Time to hit reset and accept the new normal. Our series of in-depth stories and analysis on the changing dynamics of India’s tech landscape in a post-Covid19 world — from how industries and sectors are transforming to new opportunities, evolving consumer behaviour, the new rules of venture capital, M&A and more.
Globally, analysts are busy assessing the maelstrom brought about by Covid-19. For some sectors, this pandemic has sounded the death knell, particularly businesses in travel and hospitality, but the supply chain disruption has impacted manufacturing everywhere. However, even amid this global stock market bloodbath, some sectors have risen to the top owing to the behavioural changes in consumers. Stuck at home, consumers have shown a higher appetite for over the top (OTT) video and music streaming than ever before.
Over the last few years, a chunk of the digitally-sophisticated audience has shifted its interest to new-age OTT platforms as the source of entertainment and recreation. Netflix, Amazon Prime, Hotstar, Gaana, Spotify, Khabri, HubHopper, Aawaz have been seeing healthy growth in the Indian market, paving the way for healthy competition. Yet on the monetisation front, the situation has been bleak.
Although until now, each of these platforms has been running in isolation and growing in silos, with little or more collaboration and partnerships, things have changed with Covid-19.
Due to the lockdown, news studios are closed, production houses have downed their shutters and offices are shut and people now have more time than ever. Undergoing the second phase of lockdown for another 18 days, people are now gradually adopting the new in-home lifestyle leading to daily behavioural shifts in all choices.
“We’re seeing that a lot more people are kind of converging on the OTT viewing. And the growth that was potentially anticipated to happen somewhere in late 2021-2022, has potentially happened within 2020 itself,” – EROS Now CEO, Ali Hussain.
Now Playing: Online Video
With people being homebound, consumption of media and entertainment – and digital entertainment in particular – has seen tremendous growth. TV, online gaming, music streaming, podcasts and video streaming platforms are becoming the top choices for at-home consumers to kill their time.
Source: KPMG Covid-19 report
According to COVID 19 Digital Impact Report by KalaGato, platforms that provide video are experiencing a surge in demand that’s never been seen before. The key beneficiaries of this growth are players like Netflix, Amazon Prime, Hotstar, EROS Now, MUBI, MX Player among others. For instance, Eros Now, reported about close to 80% growth in on data consumption and it is up by about 200% on subscriptions over the last couple of weeks.
In such a situation, the recent launch of Disney+ in India in partnership with Hotstar couldn’t have been more timely. Within five months of launch, the company claims to have reached 50 Mn+ subscribers including 8 Mn+ subscribers in India, which includes the Hotstar subscribers before the Disney+ launch in India.
TV consumption grows 38% over the pre-Covid-19 period now at 1.2 Tn minutes. Music streaming platforms have also observed a surge in listening times by 42% as per a Kantar and audience measurement and analytics company VTION report. However, with travel times reduced to zero, a shooting high growth curve was missed by this sector. Yet, the players are optimistic.
“No one knows what will be the repercussions of the Covid-19 situation. This has forced both consumers and brands to look for new ways. But everyone now understands one thing: Being digital is no more just an ‘option”. Right now now digital content is more important than ever for any brand or enterprise and OTT is one piece pick up from that,” Hubhopper CEO, Gautam Raj Anand.
OTT Reset: What The Future Holds
Is this a temporary book for the video and audio streaming platforms and will the consumption remain stable even after the lockdowns end? What strategies will OTT players adopt in the reset phase to capitalise on this consumption and behavioural shift in the audience?
Home Entertainment Will Become More Immersive
When it comes to TV viewing at home, there are certain limitations. At the maximum, the DTH players like Tata Sky have been able to switch people from SD to HD. This is the prime reason people have been inclined to watch movies on a larger screen in cinema halls with 3D and 4D support.
As highlighted by Girish Menon, partner and leader – media and entertainment, KPMG India, outdoor entertainment options including – films, events, theme parks – particularly in Covid-19 hotspots could see lingering risk aversion even in the medium term.
With AR/VR devices already available at affordable prices, and smart TVs making their way into households, it will not be an exaggeration to say if the users start experiencing hi-intensity advanced versions of their favourite movies and web series genres at their home.
Most Used Advanced Technologies In Digital Video Making
- Augmented Reality (AR)
- Virtual Reality (VR)
- Mixed Reality (MR)
- 360-degree Videos
- Digital Reality
“The depth of the experience that you’re able to provide within personalized viewing at home, versus what you’re able to do in movie theatres has always been challenging because you can’t do it at scale. But if you do it on an OTT platform, the experience can be scaled across the country. So the evolution of technology in video will benefit the larger OTT ecosystem in a big way,” said Hussain.
Digital Movie Releases Will Be The New Norm
Neeraj Roy, founder & CEO, Hungama Digital Media believes movie releases will continue to see experiments and changes. With cinemas closed, films are launching directly on streaming platforms as they can’t follow a traditional full theatrical release window.
Distributors don’t know when cinemas will reopen, so launching films online on OTT platforms is not only lucrative, but the only option. This could include reducing the window between a film’s theatrical release and its digital release or even offering films directly for streaming on day one in a pay-per-view model.
However, not all streaming services are majorly dependent on new big-ticket movie releases. Streaming services that are dependent on big-ticket movie releases might probably offer a higher acquisition price to reduce the window between theatrical release and digital release.
