As video content increasingly seems to be consumed, shared and generated, the traffic of such content over the internet is increasing. In fact OTT media apps seem to be one of the few services that are earning large revenues for the OTT providers says the paper. A majority of the revenues which are attained through advertising followed subscription and transactions and this is likely to grow in the future. In a recent consultation paper released by the Telecom Regulatory Authority of India (TRAI) on OTT services mentioned the rise of OTT media services traffic which has also resulted in the rise of internet traffic.
Though the consumption of OTT media is very high in the US and YouTube itself accounts for 17.1% of all US peak downstream fixed access traffic, in India it is not the case due to poor broadband penetration. In India on account of poor broadband penetration of around 4% at present, notwithstanding the availability of OTT media apps, the challenges to be faced by the broadcasting industry are yet to materialize says the TRAI consultation paper.
India’s active OTT video subscribers in 2014 were 12 million and is expected to grow to 15 million by 2015 says a recent Media Partner Asia (MPA) report. It further expects this figure to grow to 105 million by 2020. This is in comparison to the 168 million TV households in India in 2014 out of which 149 million are cable and satellite (C&S) subscribers according to FICCI-KPMG report. Though OTT media has grown quite a lot in just a short span there is quite a long way to go. The growth of OTT media services is expected tremendously on the back of smart phone penetration in India, however poor broadband penetration and bandwidth still remain challenges to their growth.
As C&S penetration is one of the highest reaching mediums today in India the question arises can OTT media players and content providers make use of the existing infrastructure by partnering with MSOs and satellite players to increase their reach? Such a partnership can only be possible if the cable or DTH player has broadband services to offer. There are however many MSOs that already are offering broadband services in addition to their cable services.
Ravi Bhushan, VP, Spuul Global said, “It is something we have been in discussions with a few of them but nothing is materialized yet. We haven’t done it right now as we haven’t had a compelling proposal yet but if something comes up that should make business sense then we will be able to get into it.”
GD Singh, Director & CEO, Digivive Service (NexGTV) says that this can possible help both OTT players as well as cable operators where both could benefit. As an increasing number of MSOs are offering broadband services it is possible for them to bundle OTT services for people to watch on TV he said. “They can become an extended arm for OTT players. There is where I see a huge synergy in development going forward. So it makes sense for them to bundle OTT services with their broadband connections. There could be a specific deal related to the data or special rates for the OTT service provided,” he said.
Shabir Momin, MD & CTO, Zenga Media on the other hand looks at partnership with C&S players from the point of both being able to capture the viewership rather than on infrastructure. “The partnership will not be because of the infrastructure but because when somebody is watching TV they are not on devices and when somebody is on devices they are not on TV. It is the distribution of time that that person does between two kinds of devices versus TV or a handheld device. If a partnership happens then between two of us we will have 100% of the time and attention that the person gives. That is the way distribution works. From an infrastructure point of view I don’t think it makes a difference,” he said.
There is however one player that is doing this currently is OTT services through their own set-top box by partnering with LCOs, it is Lukup Media. Kallol Borah, Director, Lukup Media says, “You do not have a direct line of site between OTT services and last mile cable operators (LCOs). There has to be internet service provider in between who will take the OTT service on its back and provide the internet connection to the LCOs and that is something that we are doing and that is something that is probably going to grow in the coming years,” he said. He further says, “If you look at the LCOs today they cover 75% of the population, whereas internet service providers connect hardly 10%, if you look at fixed line internet connections. You have 20 million homes connected (fixed line internet) out of 200 million. So if you have the internet service provider collaborate with the cable provider or the LCO the reach of the internet will increase from 10% to 75%. So that is the way to go,”
This definitely seems to be the way to go for C&S players too as the relevance and viewership of OTT is expected to grow significantly in India. And if they don’t want see a cannibalization of their revenues in the cable business this model seems more likely to be adopted. This will definitely push OTT media services growth and will open many other doors for revenue for such players.