Video OTT revenue in India expected to reach Rs 13,800 crore by FY 2023

The OTT market currently stands at Rs 2,150 crore with the presence of more than 30 frontline players

e4m by exchange4media Staff
Published: Sep 26, 2018 9:00 AM  | 3 min read

The video OTT market in India is buzzing with competition. The category has more than 30 frontline players, including Netflix, Amazon Prime Video India, Hotstar, Sony LIV, Voot, Eros Now and Hooq, vying for viewers’ attention. These players will soon be joined by Times Internet’s MX Player on September 27 with seven originals.

The OTT revenue in India is expected to grow at a CAGR of 45 per cent to reach Rs 13,800 crore by the end of FY23, according to KPMG Media and Entertainment Report 2018. Currently, the OTT market stands at Rs 2,150 crore (FY 18).

Zulfiqar Khan, Managing Director, Hooq, believes that this space will continue to boom for the next 10 years. “All the players are trying to carve out a niche for themselves. They just need to be clear on what play they want to have,” he said.

Advertisement contributes about 80 per cent of this market (Rs 1,720 crore), while the rest is subscription revenue. By FY23, the subscription revenue is expected to be about 33 per cent of the total revenue at that time, as per the report. Meanwhile, advertisement is projected to grow around 40 per cent CAGR in the next five years to reach Rs 9,300 crore by FY23.

“It’s now a serious digital marketing channel for brands who are using it to reach out to their consumers because they are able to get significant scale and reach,” says Uday Sodhi, EVP and Head – Digital Business, Sony Pictures Networks India (SPN) who informed us that SonyLIV has established itself as a “big advertising destination for brands.”

Driven by increasing smartphone penetration, improved infrastructure and availability of digital exclusive content, the number of online video viewing audience in India is estimated to be around 225 million in FY18 and is projected to reach 550 million by FY23.

When it comes to engagement, the average time spent by subscribers on various OTT platforms varies from 30 to 50 minutes. On YouTube, it is 8-12 minutes, according to KPMG report.

Morgan Stanley Research also did a study on the OTT landscape taking into consideration the traffic and engagement time (sourced from Comscore and Morgan Stanley Research). For the month of July, Hotstar took the top spot garnering around 90 million monthly unique viewers (MUVs) with nearly 120 minutes as engagement time.

According to Hotstar’s India Watch Report 2018, 96 per cent of watch time on Hotstar comes from videos which are longer than 20 minutes while one-third of Hotstar subscribers prefer watching their favourite shows on Hotstar compared to television.

Morgan Stanley Research mentioned that for July, Netflix had the highest engagement of more than 120 minutes but their viewer count was around 20 million MUVs. Sony LIV had 30 million MUVs with 60 minutes as engagement (for the same month).

Meanwhile, given the entry of new players, consolidation is the way to go. Khan is of opinion that there is “more than enough space for more players.”

However, he mentioned, “Having said that, from a consumer point of view, there is only a certain number of apps he can download on his device. So consolidation will happen faster than TV.”

An industry source agrees and believes that the industry will grow at a fast pace.
“It’s expected to double in size in the next three years. We will see significant advertising money flow into OTT. Subscription will grow along with the market (growth) or slightly faster. We will see significant growth in the user base,” he said.

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