Beyond Metros: Are Tier 2 & 3 markets truly powering India’s CTV boom?

India’s connected TV (CTV) ecosystem is at a pivotal moment. On the surface, the numbers suggest a market accelerating at breakneck speed. India’s active CTV user base has grown over 87% year-on-year since 2024, now reaching roughly 130 million users across 60–70 million CTV homes. Advertising investments are also rising sharply—CTV spends have more than tripled from ₹450 crore in 2022 to ₹1,500 crore in 2024, with industry estimates suggesting revenues touching nearly ₹ 2,000 crore in 2025 and could cross ₹4,000 crore in 2029.

But beneath this headline growth lies a more nuanced story; one that hinges on whether rising smart TV adoption in Tier 2 and Tier 3 markets is translating into meaningful, monetisable CTV consumption, or whether the industry is getting ahead of itself.

The hardware boom is real

There is little debate that India is in the midst of a smart TV surge, and much of that momentum is coming from beyond the metros. Sales of 55-inch-plus smart TVs grew 43% in 2024, signalling rising premiumisation, while the expansion of broadband connectivity and the availability of sub-₹10,000 smart TVs have brought nearly 46 million homes into the connected ecosystem.

This dual growth, premium and entry-level, has widened the base significantly, particularly in smaller cities. According to GroupM’s This Year Next Year (TYNY) 2025 report, India had over 200 free ad-supported streaming television (FAST) channels and nearly 40 million monthly active CTV users as of mid-2025, with much of this growth occurring outside the top 10 cities.

The direction of travel is clear: smart TVs are no longer a metro-centric phenomenon. As Kailash Adhikari, MD, Sri Adhikari Brothers Network, points out, “90% of the TVs which are sold are smart TVs and if that penetration is higher in the tier 2, tier 3, then the chance for CTV, connected TV, really grows.”

For broadcasters and advertisers alike, this widening device base opens up the possibility of far more granular targeting than traditional linear television ever allowed. As Adhikari explains, “If a particular advertiser wants to target, let's say, a particular area of Gujarat, then he can do so without spending that money in Bengal… I think this is the future of advertising and connected TV is the future of satellite television.”

But does device adoption equal consumption?

While the hardware story is compelling, the conversion of smart TV owners into consistent CTV viewers remains a key question.

Nisha Sampath, Brand Strategist, draws a clear distinction between the two. “Smart TV penetration in Tier 2 and 3 cities is real and growing. But hardware adoption and CTV viewership are not the same thing. A large share of price-sensitive households in these markets use their smart TVs to stream free content like YouTube. The hardware shift is happening. The monetisation is yet to follow.”

This gap between access and engagement is critical. Much of the consumption in smaller markets is still skewed towards free, ad-supported platforms, limiting the immediate upside for premium OTT players and advertisers seeking high-value audiences.

Even where engagement exists, it tends to be content-specific rather than habitual. Anil Solanki, Director, Dentsu X, notes that while adoption is expanding, “consistent high-quality consumption is still catching up.” He adds that for key genres—“sports, movies, and regional entertainment, CTV is already driving meaningful engagement and family co-viewing”—but the medium is “gradually moving from a premium niche to a more scalable medium, but we’re not fully there yet.”

This suggests that while Tier 2 and 3 markets are contributing to spikes in viewership around tentpole content, they have not yet become uniformly reliable consumption centres across platforms and genres.

A fragmented consumption landscape

Another layer of complexity lies in the uneven distribution of audiences across platforms.

Prabhvir Sahmey, Founder & CEO, StratPulse Techlabs, highlights this fragmentation: “Yes, consumption is growing in the smaller cities. As all the new TVs are smart or connected TVs. Media planning still on the border line; as not all states have demonstrated large base of CTV users (meaning more than 10 lac TVs to target). This has been a mish-mash.”

Platform-level disparities further complicate the picture. Sahmey explains, “If you talk to YouTube—they will have good coverage in T2/T3 cities. However, if you will talk to a SonyLiv or Zee—it's on the lower side of penetration.” The implication is clear: while overall CTV reach is growing, it is not evenly distributed across the ecosystem.

