India’s OTT growth story: the past, the present and the future

Over the two pandemic years (2020 and 2021), the OTT (or streaming) category in India dominated headlines. With theatres being shut for most part and television content remaining stagnant, OTT emerged as the new and exciting destination for quality entertainment content.

The period saw a spate of films releasing online directly, as also the launch of new platforms in different Indian languages. Established platforms such as Disney+ Hotstar, Prime Video, Netflix and the likes, upped the momentum, rolling out new series by the week.

2022 was different. The discussion was divided between theatres and OTT media. With theatres re-opening, it was a good year for the movie business, with gross collections across India crossing the Rs 10,000 crore mark, only the second time ever (2019 holds the record, at Rs 10,948 crore).

While Hindi cinema struggled, some bigger films from the south performed very well, even in Hindi dubbed versions. The likes of K.G.F: Chapter 2, RRR, Kantara, PS I, Brahmastra and Vikram contributed to the comeback of big-ticket cinema, even as most small films continued to struggle to get any traction whatsoever.

The OTT front saw a stable year. As per the Ormax OTT audience (sizing) report released in end-2022, India’s OTT base grew by 20% vis-à-vis 2021, from 353 million to 424 million people. However, this growth was skewed towards the lower NCCS segments, small town and rural India, with the big cities and the premium audience fast reaching saturation levels.

SVOD audience grew by 18%, from 110 million to 130 million, and comprised only 31% of India’s total OTT universe, which has a sizeable section of audience watching only free content on YouTube.

The road ahead for the premium pay platforms isn't an easy one. At 424 million, the OTT category is no longer niche. But at 130 million, the SVOD category can't be called 'mass' by any stretch of definition either. India is not a market that’s used to paying for premium content. Even the theatre-going population of the country is under 150 million (including a disproportionate contribution from the south).

With the early adopters already on board, where can the SVOD platforms hope to get more subscriptions from?

The report revealed that the average number of subscriptions per paying user has remained stagnant at 2.4. The 130 million SVOD audiences belong to 49 million families, who have 120 million active paid subscriptions between them. You can't expect these families to go beyond the two or three subscriptions they've already taken. Hence, the next level of growth can come only if platforms get subscribers from outside the top 10 cities, and from the lower NCCS segments.

How ready are the small towns and the ‘masses’, to pay for premium digital entertainment? Not too ready, is the unpleasant answer. The habit to pay for content is alien to them. Also, the OTT industry hasn't spent any marketing money so far to educate the country on the advantages of paying for premium content.

What further complicates this narrative is the nature of the original content being dished out by the OTT platforms. Most originals (series or films) are made with a cosmopolitan sensibility, targeting the metros and, at best, the mini-metros. That was the need of the hour in the 2016-20 period, when the category was new. But now, the ‘massification’ can come in only with a change of approach to content creation. 

It's easier said than done, of course, especially because the typical development period of a streaming original ranges from 12-24 months. In the short run, we can expect streaming platforms to rely on digital rights of theatrical films to lure new subscribers. It’s not a strategic path any platform prefers, because the top films come at price points that border on being unreal, even for platforms with deep pockets and a loss-absorption capacity.

On a positive note, the quality of content dished out on OTT in 2022 was admirable. We had more genre variety too, and the category is finally out of the crime-thriller sameness it was stuck in, for almost four years.

2023 will be a critical year for the streaming business in India. It will decide if this category can break out beyond YouTube and become truly 'mass', or whether it must learn to operate within the conceptual 200 million glass ceiling that many categories of consumer products and services in India have learnt to live with.

(The author, Shailesh Kapoor, is founder & CEO of media consulting firm Ormax Media, which does extensive work in the Indian streaming industry, among other M&E categories in the country)