In the first quarter of 2020, Netflix added a staggering 15.8 million paid subscribers as a locked-down audience turned to the platform in the absence of other entertainment option.
According to a report by Reuters, Netflix’s global total has reached 182.9 million from January to March, with the audience bingeing on shows like Love and Blind, and Money Heist.
Other video streaming platforms like Amazon Prime, Hotstar and ZEE5 have also witnessed a spike in numbers, instilling a sense of optimism in the industry regarding the future of Over-the-Top (OTT platforms). As the name suggests, these platforms offer content directly to viewers via the Internet.
The current Covid-19 pandemic and the nationwide lockdown has not just stalled industries and economic activity, but has also led to change in behavioural patterns in people, including that of digital consumption.
Shift in consumption patterns
One of the most impacted sectors today is media and entertainment (M&E), which is heavily dependent on ads and on-ground events. If not for the new OTT platforms, the industry would have been wiped out by now.
As per research conducted by KPMG, there has been a perceptible increase in media consumption during the last few weeks, even though monetisation is a huge challenge. The sector gets most of its revenues from advertising spends from FMCG, financial services, automotive, ecommerce, and real estate companies, which are reeling from the recessionary impact of the pandemic.
The subscription revenues in OTT and digital media are rising, as homebound consumers look for quality content.
According to a survey conducted by Counterpoint Technology in 2019, Hotstar, with its bouquet of sports and regional content featured at the top, followed by Amazon Prime, SonyLiv and Netflix.
The biggest advantage of OTT platforms is the variety of content on offer – from oscar-winning Korean film Parasite (released on Amazon Prime) to the recent Irrfan Khan starrer Angrezi Medium( released on Disney+ Hotstar), these platforms cover the entire spectrum. Besides, there is also regional content that can be streamed, making it perfect for all kinds of audiences.
A recent Nielsen report found that this lockdown could lead to a near 60% rise in the amount of content people consume.
Catalysts in the growth of OTT
According to Ormax Media’s research, the size of the Indian streaming audience (number of people over 15, who watch online videos for at least two hours a week on at least one OTT platform) stands at 76.5 million. That’s not all – OTT is expected to grow at 22% a year to reach Rs 12,000 crore in the next four years.
A significant reason is the penetration of smartphones, on which content is generally viewed. Based on research by ASSOCHAM and PwC, the number is likely to hit 859 million by 2022.
No wonder, the number of OTT platforms are growing by the day – from only nine in 2012, the number stood at 35 in 2019. Movies, which were previously only distributed via theatres, are now finding new ways to make a mark on these video streaming platforms.
What’s also working for these platforms is their personalisation techniques to understand their user base. Through technology, they track user’s interests and suggest relevant programs.
Trends to watch out for
YouTube and video-streaming giant Netflix topped global app spends in Q1 2020, according to App Annie. Netflix also saw a surge in its stock price.
This year, viewers were also treated to Disney+ content with the service finally rolling out in India through Hotstar (which it acquired in 2019).
A few OTT platforms are even offering extended free periods to drive subscriptions in the wake of the coronavirus crisis. Overall digital subscription revenues are likely to see an upswing, gaining from the “habit formation” that is happening now.
OTT audio platforms like Spotify and Gaana may also see a rise in their revenues. As of now, they are looking to increase the proportion of paid subscribers to about six percent of the total user base.
These audio platforms in India generally operate on three monetisation models. Ad-based model and bundled model are the major source of revenue for OTT audio players. However, there is increasing focus on subscription-based models for better monetisation.
A report by KPMG states that “digital consumption will see rapid incremental growth with India’s ‘digital billion’ trajectory likely to accelerate materially”.
It also stressed that the OTT consumption in India could start seeing a shift from the mobile screen to the large TV screen “owing to the lockdown effect with broadband internet”.
Current offerings of extended free periods to drive subscriptions could result in a new normal and accelerated growth in consumption and monetisation!
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