTT platforms
  • OTT Experimenter – who has significant consumption on both conventional and OTT platforms
  • Early Adopter – whose primary consumption occurs on OTT platforms. While early adopters are still a more urban phenomenon, going forward it will be more equally distributed.

48% of India’s internet users (~650 million by 2023) are expected to be from rural areas. With development of regional content by various players, the rural market is poised to become a significantly large opportunity for players. OTT is riding the wave of increased data consumption and internet access in rural India, has opened a new distribution channel that is viable for regional and niche content. 

Indian content, including music, Bollywood content and cricket, have large following in the Indian diaspora also. OTT players with Indian content have potential to tap into this market too. “While the NRI content market is huge and demonstrates willingness to pay, it is not only dominated by cricket – Bollywood music and films are very significant. With their large content libraries, Indian OTT players are sitting on a metaphorical gold mine to serve this increasingly important customer base,” said Gaurav Jindal, Principal, The Boston Consulting Group

“One of the key insights of our consumer work was that, while OTTs rely on top-notch hero content to attract consumers to the platform, the stickiness of these consumers is not very high unless accompanied by ways in which they engage more deeply with the platform and is associated with strong marketing efforts,” said Kanchan Samtani when discussing the subscriber acquisition and retention strategy of various OTT platforms. 

While Indian OTT players have taken many steps to capture the market, there is a lot that needs to be done before the Indian OTT market achieves the same penetration and maturity as its western counterparts. 

Report mentions top 6 priority focus areas to drive the agenda for OTT players:

Breaking the clutter: a strong marketing challenge – The consumer of today, and even more so of tomorrow, is spoilt for choice. There are over 30 OTT options available and these are mostly homogenous in the mind of the consumer. The trap is to believe that consumers will find their way on their own. In other words, there is a need to actively guide consumers to different choices, their specific propositions and the role that the platform can play in the consumer’s entertainment bouquet. 

Differentiated Content is King – Content differentiation in this space is key. There are several competing platforms vying for the same consumer eyeballs with so far minimal differentiation except “hero” and sports content. In this environment, platforms need to establish a distinct identity. 

There are several “niches” in India where there is consumer demand, but lack of credible options on content so far, such as Music, Kids, etc. 

Build a Geographically Focused strategy...from Rural to Regional to International – There are several imperatives emerging for OTT businesses to scale – and there are conscious choices to be made. 

There is a strong preference among consumers for regional language and culturally specific content as noted above in this report. This need for regional content, however, goes beyond films and GEC and extends even to niches such as news, religious / spiritual content, cookery, and comedy. While broadcaster led OTTs are starting to make forays in this space, there is also space for relevant focused regional plays in different parts of the country. 

The Indian diaspora presents a significant market opportunity particularly in the top 5 countries. However, the marketing challenge is quite steep with overall low recall and awareness of Indian OTT players / apps. This will require a concerted effort through digital marketing, on ground presence in top markets, leveraging social media etc. to really build the business. It is important to prioritise, pick priority markets and invest wisely. 

It is also critical for players to really pick their focus geographies and languages to really make a dent and not be a “me too” player. 

Consumer Data, Consumer Insight, Big Data and Analytics – It is a well-known fact that data is exploding. The use of this data can create true competitive differentiation for businesses that adapt well. There is a need to think of consumer data and analytics around two important business dimensions. There are several sources for monetising deep consumer insight that can not only help platforms differentiate their proposition to consumers but also partners such as advertisers. 

Establishing a New Currency for the OTT Industry for Measurement – There is a need for the OTT industry to establish a “currency” that can help measure and understand the impact of advertising for different types of advertisers and price in line with value created. This is essential for the long term growth of AVOD models in the country. A new currency can help represent value more holistically and capture the audience delivered (quantum, quality, segments) more sharply and holistically by:

  • Moving towards an industry common understanding, for example, BARC has established an industry standard understanding for TV
  • Triangulate across sources
  • Capture quality of audience

Invest in the Right Tech, Create a User Friendly, Economically Viable Product –Consumer demand from platforms is on the rise. Consumers are influenced by different types of online touchpoints (for example, e-commerce, search) and define their expectations from those platforms basis those touchpoints. Platforms that are not sharp in addressing consumer expectation on quality of technology and interface will struggle to scale up. Consumer research also indicates that quality of touch point is one of the key criteria by which consumers decide their OTT platforms.

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