TBI Tech & Analysis: Six key facts behind India’s explosive OTT market

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India’s vast population is fueling a booming OTT market but even recent rapid growth looks likely to be incomparable to the expansion expected over the next six years, with revenues set to soar from $268m in 2019 to more than $1.3bn by 2025. Analysts at TBI sibling Omdia provide six fast-facts from inside this surging and opportunity-laden market.

Sowing the seeds of subs…

India has one of the fastest growing online video subscription markets in the world. There are more than 40 over-the-top (OTT) services in the country and subscriptions reached 14 million by end of 2019, growing more than 50-fold since 2015. Despite offering among the cheapest OTT services globally, revenues were $268m in 2019 and, according to Omdia, will be over $1.3bn by 2025.

… but AVOD is still top

Ad-funded video-on-demand (AVOD) services are clear leaders in India: Omdia forecasts that around 90% of viewers and 75% of online video revenues in India originated from advertising at the end of 2019. Indian OTT services like Hotstar, ZEE5, Voot, and Sony Liv have over 100 monthly activity users (MAUs) and ad-supported online video services generated $856m in revenue in 2019, compared with $268m from subscription video services. YouTube and Facebook together represented 43% of total online video revenues in 2019.

One out of every four Indian originals produced by Amazon is a comedy, while for Netflix comedy forms only 1 out of 20 originals produced

Omdia’s Online Video Market Report, India 2020

Mobile & money matters

The growth of the OTT market has been facilitated by the drastic slashing of mobile broadband pricing by 70%, after the entrance of Reliance Jio in the 4G mobile market in September 2016. Another event that accelerated the growth was the demonetization of the Rs 500 and Rs 1000 banknotes in November 2016, as it raised the level of digitization of cash and of adoption of digital (online and mobile) payment solutions. It is telling that between 2015 and 2017, OTT subscriptions grew 13-fold and revenues 14-fold.

Original growth drivers

Indian service Hotstar led the market in subscriptions in 2019, supported by premium sports content. US giants Amazon Prime Video and Netflix followed with Indian service ZEE5 on a par with Netflix. The US services are leveraging their financial prowess for the production of Indian original content, due to its high appeal to both inside and outside India. Netflix and Amazon together are spending over $200m per year for Indian original content. The Indian OTT services started investing significant sums for the production of online originals, in an effort to compete against their US rivals. Omdia estimates that close to $500m will be invested in 2020 from all players from $360m in 2019.

Amazon & Netflix’s content divergence

Netflix and Amazon Prime Video are currently targeting different audiences and this is reflected in the investment in Indian original content made by both services. Netflix is focusing on films (50% of original titles) and high-brow drama series. For Amazon Prime Video, drama is the top content genre, but investment is also directed in genres like reality shows and comedy. One out of every four originals produced by Amazon is a comedy, while for Netflix comedy forms only 1 out of 20 originals produced.

Connected thinking

Consumption of online video is supported by the proliferation of connected devices. In India, eight out of ten connected devices are smartphones and this will continue at least until 2023, according to Omdia. Smart TVs are experiencing the highest growth rate, surging from 9.5 million (installed base) in 2019 to 32 million in 2023. India is an Android-heavy market where 95% of smartphones and 67% of tablets support the Android operating system.

The findings above come from Omdia’s Online Video Market Report, India 2020. Written by Constantinos Papavassilopoulos, Fateha Begum, Jun Wen Woo and Kia Ling Teoh, it offers extensive insights into the country’s vast OTT market, explores what key players are doing, and delves into the huge investments being made for acquired and original content.