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When it comes to streaming, India is all about Bollywood and cricket. This is best represented in which players are leading the two wings of the streaming market in India. On the video streaming side, there’s Hotstar which rose to prominence on the back of live cricket streaming. On the music streaming wing, the likes of OTT streaming apps Gaana and Saavn dominated thanks to the ever-growing popularity of mainstream Bollywood music. While the entry of Netflix in January 2016, and Amazon Prime Video in December that year, started an arms race in the Indian video streaming market. Netflix and Amazon arrived hot with their best original content, freebie deals with telecom tie-ups and a lot of capital momentum from the booming streaming business in the West for Netflix, and the conglomerate nature of Amazon. Homegrown services Voot, Zee5, Arre, SonyLIV, ALT Balaji, EROS Now sprang up to cater to India. Indian streaming services had to come up with their best to outrun these international rivals. All of these were already up against the juggernaut that is YouTube, which is completely free, and where piracy is not impossible. On the music side of things, Gaana and Saavn, which merged with JioMusic to become JioSaavn last year, were joined by Hungama, Airtel Wynk, Apple Music, Google Play Music and Amazon Prime Music, which also launched last year. And thanks to its hold in the video streaming market, YouTube had a fair share of the music streaming market too, thanks to people streaming on ubiquitous smartphones. With such an overview of the market, you would think it’s a crowded space and there’s no room for more. But the global streaming market leader hadn’t even arrived. Spotify made noises about entering India for over a year, as the company also juggled with its direct listing to go public. That crucial period in the company’s cycle meant that the India launch had to be delayed. It went from mid-2018 to late 2018 to early 2019. And when on February 26 this year, Spotify finally launched in India. The Swedish music streaming giant’s launch was followed 10 days later by Google’s YouTube Music app and YouTube Premium service for videos. YouTube Music got three million downloads in its launch week in India, the company claimed, while Spotify claimed to have got over one million users in its first week. This indicated that the Indian market had a good appetite for new services and that the competition in the Indian music streaming space was just getting started. OTT or Over The Top is used to describe any service that runs atop another one. In the context of internet services, the term OTT is used to bucket video and music streaming services which need underlying network infrastructure. With unlimited data plans, cheap 4G smartphones and loads of cashback offers and telecom players subsidising subscription plans, the video streaming market had already grown sizeable and with the music streaming giants arriving in India, the overall OTT and streaming market have become one of the hottest segments in India. The OTT industry received a huge impetus after the launch of Reliance Jio’s 4G service, which was coincided with the entry of cheap 4G phones. These are some of the factors for the gold rush in the OTT space in India, but it’s also about other factors such as changing consumer behaviour, more disposable income. The OTT Landscape in India - Domestic Vs International Players When it comes to the streaming industry, the cliché is true: For a product to be successful in India, the 'Indianisation' of the product is a must. For OTT players, the Indian regional language users will bring the next big inflection point in terms of growth and revenue. And it’s no wonder that there’s a lot more focus on this segment of users among the new offerings. Whether it is Hotstar, Zee5, Alt Balaji or any other Indian streaming service, or international offerings such as Netflix or Amazon Prime, the chief focus has been on original Indian regional language content. A lot of foreign companies who have tried to enter the Indian market without customising their offerings for the Indian market, have failed with Kellogg’s and Dunkin Donuts being examples. The failed brands showed a lack of understanding for the market dynamics in India and the challenge of catering to the wide demographic, as well as tailoring products for the Indian consumer. But OTT streaming players have not left a single stone unturned in creating original India content to tap the next wave of 500 Mn-plus internet users in India. Why OTT Has A Bright Future In India Data Boom For OTT streaming to thrive, data has to be easily accessible and cheap, especially in a market with a huge population such as India. India delivered on this front after the launch of Reliance Jio in 2016. The country now has the cheapest data in the world at just INR 18.5 per 1GB consumed, compared to the global average of around INR 600, as shown in the research by price comparison site Cable.co.uk. Reliance Jio’s launch with free 4G data forced other telecom service providers to reduce their price and India’s data consumption also skyrocketed