Shailesh Kapoor, head of Indian media consulting agency Ormax, says that profitability challenges and consolidation are tendencies to look out for in India‘s complicated streaming market.
Kapoor notes that streaming penetration stays restricted, with paid content material reaching solely 10-14% of the 1.4 billion inhabitants. “The overall perception is that this quantity will go up, resulting in scale and profitability,” he explains, whereas cautioning about slowed development for the reason that pandemic.
Value stays a hurdle, Kapoor says. “Indians aren’t used to paying for content material. Usually, TV has been very low price in India for years now. And in streaming, there are two prices, the info price, after which there’s a subscription price. So, it’s a double price construction. Many Indians don’t totally perceive why they need to be paying for content material when a lot content material is accessible without cost on TV and on YouTube,” Kapoor stated.
“It’s going to be difficult, as a result of the primary two, three years after the pandemic, the expansion got here largely from the highest 10-15 cities. Since then, these cities have saturated, whoever needed to subscribe to whichever apps, by and huge [have now] subscribed,” Kapoor added. “Now, the one approach to develop is that you just get individuals in smaller cities and rural India to start to pay. That isn’t taking place very simply. It’s a really sluggish course of.”
On business consolidation, Kapoor observes: “The entire merger and acquisition factor in India shouldn’t be so streaming-specific. It’s in all probability extra being pushed by the general panorama, together with tv.” He cites the failed Sony-Zee merger discussions as primarily motivated by their tv companies. Tv stays the only largest part of India’s media and leisure sector, with a valuation of $8.3 billion in 2023, in response to the recent FICCI-EY industry report.
Kapoor factors out a paradox out there: “You’re feeling that the market is getting extra consolidated round three, 4 main gamers, but on the similar time, there’s a lengthy tail of regional gamers that are equally robust,” Kapoor stated.
The exec highlights the upcoming Reliance-Disney deal as a possible business template. “What occurs with Reliance and Disney over the following six months will actually be case research,” he predicts.
Kapoor acknowledges distinctive fashions like Amazon Prime, which integrates purchasing and video providers, as doubtlessly extra viable. He additionally notes the development of content material library acquisitions, exemplified by Amazon’s buy of MX Participant property, drawing parallels to historic TV business practices, for instance SAB TV which was acquired by Sony in 2005.
Kapoor additionally emphasizes the significance of theatrical movies on streaming platforms, with each Netflix and Amazon benefiting from their robust theatrical movie libraries. “The Indian market actually depends on… the significance of theatrical movies on OTT [streaming], as a result of it’s an enormous increase to subscriptions and to the desire for utilizing sure apps over the others,” Kapoor says. He notes that for a lot of Indian audiences, particularly within the South, net collection are nonetheless a nascent format, and theatrical releases stay a significant draw.
Sports activities content material affords promoting income potential however faces excessive rights prices, Kapoor stated. Disney+ Hotstar, regardless of losing IPL cricket digital rights, stays a major participant, Kapoor added. “Final yr, one of many issues Jio Cinema modified without end is that they made sports activities free… by placing IPL in entrance of the paywall.” This transfer has altered the monetization technique for sports activities content material on streaming platforms, Kapoor stated.
Wanting forward, Kapoor identifies Netflix, Amazon and JioCinema as probably the most promising gamers within the Indian streaming market. “Netflix is doing amazingly effectively within the final two years,” Kapoor states. After a difficult preliminary interval in India, the platform has seen important development, with subscribers reportedly growing from 7-8 million to over 11 million in two years, the manager stated. Kapoor attributes this success to the introduction of a extra inexpensive cell plan and improved content material high quality. He suggests maintaining a tally of JioCinema’s technique within the coming months, noting its latest launch of disruptive pricing at INR29 (35 cents) per 30 days.
The analyst concludes by emphasizing the necessity for high quality content material to accompany aggressive pricing, stating, “Low pricing shouldn’t be a assure in itself if the content material high quality doesn’t match up.”
