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Last Updated : Apr 05, 2019 09:08 PM IST | Source:

Will the new TRAI order actually prove beneficial for OTTs?

According to an EY 2019 report, OTT platforms are certain to benefit post the tariff order implementation due to an increased parity between television and OTT

Maryam Farooqui @farooqui_maryam
Representative image
Representative image

The new Telecom Regulatory Authority of India (TRAI) order on the Indian pay-TV ecosystem allows consumers to opt for channels they wish to view and pay only for them. However, few surveys revealed that people are finding the new order expensive as they are paying the same amount of money for lesser channels. And this is the reason why many think that over-the-top (OTT) platforms will benefit from the new pricing structure.

However, Hanish Bhatia, senior analyst, Counterpoint, thinks otherwise. Talking to Moneycontrol, he explained that primary users of OTT, the consumption has been driven on smartphones rather than on television. And on the other hand, cable TV is primarily for viewership with family. The penetration of smart TV in the overall TV market is very low. So, in case of OTTs, there will be marginal impact on the adoption of OTT because the smart TV penetration is low.

“However, because there is so much confusion, there may be some reshuffle. People might subscribe to more stuff online, but this will be very short term,” he added.

Concurring with Bhatia is N Chandramouli, CEO, TRA Research, who thinks that the pricing may stem the dip in cable subscriptions.

According to an EY 2019 report, OTT platforms are certain to benefit post-tariff order implementation due to an increased parity between television and OTT — in terms of content choice and cost.

Chandramouli believes that “the pricing of the new TV packs are very consumer friendly. However, it must be understood that the methods of video content consumption has changed and OTT has added on-the-go video. The consumer is willing to pay more for the convenience of OTT”.

However, Bhatia says, “Overall, among consumers, there is lack of information (regarding OTTs). People still don’t know how to subscribe or how to stream it on TV or even cast it using their smartphones. Awareness is key for Tier II and III cities. The millennial population is more aware of the new content consumption models but older generation don’t know how things work.”

And this is a big population for TV.

He added, “Only those users that are looking for multi-screens might think of switching to OTT and avoid all confusion regarding the new price structure.”

According to him, “In the long term, it (new pricing) will have a big impact because consumers will realise that they are paying more to watch the same content on TV and they might switch to OTT.”

However, he believes that there is “consumer resistance towards the consumption model rather than pricing. If there is more awareness, consumers might switch (to OTT). And this is not just India, this is a global trend. This is a cord-cutting trend.”

But will the switch to OTTs happen now due to confusion regarding the new price structure?

Bhatia explains that, “In case of consumers who subscribe through their cable operators, we can expect operators to pitch in and help, otherwise their revenues will be hampered. And they are majority of the section. If there are around 170 million cable subscriptions, then 100 are through cable TV and the remaining 70 million are through DTH.”

While industry players say people are consuming TV shows on digital platforms as users are yet to align to new channel packs resulting in higher viewership for OTTs, others believe that the nature of content will be the decisive factor. Some also say audience for the two platforms are different.

According to Chandramouli, “The order itself is not likely to benefit anyone, other than the consumer. If at all, OTTs will also be forced to rationalize costs.”

Another opinion is that one will supplement the other.

“It must be realised that convergence is the key and neither OTT, nor TV will survive on its own. We may soon see TV becoming a news medium and OTT becoming an entertainment medium. However, with more and more choices for the consumer, content, as the saying goes, will be king,” Chandramouli added.
First Published on Apr 5, 2019 09:02 pm
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