22/12/2016 2:02 PM IST | Updated 26/12/2016 8:52 AM IST

Is Small Town India Ready To Give Up 'TV Time' For Digital Entertainment?

OTT players are set to ride the next wave of consumption in India’s smaller towns

Getty Images/Passage

Over the last year and a half, there's been a flurry of activity in the Over the Top (OTT) space in India. The market for OTT services across the country is fast evolving. Behind this accelerating growth are a set of critical enablers, key amongst them being increasing multi-screen content consumption, changing content preferences of viewers, much improved internet speeds and the increasing affordability of both smartphones and data. Although access to and inclination towards digital entertainment still remains largely driven by the metro and mini metro audiences, exciting times lie ahead for those of us in this space, as we are already seeing a steady rise in consumption of online content in tier 2 and tier 3 towns.

We are already seeing a steady rise in consumption of online content in tier 2 and tier 3 towns.

For the vast majority of Indians, TV remains the primary source of entertainment. This is especially true in smaller towns, where access to alternate recreation such as malls or sports facilities, is limited. However, close to 90% of households have a single television set, which is usually dominated by certain members of a household, especially during prime time. With the multitude of channel and genre options available today, a single TV cannot cater to the varied viewing preferences across all members in a household.

There is also a significant young audience that is based outside of their home, such as in hostels and campuses across the country, that is both tech-savvy, demanding of niche content such as sports and comedy, and access to campus wifi or free internet This group, that forms about 52% of the Indian youth, spends an average of 3.2 hours on mobile devices. They hold promise as early adopters of technology, who play a key role in determining the path that providers and marketers of entertainment take. This demographic has been early adopters of "TV-on-the-go" platforms that they can access via their mobile devices. No longer are they forced to watch what is playing on the TV in the living room or the hostel common area. In this way, technology has become a great enabler of individual choice and preferences.

And this is not a passing fad. What we are witnessing is really an evolution of television itself or TV 2.0, made possible through the easy availability of high-quality alternate screens and the ubiquity of the internet. The resultant influx of OTT players in the Indian market in 2016 is perhaps the clearest indicator of this change. All these players are tapping into the huge online video opportunity that India with its varied tastes and heterogeneous audience offers.

The Global Mobile Data Traffic Forecast, by Cisco Visual Networking Index suggests that by 2020, India will have 702 million smartphone users, which will outnumber television sets by a ratio of 5:1. An Ernst & Young report from earlier this year, states that by 2020, India will be one of the largest smartphone economies in the world. And by 2020, of the 730 million Internet users predicted by NASSCOM, 50-55% are expected to be small town users, up from 33% off 351 million in 2013. OTT players have observed a huge potential in these small town and regional markets and are increasingly ramping up their regional content offerings for these markets.

Adapting to a complex environment

While clearly there is a strong story unfolding, in stark contrast are the current ground realities that still have to be acknowledged and dealt with. We are still far from being a "digital" people. While the statistics point towards a significant uptake in consumption of digital entertainment in India, this phenomenon is yet to penetrate all corners of the country, owing to the infrastructural inadequacies in small towns in India.

OTT players are lining up every trick in the book to capture this segment and have already begun to observe a marked increase in regional consumption.

Even as the country has gone into a frenzy over the rollout of dirt-cheap 4G services earlier this year, tier 2 and 3 cities still battle basic connectivity issues such as poor internet speeds. Tie that in with low English literacy levels and the dearth of frictionless digital payment facilities, you find that the most critical elements to facilitate the growth of digital entertainment in small town India are yet to fall into place.

OTT players however have begun to craft innovative solutions to these problems. Through leveraging technology and striking strategic partnerships, the OTT industry is going all out to ensure that on-the-go entertainment is as easily within the reach of a shopkeeper in Osmanabad as it is to a tech-savvy teenager in Mumbai. Features such as adaptive streaming for those with sporadic internet connectivity, bundling OTT subscriptions with telecom services to eliminate the hurdle of online payments, and multilingual UIs to cater to vernacular audiences, are a few fixes that OTT platforms are working on. Huge eco-system changes like the recent thrust on digital payments will also go a long way in accelerating the uptake of online video services.

With the metros and mini metros already conquered, the industry is aiming for small town India next, all guns blazing. From competitive pricing to ingenious features, OTT players are lining up every trick in the book to capture this segment and have already begun to observe a marked increase in regional consumption. While digital entertainment still is, for all intents and purposes, largely an urban phenomenon, small town India has had its taste of digital disruption and with increasing affluence levels and improving infrastructure there, is unlikely to be left too far behind in this story.