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Pace of fresh content launches on OTT set to accelerate
* The OTT space in India is all set to witness unparalleled growth, propelled by increasing mobile penetration with affordable data offering, especially in the rural markets, and a favorable demography, along with the availability of increased variety of tailored content. The space is evolving with the rise in new entrants that aim to disrupt an already fragmented market with 30+ content providers looking to grab viewer share. Hotstar remains the undisputed leader in the Indian OTT space with >100mn subscribers, while broadcasters such as ZEE Entertainment and SUN TV as well as international behemoths like Amazon and Netflix are expanding their content offerings. At the industry level, we expect regional content investments by OTT players to accelerate over the next 2-3 years, similar to what happened in the television space in the past. Zee has been the most aggressive in regional markets and has launched special-priced packs for Southern markets as well. The recent price reduction and the introduction of low-cost plans continue to corroborate with our inference that the acceptance of SVoD will happen at a slow pace in a price-sensitive market like India. The rise in competition will entail more content and marketing investments and will delay monetization, if any, at least for the foreseeable future.
* Mar’19 OTT performance analysis:
Mar’19 was marked by a significant rise in metrics for Hotstar, primarily due to start of the IPL (Season-10). Zee5 continued to see a rise in downloads, while DAUs remained flat on a MoM basis. Voot saw a marked increase in downloads and DAUs on MoM basis. JIO TV recorded accelerated downloads in March owing to its cricket properties (16.4mn downloads; +34% MoM). Sun Nxt, Sun TV’s OTT platform, delivered a mixed set of numbers as downloads climbed considerably while DAU continued to moderate. All three Telco players saw an improvement metrics at an aggregate level. Audio OTT platforms saw increasing entrenchment, which is underscored by increasing downloads and DAU metrics by users.
* Content announcements and new pack launches:
Hotstar returned to originals after a brief hiatus, launched ‘Roar of the lion’ as well as ‘Criminal Justice’ which received decent response from critics. It also introduced Hotstar VIP pack for Rs365/annum, targeting the cricket content viewers in light of the ongoing IPL. Netflix too is experimenting with a weekly mobile-only plan for Rs65, which will likely intensify competition further. Moreover, Apple has announced its planned launch of Apple TV+, which we believe will not impact the Indian landscape in the near term, though it marks the entry of another big player into the OTT arena. In related news, Eros Now has announced partnership with Apple which will result in its app being available on Apple TV+ among others such as CBS, Comedy Central, HBO, and Sundance Now.
* Factors restricting monetization/ROI’s still exist:
1) ever-increasing content costs; 2) the long-dated process building consumer stickiness for SVoD players in a price-sensitive market like India; and 3) the availability of free content apps, rising content levels on YouTube, and the password-sharing phenomenon.
* Analysis of Mar’19 launches:
There was a clear increase in intensity from OTT players in Mar’19 as most platforms stepped up their offerings — 8 overall in Mar-19 vs. 4-5 in the past few months — and the launches are slated to rise with some OTT players announcing their FY20 line-up. The audio OTT space heated up recently as Spotify and YouTube Music entered the Indian market to compete against home-grown audio streaming apps such as Saavn, Gaana, and Wynk.
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