This is good news for over-the-top (OTT) services which are becoming increasingly popular, now that data prices have come off sharply. (Image: Reuters)
India’s app ecosystem is becoming increasingly fertile with as many as 30 apps now commanding a meaningful viewership. Although, the penetration of smartphones in the country is just around 34%, they are becoming increasingly more affordable at sub $100. As more smartphones are sold, the number of downloads of apps will go up automatically, say industry watchers. This is good news for over-the-top (OTT) services which are becoming increasingly popular, now that data prices have come off sharply. Time spent by viewers on Hotstar, for instance, jumped two-fold to 15,574 million minutes in August 2017 from 4,739.8 million minutes in August 2016. With RJio offering wireless data services at below Rs 10 per GB, a near-20-fold drop in a short span of time, analysts at Nomura observe that rates for fixed line connectivity have also fallen. Indeed, most operators now offer unlimited downloads at prices which are lower than those for fixed use. This appears to have made extended periods of online TV viewing viable.
Moreover, the glamour quotient of the space has gone up with the entry of Amazon and Netflix. A whole lot of content is now being produced for the OTT space catering for varied audiences, say analysts at Nomura. This is important, say industry watchers, because no app covers content across all or even most channels. Although mobile phones may be more suited for watching short-format content, anecdotal evidence suggests viewers are also watching films.
The OTT medium has the potential to attract eyeballs and bring in incremental advertising revenues, especially in the area of sports. In the latest auction for IPL media rights, the highest bid for the digital rights came in at Rs 39,000 crore for a five-year period or Rs 7,800 crore a year. That’s a near eight-fold rise over the Rs 100 crore paid in FY16. Industry experts say digital advertising will continue to grow at a fast clip of 31% compounded between 2016 and 2021 with video advertising remaining the preferred medium with improving data speeds and higher mobile penetration.
Given subscription revenues will take time to make a meaningful contribution to total revenues advertising will remain the primary source of revenues for now; analysts at Nomura point out that at Hotstar for example, subscriptions brought in just 13% of the FY16 revenues of Rs 186 crore. OTT is gaining ground in regional markets too; YouTube has indicated regional viewership has trebled in the past two years.
