The world of OTT in India: No clear winner in sight

“The great news is, in every single other major market, we've got the flywheel spinning. The thing that frustrates us is why haven't we been as successful in India.” Netflix boss Reed Hastings’ comment, which is rather uncharacteristic for a global business chief, didn’t go unnoticed.

Netflix has spent a lot of money on India-specific content creation, but hasn’t seen the kind of success it had been used to. A lot has to do with the content and context of India, which somehow seems to be frustrating Hastings and his team.

• The Indian Context: India is home to over 1.3 billion people, which roughly translates into 300 million households. As per a recent BARC TV Universe Estimate report, about 210 million of these households own a television set, giving access to nearly 900 million Indians. About 180 million households access either cable TV or paid DTH connections. In fact, the cable TV households have reduced sharply without a commensurate increase in paid DTH connections. The total streaming subscriptions in India have sharply risen from 20-25 million in 2019 to an estimated 100 million in 2022, increased access to smartphones, improved high bandwidth connectivity at a very low cost and COVID-related lockdowns being the growth drivers.

• Multiplicity of business models: In India, AVOD (advertising-based video on demand), SVOD (subscription video on demand) and freemium models are co-existing across platforms. Zee5 and Sony have got their broadcast channels and production houses as alternative revenue sources. AppleTV+ beautifully bundles its Apple Music, iCloud and Apple Games Arcade. Similarly, Prime Video comes with Amazon’s priority delivery service and Prime Music bundled. Netflix has no such options, even as their much-touted gaming foray has not yet seen the light of day. So, while they can look at an ad-funded model, they have chosen to stay out of it and hence they have to depend upon the not-so-cheap monthly subscriptions.

• Right Pricing: Telecom players starting with Jio Mobile had started offering compelling bundled offerings along with their data plans. Select movies, live TV channels and other services come bundled as long as the SIM card is active. Ditto for Airtel’s X Stream and Vi’s Vi Movies and TV. There is some basic content on entry level plans but more premium content gets unlocked as the mobile data pack commitment goes higher. “What's unique about India is cable at about $3 per month per household. So radically different pricing than the rest of the world, which does impact consumer expectations,” says Reed Hastings, acknowledging the pricing challenge that he has on his hands. So, Netflix has revised its pricing recently in line with this reality. However, competing OTT platforms are still available at a lower price.

• Regional and vernacular slates: Over 2,000 films are produced in India, of which Hindi movies contribute to just about a fourth. South India has very strong film production units for Kannada, Telugu, Malayalam and Tamil films. Overall, India produces films in about 25 languages. That’s a challenge for anyone with pan-India aspirations. As per a CII-BCG Report of 2021, regional language content consumption is almost 56% of the total content consumption in India. Prime Video, ZEE5, AltBalaji, MX Player, SonyLiv, Hungama Play, ShemarooMe, etc., that have (largely) Hindi/Bollywood-centric content laced with some regional content, have a large appeal. However, regional platforms like Sun Network of the south, Hoichoi, Klikk, Addatimes in Bangla, ShemarooMe, Oho Gujarati, LetsFlix of Gujarat, and similar platforms rule the roost in their respective territories.

• Flight of branded franchisees: The Harry Potter and James Bond series are now with Prime Video, Marvel series (Avengers,Iron Man, Thor, Ant-Man, Captain America, Star Wars, etc.) is with Disney+Hotstar. ‘Friends’ may also soon get taken off Netflix. So, all the blockbuster franchisees which attract a lot of engaging users may fly off to competing platforms. While Netflix produces some top-class original shows, the same is now true for most platforms on offer in India - Rocket Boyz, Scam 1992, Special Ops and Mirzapur, among others, are all iconic shows.

• Sports as the big draw: Disney+Hotstar and SonyLiv have built their platforms on live sports coverage. Most of the sports events beaming into India are largely split between these two platforms. Even Amazon has signed a deal with New Zealand Cricket to exclusively stream in India all men’s and women’s cricket matches played in New Zealand across all formats. Facebook had taken rights for the La Liga tournament to be live-streamed into the Indian subcontinent. Acquiring sports rights is an expensive affair, but Netflix has not ventured into sports as yet. Soon, we may find Amazon and Reliance locking horns to acquire the rights for the Indian Premier League (IPL) – the most valuable sports property, of which Walt Disney had acquired the telecast rights through 2022 with the acquisition of Star.

• Competition: Netflix faced credible competition in its home turf only recently – Disney+ (Disney, Pixar, Marvel, Star, National Geographic, and Star Wars), HBO Max, Hulu, Amazon’s Prime Video, ESPN+ and AppleTV+ are strong players nibbling away at Netflix’s share. The pandemic-induced lockdowns helped their cause and the new platforms gained currency. There was a time when Netflix was the dominant player, ruling the OTT space in its home ground. Not anymore. In India, we have strong production houses churning out world class content with high production quality. SonyLiv, Zee5, Alt Balaji, Voot Select, etc., are titans in their own right. Regional OTT players as discussed earlier bring the indomitable regional flavour. Amongst OTT platforms in India, a clear winner is not yet in sight. Netflix cannot hope to fix these concerns by just recklessly throwing money. It must tread carefully to succeed in the Indian market or meet its ‘Waterloo’. No easy answers there.

And while Netflix sorts its problems, I am awaiting the release of Kabir Khan’s film ‘83 this weekend… on Netflix, where else!

(The author is a senior professional in the corporate sector and writes on varied topics that catch his fancy. The views expressed here are his own. He tweets at @sandeepbangia)