Published on 15/05/2020 3:55:13 PM | Source: ICICI Securities Ltd

Media Sector Update - Efforts on OTT getting verified - ICICI Sec

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Digital  is  undeniably  the  next  level  of  evolution  for  broadcasters  and,  in  the challenging  times  of  lockdown,  the  results  of  their  investments  and  efforts  are getting verified. Unlike TV, broadcasters have global competition from Netflix and Amazon  Prime Video  in  OTT  format, who  are  investing  heavily  to  capture SVOD market share in India, and are aggressively building local tent pole content (apart from  global  content).  Currently,  Disney+  Hotstar  is  winner  in  India.  Zee5  and SunNXT may require to shore up their efforts in OTT to grab a reasonable market share  on  digital  platforms;  presently  their  market  share  in  digital  appears  to  be lower than in linear TV. This reduces visibility on their incremental market share in  media  spends  (advertisement  and  subscription)  in  the  longer  run.  Maintain BUY on Zee Entertainment Enterprises (ZEEL) and ADD on Sun TV. 

* Significant  rise  in  users  on  OTT.As  per  Apptopia  and  Moengage,  media  and entertainment  has  seen  rise  in  downloads  and  active  users  globally.  Neilson  India data  shows  115%  rise  in  users  on  VOD  for  original  shows  and  57%  rise  in  time spent  per  user.  These  increases  have  probably  been  aided  by  absence  of  fresh content  on  television. Rise  in  users  formovie was42%  and  time  spent  per  user increased  by  a  strong  82%.  The  current  lockdown  and  lack  of  content  on  TV presents  a  huge  opportunity  for broadcasters to  showcase  their  VOD  content,  and build strong and loyal user base. There has been huge surge in digital consumption, and  normalised  levels  (when  TV  starts  airing  fresh  content)  for  digital  should  be meaningfully  higher  than  pre-lockdown  levels  in  our  view.  This  would  increase  the importance  of  VOD  platform  for  broadcasters.  Globally,  the  trend  has  been  more pronounced with the US reporting 25% of its total TV usage coming from streaming

* Disney+  Hotstar  dominates  top-10  movies  and  original  shows  on  OTT.The top-10 movies  (based  on unique  audience) on  OTT  in  week  17  (starting  25thApril) had seven movies from Disney+ Hotstar, two from Amazon Prime Video (APV) and one from Netflix. In the top-10 original shows (based on gross consumption) on OTT in  week  14  (starting  4thApril),  five  shows  were  from  Netflix,  three  from  Disney+ Hotstar  and  one  each  from  APV  and  Voot.  The  notable  missing  OTT  was  Zee5, which is disappointing considering that it has one of largest movie libraries, and has been promising  huge  investments  in  OTT  content.  OTT may  require  a few original tent  pole  shows  to  attract  users;  e.g. Asur,  which  has  worked  well  for  Voot.  Such shows probably are missing on Zee5. We reckon these are early days and evolution has just begun, and sustainability of ranking will be critical for service providers.  

* It’s  all  about  ranking...The  average  OTT  app  accessed  per  user  during  the lockdown  thus  far  rose  just  to  1.6  (in  week-3  starting  28thMarch)  from  1.5  pre-lockdown.  61%  of  users  accessed  only  one  OTT  app  (unchanged  from  pre-lockdown)  while  26%  accessed  two  apps  (dipped  from  28%  pre-lockdown).  Users who  accessed  three apps  remained  unchanged  at 8% while more  than  three  apps were accessed by 5% of users (up from 3%). 61% of users with two or more apps have  changed  their  most  preferred  app.  Fewer  accesses  per  user  is  probably  key reason for Zee5 content not figuring among top-10 on OTT platform. Comscore data shows Zee5 had 59mn unique visitors in Mar’20, a rise of only 2% over Feb’20. Those were initial days of lockdown; however, competition from Netflix and APV has seen strong growth. Unique visitors on Netflix increased by 82% MoM to 40mn and that on APV rose by 21% MoM to 39mn in Mar’20. The corresponding number for Disney+ Hotstar dipped 7% MoM; nonetheless it remains strong with 131mn users. Zee5  presence  on  mobile  apps  lagged  that  of  MX  Player,  Disney+  Hotstar,  and Amazon Prime Video according to Comscore data.


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