Amazon Prime, Netflix will not impact cable TV biz: Edelweiss

Moneycontrol BureauConsumer spending on videos will increase but new Over the Top (OTT) providers such as Amazon Prime Video, Netflix, Voot, Hotstar and others will not impact the TV market, says a latest report by Edelweiss Capital. Cable TV and DTH operators will see negligible impact due to the low monthly cable rentals of Rs 300 to Rs 450 per month, the report predicts. India has seen the emergence of large number of OTT players such as Spuul, Sony Liv, TVF Play, ALT Digital (of Balaji Telefilms) besides the existing market dominator YouTube. Amazon Prime Video, which launched a few weeks ago, charges Indian users about Rs 499 per year which is much lower than rival Netflix’s Rs 500 per month. Also, existing subscribers of Amazon Prime can access video streaming at no extra cost. However, Amazon Prime Video lags Netflix in terms of original content, the report says. “With improved broadband speed, consumption of video is expected to increase from 3.5 hours per day to 5 hours per day, aided by higher OTT consumption. OTT is expected to complement traditional TV viewing,” says the Edelweiss report. Challenges AheadThe biggest challenge to OTT penetration in India is broadband speed. In India, average internet broadband speed is 3.5 mbps which is much less than required for lag free HD video streaming. However, OTT proponents think otherwise. “Globally, viewership is moving towards Video on Demand. With robust smartphone penetration in India and the launch of 4G, one can foresee a tectonic shift in consumption which will forever change the industry,” says Spuul India CEO Rajiv Vaidya. Consumers spending on video viewing is also expected to increase up to Rs 600-Rs 700 from current Rs 300-Rs 450 to access content from different platforms in next five years, predicts Edelweiss.“India is what US was 7 years ago and the country’s OTT market is at a nascent stage,” say Edelweiss report authors Rajiv Berlia and Abneesh Roy.Will TV consumption shift online?In Western markets, the phenomenon of cord shaving or cutting is prevalent. Cord shaving happens when consumers subtly trim their pricey cable packages into basic ones. Cord cutting happens when OTT companies completely poach TV subscribers. Edelweiss believes that the concerns on cord cutting is far stretched for India given that cable prices are still affordable and broadband prices are still steep. “In case of India, it is largely a single TV home market where not everyone in the family gets to watch what they want during prime time which will aid OTT space,” the report adds. In the US, broadcasters are afraid of cannibalisation of their pay TV rentals by the new online channels. Edelweiss observes that TV ad spends are growing, but ad spends in digital media are growing at faster rate than TV ad spends. It expects no impact in viewership and, therefore, no loss in TV ad revenues in India due to OTT players.