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Production curbs may make it difficult for OTTs to sustain last year’s subscription growth

Rattled by Covid-19’s second wave, OTT players look towards the hinterlands as they hope regional production will help them sustain their subscription base. Some, however, feel the growth will have a multiplier effect, possibly even greater than the previous year on the back of fresh global-level originals and e-sports

The Covid-19 pandemic has increased the demand for OTT platforms as consumers are looking for more options of entertainment from the comfort of homes. Last year, OTT subscriptions grew by 60% on the back of originals, IPL going behind the paywall and direct movie releases on various streaming platforms.

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Many platforms, however, fear that it might be difficult to carry forward the lockdown-generated push this year as Covid-19’s second wave has yet again restricted production houses from shooting for originals. At the same time, they believe that regional content might help them to sustain a similar growth.

India is one of the fastest-growing OTT markets and poised to be among the top seven markets globally, with subscription VOD expected to grow approximately at 30% CAGR to nearly $2.7 billion by the year 2025.

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Ali Hussein

Explaining how the global pandemic pushed the overall growth of subscription-based OTT, Ali Hussein, CEO, Eros Now, said the overall surge was quite high last year. But this year, there has been a minor dip for both SVOD and AVOD. But with IPL kicking in, the numbers might go up again, he said.

“This growth continues to be very strong, though not potentially the same in terms of last year’s lockdown phase. The only challenge and unknown factor is production capability and if fresh content will keep coming in. To keep the growth consistent, we will have to be in a condition to ensure production of fresh content. Production has opened up but not in totality and its capacity is not exactly like before.” 

In order to sustain last year’s growth, he mentioned how OTTs are coming up with a lot of newer ideas, like having theatrical plays on streaming platforms.

Mass consumption generally happens because of originals, cricket or e-sports. There might be a dearth of fresh originals because of the second wave and he doesn't think any new mass consumption type of content will be launched.

“Some genres in terms of originals will remain. Originals, episodic series and global sports will continue to contribute to the growth. Overall, from a video industry perspective, short format will have a larger surge in growth. Interesting innovations and thought leadership will happen this year. A couple of originals made out of India will start getting a lot of traction globally, and that is a trend to watch out for. Regional content production has been a big economy booster and will continue to form nearly about 40% of the overall video consumption,” he added.

Divya Dixit

Divya Dixit, SVP, Revenue and Marketing at ALTBalaji, believes the OTT industry is at a nascent stage across the non-urban market. She said while OTT has managed to secure a place in the hearts of consumers and create a loyal fan base, one segment still likes to consume content on television only.

“The next step for OTT players is to tap the hinterlands and place these towns on the digital roadmap. Ready for the next billion internet users who want relevant and relatable content, ALT’s content line-up is geared for the Bharat audience, which comprises 59% of the viewership on the app,” she said.

Amit Dhanuka

OTT has become a destination for high-quality content on the back of originals and direct-to-platform movie releases. And Amit Dhanuka, Executive Vice-President, Lionsgate, said this trend will be amplified this year as the platform is set to premiere its Indian originals.

“As we see returning seasons coupled with new content hitting the platforms, subscription growth is bound to have a multiplier effect for most OTT players, possibly even greater than the previous year,” he said.

As the market continues to see a rise in broadband penetration and better internet speed, the subscription base of OTT will also see a simultaneous rise.

The rapid availability of affordable internet data coupled with telecom partnerships play a crucial role in India’s digital evolution.

Viewing the whole situation with much optimism, Dixit said the soon-to-arrive 5G connectivity will only be a shot in the arm for OTT platforms and help them scale further heights.

ALTBalaji at present has an engagement metrics of 83 minutes as compared to 60 minutes, according to its Q3 FY21 results. It has crossed 2.1mn active subscribers in its last quarter.

Indian originals have picked up pace since last year as audiences are on the lookout for non-stereotypical and relatable content. And because of this, she believes, Indian OTT players have the edge over international players as they understand the market better, which helps them create content for different sets of audience. Additionally, affordable pricing is seen to be a win with the audience.

Dhanuka said OTT SVOD players, both on digital and ATL, have been increasing their spending significantly each year.

As consumer demand rises, he sees increased spends on digital mediums and with originals in the pipeline, ATL spends are also bound to go up. ATL spends might get skewed towards TV and print given the pandemic, but outdoor continues to be an important perception and awareness medium for OTT platforms.

Hussein said if OTTs can ensure that production is in place, the growth of ad spends will continue at a fairly healthy trajectory. It may not be the same like last year but close enough. “Regional spending will contribute more because the regional economy is relatively unaffected by lockdown, where production still continues,” he said.

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