Drop in data prices pushes OTT viewership

Over-the-top (OTT) players like Hotstar and Voot can rejoice. The number of customers and minutes of usage of content on these digital platforms have shot through the roof in the last seven months, thanks to the nearly 95 per cent drop in data prices. And the unprecedented increase in the number of customers has attracted the attention of advertisers, who are looking at this new opportunity much more seriously now.

Hotstar, the largest OTT platform run by STAR India, has seen its numbers climb three-fold since last September to over 100 million customers. The overall minutes of usage of content has gone up by six to seven times, say sources in the firm. 

Voot, offered by Viacom 18, has seen its active customer base double from December to 25 million, and these customers are spending over 45 minutes a day on the platform. Voot expects the number of its customers to double in the next 15 months. Says Gaurav Gandhi, COO of Viacom Digital Ventures, “We are reaching an inflection point where at least a few players have 1 billion minutes of usage per month, which is meaningful for marketers to look at.”

OTT players say their digital platforms will take the place of the second or third TV in a household, which is a rarity in India. “With only 5 per cent of Indian households having a second TV, we see digital as a huge opportunity to add value to consumers by functioning as the second or third TV at home,” says Sanjay Gupta, managing director of STAR India. 

But OTT has a long way to go before it can approach TV viewership, digital video viewership constitutes 2-3 per cent of overall viewership minutes.

A study by Group M points out that as much as 40 per cent of incremental advertising by FMCG companies is going into digital. Hotstar was able to garner over Rs 200 crore through advertising this year for the Indian Premier League from companies like Vivo and Maruti Suzuki. 

Also by next year, the BARC is coming out with an industry measurement for streaming services, which will help media planners and buyers. That will help advertisers choose platforms and programmes.
 

“We are seeing advertising shift to digital, it already has a 15 per cent share compared to 5 per cent three years ago. But the OTT viewership is restricted to the top cities, which in any case consume less TV, and has not become popular among the large middle-class women viewers. So it will be a long haul,” says Sam Balsara, chairman and managing director, Madison World. 

Companies are following varying strategies to draw viewers. STAR India is focused on sports and drama. Its big boost was winning the digital rights for the IPL for five years. Viacom 18 is betting on content targeted at children and reality content.

Amazon Prime and Netflix, too, are building their India content by battling for digital rights of big Bollywood movies. Amazon is investing in original content in Hindi and other languages. 

Bank of America Merrill Lynch says in an analyst report that with weak broadband penetration, the appeal of the two companies will be limited to urban English-speaking audiences and they do not pose a threat to their competitors in the next three years. 

According to kalagato.com, a research site that tracks market share of online video, Netflix has an 0.8 per cent share while Amazon has 6.56 per cent. The largest player, Hotstar, had a 39.07 per cent share in April. 

OTT players privately admit that it will take at least five years to break even. At the moment, they are focused on acquisition of customers so that they can increase the overall minutes of viewership. They are offering content free and the broadcasting companies can amortise the cost over TV and streaming.

However, with customers paying much less for data, some can now afford to pay the nominal amounts for premium content players like Hotstar and Voot are experimenting with.

Growing Base

• STAR’s Hotstar customer base went up from 30 mn before Jio entered to 100 mn now. Minutes of usage has gone up at least six to seven times 
• Viacom18’s Voot seen active customers hit 25 mn from around 12 mn in December 2016. It expects the number to double in 12-15 months 
• While digital video viewership is pegged at around 400 bn minutes annually, it is very small compared to consumption of 700 bn minutes a week on TV 
• Ad revenues for digital are expected to grow by 35% this year. It is already 15% of overall advertising pie 
• Most ad content is the same as on TV with 5-7% being new content
• Digital streaming functioning as the second or third TV at home now, say analysts