The on-demand video streaming industry in India has been well and truly percolating, with a host of developments since the latter half of last year. Production houses have ventured into this space and an array of international players are making a beeline for the Indian market in order to expand their services. A bonanza of new video offerings across multiple avenues is set to be unleashed, catering to the varied tastes of a very heterogeneous Indian audience. What makes India unique as a market is this very heterogeneity -- a cluster of markets with each having its own salience. That aside, the infrastructural constraints as well as the peculiarity of consumer behavior that it presents, makes it one of the most exciting and, in the same vein, challenging markets for video on demand (VOD) players to operate in.
What makes India unique as a market is this very heterogeneity -- a cluster of markets with each having its own salience.
Economics teaches us is that competition is good. It benefits not just the end consumers but also those businesses which are willing to work much harder to satisfy the needs of these consumers - be it through innovation that leads to a differentiated product or service offering, or through improved efficiency in doing the same business differently.
The success factors
In the VOD space, this translates to having video catalogue diversity, freshness and exclusivity to make the target audience want to experience your service. The role of technology in being a service delivery differentiator is all the more pronounced in making the viewing experience superlative and, therefore, retaining the interest of the viewers. This is exemplified through improved navigation and user interface, smart video discovery, video optimization and seamless video viewing across devices and networks. Lastly, forging strategic partnerships across the ecosystem of studios, telecom service providers, technology enablers and payment solution providers, is important in order to get the competitive edge to win market share.
Understanding viewers through data-backed insights
Video streaming OTT players are in essence, purveyors of entertainment. The more we are tuned into what our audience demands and consequently work towards their fulfillment, the better would be the chances of success. Acting on consumer insights and analytics therefore need to be an integral part of the business strategy. The more the viewers' experience on the platform gets personalised, the better the engagement quotient. Personalisation entails understanding consumers' preferences in terms of the types of videos they wish to watch based on the their viewing history.
Every mobile device is a data generator. How VOD players make sense of this user data and translate that into a great user experience will be a key differentiating factor in a hyper competitive market like India. At Vuclip, we have consumer insights from eight years of viewership data as well as from our quarterly Global Video Insights (GVI) surveys conducted across all the emerging markets that we operate in. This has helped us not just fine tune our offerings but, more importantly, to understand what sort of content our viewers see and would like to see.
Video consumption patterns
The following video consumption behavioral patterns hold a lot of relevance to the challenges that VOD players in India specifically and emerging markets in general are confronted with.
Indian consumers are really more value conscious than price sensitive.
1) A shift from 'What's on TV?' to 'Streaming a video of my choice': The audience is different and so are their viewing patterns. The demographics that VOD players cater to are people of the 'Experience Generation' - those in the 18-25 age group, who love to consume entertainment on the go and watch videos of their choice at a time and place of their convenience. Unlike a TV-watching audience, they do not schedule their lives on the basis of when a program or film is being broadcast. The kind of content they consume is significantly different from what the TV audience is wont to viewing. It's therefore a foregone conclusion that curating content that is youth centric, trendy and that strikes a chord with this generation is of paramount importance.
2) Demand for vernacular entertainment: As people of Tier 2 and Tier 3 towns and rural areas enter the digital fold, the demand for entertainment in vernacular languages too will come about. Given that 78% of Indians prefer to watch videos in their native languages, VOD players wi work towards offering their viewers a multi-genre and multi-language content catalogue.
2016 will witness VOD players in India foraying into co-creation of original video series in addition to adding catch-up content to their catalogue. This is a course of natural progression to stay relevant and appeal to their audience.
3) Torrent vs. paid content: Downloads via torrent are dominant in India, and the propensity to pay and watch videos is significantly lower than in developed markets. So how does a VOD player monetize in a challenging scenario such as this? It is a belief that India is one of the most price sensitive among the emerging markets, but what our surveys have given us to understand over the last eight years in this market is that once Indians see the value in what you're offering, they will have not have inhibitions about paying. The Indian consumers are therefore really more value conscious than price sensitive.
4) The right revenue model: Content is an expensive proposition. Content that is the latest and in demand entails high licensing fees for VOD service providers. This cost needs to be recovered in order to make the business viable. This is done either through advertising revenue or through a subscription model. The challenge with advertisements as a revenue source is that mobile video and VOD platforms still do not command the same rates as those of television broadcast channels. The challenge with the subscription model is the low proclivity among viewers to pay.
We have seen that a vast majority of viewers who log in to view the free videos turn into subscribers after gaining a good viewing experience.
This can be addressed by adopting a unique 'Freemium' revenue model, wherein a certain proportion of the catalogue content is kept free while the rest accessible through subscription. We have seen that a vast majority of viewers who log in to view the free videos turn into subscribers after gaining a good viewing experience. Moreover, having seamless payment methods such as carrier billing in addition to digital payment options, make it easier to facilitate this transition.
This year will likely see VOD players experiment with their revenue models and woo Indians with different price points in order to entertain viewers of every stripe.
5) Preference for short form video consumption on mobile devices: While players in India are offering their subscription services in a range of price points, data costs -- or in more lucid terms, the cost of the broadband connection over which the OTT video streaming service is accessed --are often forgotten. These can significantly burn a hole in the consumer's pocket and hence pose a challenge in terms of the degree to which VOD services will be adopted.
We all know the extent to which smartphones have contributed to the video revolution. CISCO's Visual Networking Index Report (VNI) has predicted that online video traffic will contribute approximately 65% of all IP traffic in India by 2018 with smartphones contributing in excess of 70%. However, on account of network connectivity and high data costs, predominantly short form content (videos having duration of under 10 minutes) is what 85% of Indian users consume on their mobiles. Only 33% of smartphone users in India use the device to view full length movies.
VOD players [should] leverage technology in order to help optimize quality of videos and facilitate a buffer-free viewing experience or introduce off-line features for downloading...
The year 2016 could see VOD players ink arrangements with broadband suppliers and telecom service providers for cheaper and faster access. What would however be more practical is for VOD players to leverage technology in order to help optimize quality of videos and facilitate a buffer-free viewing experience or introduce off-line features for downloading and watching videos at a later time.
So who will win in India?
Viewers have indicated their preference for a single OTT video streaming service for both regional and international video content. The market is big enough and there is a huge scope for every player to cater to niche segments. Only those VOD players operating with a robust revenue-generating business model, and who are sentient to what their viewers want and who have forged strong partnerships will thrive while the rest will be weeded out.
All in all, it is those players who engage with their viewers better and make them true fans of their service who'd be here for the long haul. The show will go on!
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