MUBI founder Efe Cakarel shares a more straight forward viewpoint.
“Those who have historically been reluctant to experiment will be considering different models to launch their films, whether it’s shortening their windows or launching day-and-date with a streaming platform,” Cakeral added.
Digital Influencers As OTT Celebrities
The user-generated content is the new fad. One can find influencers on video platforms gaining popularity in all segments particularly beauty, music, kids, cooking and more. With OTT platforms supporting multi-genre content, it is expected that the future will see rising stars on user-based content platforms like YouTube or TikTok make their way into OTT platform’s ‘Original’ genre with a bang.
As Eros Now’s Hussain indicated, the talented influencers that have the capability in providing good acting, we’ll get an opportunity to kind of modify their social influence with the content creation world in between. And each of them kind of solves a very different use case.
Short, Regional and Live Content Will Lead The Way
With concerts on hold and work from home eliminating long commutes, short video and audio content will become a preference for the OTT consumers. Also, live podcasts, artists shows will be consumed more as consumers look to replace some of the real-world experiences.
For instance, EROS Now launched a brand called Eros Quickie, which is high premium short-form content, a 45-minute series with several smaller episodes. Another example can be Hungama ArtistAloud that involves a renowned musician rendering an acoustic performance from their home, every day, and interacting with their fans live on Hungama Music’s Facebook page.
At the same time, households will become more open to subscribing to multiple services for their different content needs as well as regional content interests.
“Consumers right now are seeking alternative entertainment options at home to find fresh content and diversify what they are watching,” said MUBI’s Cakarel.
For instance, niche streaming platform MUBI was already growing steadily but it is now seeing accelerated subscriber growth and increased viewing during the pandemic. In India, activity on MUBI increased by 28% in March vs February.
Production Is Not A Concern
For now, the content pipeline will eventually get affected due to delays in shoots. However, it is unlikely that delays could run into a period as long as 12 to 18 months. The creative industry is already working on new guidelines that would adapt to social distancing and yet deliver on quality production.
Also, the industry is looking at technology means to be able to collaborate and look at doing production completely in isolation yourself, and then provide it to a single editor who’s able to put certain pieces together and do some co-sharing through online mechanisms.
“Ensuring that we offer quality programming to our users is important and we would not want to compromise on that irrespective of the situation. We have more original shows ready and will release those in due course of time. Besides, we are continuing to release new movies, short films and short format content,” said Hungama’s Roy
Subscription-Based Models Will See Surge
In the linear TV world, DTH players and cable TV players are like aggregators for production houses as they bring all the content on one platform for a viewer. In the OTT world, we have seen players already collaborating with telcos, DTH players and even the other OTT players offering different genre content particularly regional.
With Covid-19 hitting the advertising revenues and consumption on an all-time high, it is expected the OTT players will start focussing on promoting subscription-based content in a different way. For instance, instead of one-time subscription fees for all kinds of content, the subscription fees can be charged on the basis of genres preferred by the users.
Consumption-based pricing models, in-app purchases or per episode pricing (in podcast industry particularly) could be the new trend. Also, new business models catering to the needs of the audience within niche areas will come into play. For instance, Chennai-based OTT aggregator Flixjini allows consumers to compare content and pricing between OTT video platforms.
Content Categories Will See A Shift
If you see content categories on Netflix, the likes of science-fiction, horror, teenage stories, action, adventure are getting more and more commonplace. The new generation of viewers is now experiencing real-life stories in deeply-informed documentaries, so it is expected that content categories will shift or get an addition of ‘real-life inspired’ dramas and movies. Covid-19 documentaries and real-life experiences could see more traction in the new future along with a focus on more human interest stories rather than fanciful fiction.
Will OTT Replace DTH In India?
Digital has been an ever-evolving medium. At present, the DTH subscription budget per household is between INR 200-INR 250. So that becomes a sweet spot for the OTT players. Most TV viewers today are between the ages of 30-35, which overlaps with the core audience for OTT platforms too.
It will be difficult to turn this audience into a binge-watcher overnight, so a huge behavioural change such as quarantines and lockdown will help reset expectations. Having said that, TV viewing or DTH is going to stay in parallel with digital video streaming for at least 5-6 years from now before we see a drastic shift towards cord-cutting.
When it comes to OTT players, competition across the industry is ever increasing with everyone trying to secure their place in the minds of consumers. In the long run, according to Nachiket Pantvaidya, CEO, ALTBalaji and COO, Balaji Telefilms any major player would need five key elements to stay ahead in this game of running a virtual entertainment business. It includes:
- Uninterrupted connectivity
- Local content
- New experiential viewing
- Value-additions and pricing
In terms of unit economics or metric of growth, the road is still long. However, this does not imply a D growth or a flattening of the growth in the post-Covid-19 world.
“The overall users are going to go up, at least a minimum of 2x-3x to what was earlier planned for the season. Paid users will also be higher than what was planned because people are then looking for options to consume entertainment,” said EROS Now’s Hussain.
The lockdown period has indeed scaled up the OTT content consumption game. It’s time for OTT platform players to sit back and rethink their content strategy.
Though this growth is due to a phase right now, we believe it will act as a catalyst in changing the content consumption habits of the audience to a great extent while making some of them avid followers of the OTT industry.