after 2016. Economy Grows The increase in per capita income and consequently disposable income from 2013 to 2016 also played a major role in Indians embracing OTT players. Music Obsession India is a music-heavy country in terms of consumption patterns - 94% of Indian online users listen to music, according to a Nielsen survey. Bollywood music and other Indian film music are the two most-preferred genres in the country. The survey respondents spent 21.6% of their listening time, consuming music videos. Smarter Devices Along with easy access to 4G data and cheap data plans, affordable 4G handsets pushed India’s consumption even higher. The India smartphone market shipped 142.3 million units in 2018, registering a healthy 14.5% YoY growth, according to IDC data. After a decline of 15.1% in Q4 2018, the market saw a growth of 19.5% in Q1 2019, driven primarily by ecommerce sales. Another major factor is the growth of smart TVs in India as opposed to regular TV sets. According to IDC, the video entertainment category which includes smart TVs and streaming sticks grew 81% year-over-year in 2018. User Growth India has close to 500 million Internet users, with a mere 20% rural penetration. The increase in the number of smartphone subscribers and the growth rate projections for this metric are a good omen for the OTT streaming industry in India. An ASSOCHAM-PwC report says India is on track to be the tenth-largest market for OTT in terms of revenue in 2022, with mobile internet subscribers set to grow to 805 mn in 2022. The spurt in users across digital platforms can be attributed to disruption caused by Reliance Jio and ecommerce platforms which have made high-speed connectivity a reality for Indians in all corners of the country. This deeper penetration has unearthed one of the biggest trends in India. The sudden growth in internet users has resulted in an explosion of Indian regional language users and multilingual content. According to a Google-KPMG Report, the Indian regional language user base is likely to grow to 536 million by 2021, compared to the number of English-speaking internet users in India which is expected to grow to 199 million in the same period. Indian Regional Language Opportunity Brings In Investments The reason for OTT streaming players focussing on Indian regional language content right now is simple. Not only is this subset going to have more users by 2021, but it’s also growing faster than the English speaking user base, which means new users are also being added to the total addressable user base at a faster pace. The annual growth rate for English-speaking internet users in India from 2011-2021 is 11.34%, while the same for Indian regional language internet users is 29% for the same 10 years. US-based Netflix is set to launch 12 original movies and another 12 original series in the next couple of years in India and has invested heavily in this area, as it believes this is the primary growth driver for India. Amazon has announced in its Q1 2019 filings that it has spent $1.7 Bn on video and music content in the first quarter. The total cost of released content in the first quarter was $4.2 Bn for video and music. Given that the rise of regional language internet users is being considered as the next big revolution, the market confidence towards this segment is quite high. The success witnessed by global players like Netflix and Prime has attracted the attention of VCs and Angels towards the lucrative Indian regional language market. This has lead to a rise in the volume of investment in the media and entertainment sector around regional language content. In Q1 2019, startups in the digital media and entertainment industry received $167 Mn of total funding through 11 deals. While the numbers look quite low compared to other sectors, the rate of increase in funding in this sector has been 295%. Between 2017 and 2018 the funding to startups in this sector has increased 1.85X. The media & entertainment sector is expected to be one of the most lucrative sectors for investors in the Indian ecosystem. As per IBEF, the Indian media and entertainment (M&E) industry grew at a CAGR of 10.90% from FY17-18 and is expected to grow at a CAGR of 13.10% to touch INR 2,660.20 Bn ($39.68 Bn) by FY23 from INR 1,436.00 Bn ($22.28 Bn) in FY18. India's media consumption has grown at a CAGR of 9% between 2012-18, almost nine times that of US and two times that of China. The industry provides employment to 3.5-4 Mn people, including both direct and indirect employment in CY 2017. India’s advertising revenue is projected to reach INR 1,232.70 Bn ($18.39 Bn) in FY23 from INR 608.30 Bn ($9.44 Bn) in FY18. With such a high ceiling for growth, India’s media and entertainment startups are bracing themselves for big growth in terms of users, content inventory and of course revenue. Already, we are seeing new models emerging in this space, such as blockchain-based streaming platforms. With new technologies such as artificial intelligence and machine learning also being used by OTT players, the innovation spree in the media and entertainment sector has just begun.

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