Regional OTTs eye small towns as metro demand saturates

The phenomenal rise of streaming video platforms, driven by the COVID-19 pandemic, has now slowed down. Following the significant expansion of the Indian OTT market during the pandemic years of 2020 and 2021, the category has transitioned beyond the peak growth phase. While the Indian OTT audience base experienced a 20% increase from 2021 to 2022, it has only grown by 13.5% in the last year, revealed The Ormax OTT Audience Report: 2023.

During the peak of the growth phase, many OTT platforms mushroomed in the country, offering content in various regional languages. Now as the growth slows down, these platforms are likely to face immense pressure to widen their audience base and increase their penetration in the Indian market.

The top 15 cities in the country have reached saturation, and any future growth is now expected to emanate from smaller towns. The local language player will have to capitalise on these markets. Keerat Grewal, head of business development (Streaming, TV, & Brands), Ormax Media, says, "The growth, however, will be challenged by a higher price sensitisation in these markets."

However, regional OTT platforms are confident about their growth. Rakesh CK, senior vice president and head- SVOD and business strategy says that the outlook for regional OTT platforms is promising as the increased investments in regional content, rising platform adoption, and deeper market penetration are expected to drive exponential growth. 

If these platforms capitalise on the expanding opportunities in the changing media landscape, they stand to benefit significantly.

Citing the EY-FICCI M&E report, which projects the digital medium to reach Rs 862 billion by 2025 at a 15% CAGR, he highlights significant growth potential. SVOD revenues are expected to grow at an 11% CAGR, and paid video subscription households may reach Rs 52 million, potentially Rs 100 million with adjusted pricing. 

"These figures surpass traditional media growth rates, firmly positioning the digital space, especially OTT, as the future of content consumption. The 13.5% rise in OTT platform audiences in 2023, while slightly lower than the previous year's 20%, still indicates a robust trend. Rapidly evolving digital consumption, driven by connected devices and improved connectivity, is evident," he says.

Saurabh Srivastava, chief operating officer- digital business, Shemaroo Entertainment, mentions that at ShemarooMe, its SVOD subscriber base has outpaced the broader OTT market. "This growth can be attributed to two main factors: the enhancement of our content and user experience, and it also signifies the significant untapped potential in the market for more specialized platforms, segmented by language, genre, and other criteria."

Grewal says the earlier boost in growth was directly linked to the pandemic. "Now the rise is more organic, and this is being affected by factors like the price of data and penetration of the digital medium itself." 

Echoing her thoughts, Rakesh says that the slower growth can be linked to post-pandemic rationalization and increased market competition. However, the shift to OTT consumption is irreversible. "Future goals include profitability, scalability, and reaching traditional media levels of influence. 

With a 15% CAGR projection for digital growth and potential subscriber expansion through pricing adjustments, the OTT future is promising. The challenge is optimizing strategies and monetization to match traditional media's profitability and reach."

Akshay Bardapurkar, founder, Planet Marathi OTT, attributes the growth to an abundance of OTT platforms and content leading to confusion among the audience. "OTT platforms offer on-demand viewing flexibility. So there is no sense of urgency. Moreover, with the pandemic ebbing, people have moved on with their lives."

Within the SVoD (subscription video-on-demand) sphere, 16% (77.2 million) are indirect viewers, 8.2% (39.5 million) are paid members via telecom packs, and 7.6% (36.4 million) are direct B2C subscribers, a Livemint report states. The SVoD category has grown by 18% to 153 million in 2023, increasing its share of the total OTT audience in India from 30.8% to 31.8%.

Concurrently, the AVoD universe has grown by 7% to 198.1 million, while the YouTube and social media universe has expanded from 109.2 million to 129.9 million, representing a 19% growth.

Bardapurkar attributes the slow growth of the SVoD audience to the free streaming of sporting events like IPL and World Cup, and JioCinema's AVoD offering. "Free platforms and bundling apps have increased manifold. 

The stiff competition and bundling also lead people to switch loyalties from one platform to another," he says. Srivastava also believes that the availability of premium live sports within the AVOD ecosystem has had an impact. "Premium content drives consumer acquisition after all."

Rakesh says SVoD's slower growth calls for strategic action by local platforms. He suggests that these platforms should consider competitive pricing, content differentiation, retention strategies, collaboration, and diversifying monetization models. 

"Competitive pricing can significantly expand the subscriber base. Investment in high-quality, exclusive content is vital to attract and retain paying subscribers. Enhancing user experiences and providing personalized recommendations can keep viewers engaged and subscribed. 

Partnerships with local content producers and telecom companies can broaden the audience while diversifying revenues with TVOD and bundled subscriptions with audio services will bolster SVoD growth," he says.

Regional platforms often rely on bundling services with telecom providers or DTH operators for customer acquisition. While only about 8.2% of subscribers come through these services, aggregators are crucial for these platforms. "Telecom providers have a broad customer base, enabling regional platforms to access a wider audience and penetrate new markets effectively. 

The unparalleled reach that telecom companies offer is a key driver in connecting regional platforms with a larger audience," says Rakesh. Srivastava says it solves for convenience and choice for consumers, ensuring there is value for everyone in the ecosystem. "Intelligent bundling is a force multiplier and there is an optimum mix of consumer acquisition that we have set for ourselves (through B2B2C or aggregation)."

While acknowledging the role of these bundling platforms, Bardapurkar cautions that it will have an impact on the SVoD universe soon. "Revenues through bundling may see an increase, but SVoD will see a further drop," he says.