With their traditional revenue streams like voice and VAS drying up, telecom operators across India are tying up with over-the-top (OTT) players offering on-demand video content via apps and dedicated platforms. The increased adoption of these subscription-based on-demand video services, has become a new way to monetise data services with smartphones as the de facto medium to stream video content.
Over the past year or so, OTT service providers like Netflix and Hooq have been increasing their presence in India through affordable subscription models. Amazon too has joined the game with video becoming an integral part of its full Prime service. Along with the global players, Indian players like Voot and Eros Now have been focusing on popular Bollywood video content.
Consumers are opting for these new platforms as they provide the freedom to choose content they want to consume, including local and regional titles which are otherwise hard to find. Players like Netflix and Amazon are setting a benchmark in creating high-quality original content and distributing it across the markets, thus offering a big bait for customers to opt for these subscriptions. They are also ensuring that the latest content relevant to the audience is available on their platforms.
“With the arrival of 4G in India, and promotions of unlimited data packs, telcos are often at a loss to get the Indian consumer to use data services. The maximum consumption of data today happens for video content, and this is where Eros Now has a leading role to play,” Rishika Lulla, CEO Eros Digital, told indianexpress.com over an email.
“India is the only market with over 25 OTT players. The new generation is going more online to watch the content in place of standard linear TVs. That shift is visible,” said Salil Kapoor, Managing Director, Hooq India. The Singapore-based Hooq has been focusing on Hollywood content and has recently announced that users will be able to stream and download movies and TV shows at an introductory price of Rs 89 for the first 3 months making it less than Rs 1 per day.
Telecom operators on collaborating with OTT players
The traditional telecom players see an opportunity here and are trying to forge relationships with leading OTT players. For instance, Vodafone last year launched a new app called ‘Vodafone Play’ with unlimited TV, free music, and movie titles from different genres. For the app, Vodafone inked partnerships with Eros Now, Ditto TV, Hooq, Hungama Play and Alt Balaji, among others. The operator has also announced association with Netflix to exclusively offer Vodafone Red customers free Netflix subscription of up to one year on select Red Plans. The Airtel TV app is also similar with content from other players like Sony Liv and Eros Now.
“Video-on-demand is in a nascent stage in India and we are excited to see how it evolves further. It presents a win-win situation for the operators and content partners. As an aggregator Vodafone Play has been able to build a robust library of entertainment content for our customers. For content partners it offers an ideal distribution channel to connect with a wide audience and distribute diverse content,” said Avneesh Khosla, Associate Director – Consumer Business, Vodafone India. He said Vodafone’s strategy is to have the best content available across OTT apps and created an unique aggregate platform where customers can access content from multiple partners with single sign-up.
Similarly, Idea has been revamping its business strategy to better compete with the competition. The company said it has launched three entertainment apps – Idea Music Lounge, Idea Movie Club and Idea Game Spark. The idea is provide a one-stop destination to a large collection of popular and premium content, including a rich collection of Hindi, vernacular and international content. Idea too has partnered with Hungama Digital and Eros Now to offer subscription based music and movies.
Other than Vodafone and Idea, the Mukesh Ambani-owned Reliance Jio offers a suite of apps (JioCinema, JioTV, and JioMusic) that come pre-loaded with Lyf smartphones as well on the recently launched JioPhone.
“Operators have actually realised that working with OTT players is beneficial for them especially with the rise of data consumption in India, which increased up to six times per user per month by end of Q1 2017,” said Shobhit Srivastava, Research Analyst at Counterpoint Research. “In a scenario where industry data tariff in India is one of the cheapest in the world, operators are banking on business collaborations which push the data consumption from end user point of view. Tie-up with video content providers is a strategy in a similar direction,” Srivastava added.
Ecosystem to grow; success of video monetisation still not clear
Without affordable 4G data packs and subsidised subscription to video on-demand content, OTT players may find it difficult to penetrate a market like India where users are used to consuming free content, be it music or video. If operators maintain close relationships with OTT players, they can think of a new revenue stream that has the potential to become huge in the long term.
As Srivastava points out, in the long-term operators will look forward to have their own ecosystem of content and services which give them greater flexibility to monetise. As of today Jio is in a very good position to achieve the same.
“The ecosystem is huge – with operator billing, massive retail distribution network own apps, etc. We are yet to see how successful video monetisation will be in India. The business models around OTT are also at an evolutionary phase between advertising and subscription with focus on creating destination for original content, “ Khosla added. He said the revenue will depend on the pricing at which the market rests. “Currently, everyone is working on a freemium model, or through advertising, so the focus is not on charging.”