As a result, advertisers face a patchwork of reach and engagement levels depending on the platform, region, and content type. “Short answer to your question is—yes; but not consistent across apps. No major trend that I am seeing emerge,” Sahmey adds, underscoring the absence of a unified consumption pattern.

 Early signs of behavioural shift

Despite these challenges, some industry players believe the shift in consumption behaviour is already underway—and meaningful.

Prrincey Roy, Co-founder and CEO, Huella Services, argues that the narrative has moved beyond mere device adoption. “CTV is no longer a metro-first story. What we are seeing now is that Tier 2 and Tier 3 markets are not just buying smart TVs, they are actually becoming meaningful consumption centres. That shift matters.”

Roy attributes this to a combination of structural enablers: “Better internet access, affordable devices, and a much stronger habit of streaming premium content at home are all feeding into it.” From this perspective, the growth is not just statistical—it reflects a deeper shift in how audiences consume content.

Data trends support this evolving behaviour. According to MiQ’s Advanced TV Report India, viewers spend nearly 2.8 hours daily on both OTT and linear TV, with 67% planning to increase their streaming subscriptions. Meanwhile, the Ormax OTT Audience Report 2025 indicates that Indians spend over 3.5 hours daily watching television, with 80% of that time involving simultaneous mobile usage—highlighting the rise of multi-screen consumption.

Taken together, these trends point to an increasingly hybrid viewing ecosystem, where CTV is becoming a key node rather than a standalone channel.

 Is it changing media planning yet?

The bigger question for the industry is whether this growth is significant enough to influence how media is planned and budgets are allocated.

The answer, for now, appears to be: selectively.

Roy believes the shift is already impacting planning frameworks. “It is definitely significant enough to impact planning. Budgets, yes, but more selectively. I do not think the answer is for brands to suddenly shift money in a dramatic way just because non-metro smart TV adoption is rising.”

Instead, she sees a gradual recalibration. “I do think it changes how seriously brands need to consider CTV in their media mix. The audience is broadening, language relevance is becoming more important, and the opportunity to build for regional context is much stronger now.”

Sampath, however, cautions that the industry may be overestimating how quickly this shift will translate into ad dollars. “CTV budgets today still flow disproportionately towards metro and younger audiences. That will change, but the Tier 2/3 opportunity is being talked about more than it is being acted on.”

The primary barrier remains data. As Sampath puts it, “Advertisers need more data from these markets before they will be ready to put in spends.”

Sahmey echoes this hesitation from a planning standpoint. “CTV campaigns continues to be dominated by the larger brands who can afford both national & regional campaigns. < 1% are actually doing CTV at scale.” Until reach becomes more consistent and measurable across regions and platforms, large-scale budget shifts may remain limited.

 Categories leading the charge

Even within this evolving landscape, certain categories are leaning into CTV more actively than others.

Sampath points to high-involvement sectors as early adopters. “Automobiles and fintech are the most active categories, as CTV fits best with high-involvement decisions and younger, digital-first buyers.” At the same time, she notes that “FMCG is steadily building presence for reach, connecting with households that have moved away from traditional TV.”

Roy expands this list further, identifying “FMCG, auto, BFSI, consumer tech, and e-commerce” as categories showing stronger interest. For these brands, the appeal lies in CTV’s hybrid nature. “It combines the impact of the big screen with the precision and measurability of digital,” she says.

Importantly, the expansion into Tier 2 and 3 markets enhances this value proposition. “When you start seeing audience growth from Tier 2 and Tier 3 markets, the medium becomes even more valuable, as the brand opportunity widens and becomes much more culturally relevant.”

 The road ahead

Looking ahead, the trajectory for CTV in India remains undeniably strong. Industry projections suggest the country will reach 60 million CTV households by early 2026, with viewers in the top 15 cities alone consuming over 700 million minutes of streamed content daily. Growth beyond these cities will be crucial in sustaining momentum.

Yet, the central tension remains unresolved.

On one hand, the ecosystem is expanding rapidly, driven by affordable devices, better connectivity, and shifting consumer habits. On the other, monetisation, measurement, and consistency of consumption are still catching up, particularly in Tier 2 and 3 markets.

As experts put it, “The Tier 2/3 opportunity is real, however, it’s more in the future.”