Television viewing survives the onslaught of OTT, digital content services

Television viewing in India will continue to grow in the next five years, unlike in many countries where the slide, caused by the onslaught of over-the-top (OTT) and digital content services, has been precipitous. While OTT will have a huge increase in viewership and more consumers will be willing to pay, advertising will still constitute the bulk of the revenues of OTT.

But content will become king because of the multifold increase in demand from TV and OTT channels, say the country’s top broadcasting companies who shared their projections for the next few years without going on record.

Over the next few years, TV viewing will keep growing in terms of minutes of viewing for two reasons. First, the number of households with TVs will grow year-on-year as it is still seen as an aspirational product at the lower end of the market, and second, the time spent watching TV will go up. If the number of households with TVs increases, as expected, by 5-6 million every year, broadcasters say the figure will rise from 197 million to 230-235 million in the next five years.

According to Broadcast Audience Research Council (BARC) India, the average viewing time stands at 3.4 hours per day per viewer. The industry believes that, with greater choice in what viewers watch, this will rise to 4-4.5 hours per day in the next five years.

Broadcasters estimate that, from 950 billion minutes of TV viewership (in line with BARC estimates) per week, the number will go up by over 47 per cent in five years to hit 1,400 billion minutes a week.

Simultaneously, OTT and digital viewing will also see a six-fold increase in the same period from around 100 billion minutes a week to 600 billion minutes a week in five years. The reason is simple: The number of mobile screens that can support OTT is expected to go up from 400 million to 1,000 million in five years as consumers shift from 2G to 4G.

Yet the share of TV viewership will not fall precipitously as it has done in many markets across the world such as in the US. In simple terms, the share of viewership minutes of TV of the overall pie will fall from over 90 per cent to 70 per cent in five years.

“The quick shift in the US was because subscribing to TV broadcasting was expensive and was available at $80-100 a month while OTT channels are available at an average $10,” said the CEO of a leading broadcasting company. “In India, however, a TV package is on offer for Rs 150 while you have to pay Rs 999 for a year for one channel like Amazon Prime or Rs 650 for Netflix. Hotstar, with its Rs 35 a month package, has made it more attractive for the price-conscious market to try it out.” The broadcaster added that a large part of the content, however, would still be free.

Certainly, broadcasters expect more moderate pricing to push up paid OTT subscribers 10 times from 10 million to 100 million in five years. But they still expect that it is advertising on which they would have to depend for their revenues. At present, only 3-4 per cent of OTT revenues come from subscription. The projection is that it would go up to 10-15 per cent in five years. In TV, the number of paid households stands at 120-130 million and broadcasters say it has stagnated. They fear that it might even fall as a result of the regulator’s tariff order, which consumers have opposed because it has inflated their monthly bills.

As a result, they expect subscriptions to continue to remain only 35 per cent of the total revenues from TV; the rest will come for advertising, even after five years. “The CAGR (compound annual growth rate) of advertising is faster than that of subscription growth, so one does not expect any major change,” said a senior executive of a Hindi channel.  What is clear is that content companies can expect great times ahead. Estimates suggest the requirement for content in the next five years will double from roughly 100,000 hours made yearly to 200,00 hours in five years, as OTT channels, especially the big boys like Amazon and Netflix, increasingly hike their budgets to make Indian programming rather than just stick to international fare.