If you’re one of those Amazon Prime Video users who were puzzled by the Rs 199 fee required to watch Mani Ratnam’s blockbuster period drama Ponniyin Selvan 1 on October 28, you were not alone. It was part of Amazon Prime Video’s ‘Early Access’ movie rental feature, essentially a premium to be the first to catch it at home. Of course, this was only for a week. The movie is now available (from November 4) at no extra cost for Amazon Prime Video subscribers in India. It’s the latest in many moves that have seen OTT platforms explore new strategies even as they decode the complex market maze that is India.
YouTube Out(r)age
While the India market continues to be a puzzle for OTT majors, YouTube’s new pricing model abroad sparked outrage and memes. The company recently hiked subscription costs for YouTube Premium from $17.99/month to $22.99/month (effective November 21) in several countries - India is not one of them, yet.
The price hike is higher than the soaring inflation rates American consumers are battling across categories. And it’s not just YouTube Premium, earlier this year Netflix raised costs between $1-2 across tiers while Amazon Prime rates also shot up by $2/month. Other players like Disney+ and Hulu also joined the party. It’s a different case in India, though.
What we pay:
· Amazon Prime Video - Rs 1,499 / annual subscription / Amazon Prime Mobile edition – Rs 599/year
· Apple TV+: Rs 99/month
· Hotstar: Super – Rs 899/year / Premium - Rs 1,499/year
· Netflix: mobile only - Rs 149/month / Basic – Rs 199/month / Standard – Rs 499/month
· Sony LIV: Rs 999/year
Amazon Prime Video Mobile Edition
On November 7, Prime Video announced a new Mobile Edition at Rs 599/year. In an official statement received from Kelly Day, vice president, International, Prime Video, the company added that an initiative like Prime Video Mobile Edition, that had its genesis in India, is now being rolled out across multiple countries in Latin America and South-East Asia.
The company is also hoping to cash in on India’s tour to New Zealand that will come hot on the heels of the T20 Cricket World cup.
The ‘diet’ version of Prime Video will be available via Android or PrimeVideo.com and will allow access to Prime Video’s full catalogue of exclusive content on a mobile device of their choice. This service will not offer multi-user access, streaming across devices including Smart TV and the ability to enjoy content in HD/UHD in addition to having access to all Prime benefits (like free fast delivery on Amazon.in and ad-free music) that will continue to cost Rs 1,499/year.
The India numbers look promising but…
A recent report from RBSA Advisors projects India's video OTT market to touch $12.5 billion by 2030 from about $1.5 billion in 2021. 5G and overall connectivity, smartphone penetration will be among the drivers for this growth. The report is also bullish about the growth in the OTT landscape that will come from tier 2, 3 and 4 cities.
As per Deloitte’s Telecom, Media, Technology Predictions 2022, the OTT video streaming market is poised for take-off from its current share of 7-9 percent of India’s entertainment industry. The report suggest that the industry will grow at a CAGR of 20 percent to hit $13-15 billion over the next decade. The report adds that paid subscribers will zoom at a CAGR of 17 percent to hit 224 million by 2026 (from the current base of 102 million).
The RBSA report adds that the ARPU (average revenue per user) in India is currently around $7.2. That’s the number that has OTT platforms worried.
It's all about the ARPU
A Deloitte report estimated that OTT platforms spent approximately $665 million on content in 2021, in a bid to improve mainstream appeal for their platforms. But the low ARPU numbers in India continue to remain a challenge.
In 2021, Netflix dropped prices with a Rs 199/month entry-level package. Even as the company dropped prices, its CEO – Reed Hastings – admitted that Netflix was still figuring things out in the India market. While the move boosted subscribers, it is likely to further reduce the company’s ARPU in India. That’s one reason why the company opted not to launch its new streaming plan (Basic with Ads) in India. It launched this service in 12 markets this year. It marks a surprising departure from the company’s anti-ad stance. The launch price of $7 is still much higher than the base price Indian consumers pay. It’s the same with YouTube Premium that is available for Indian users for a free four-month trial (with certain conditions) before a monthly subscription fee of Rs 129/month (that is much lower than global markets) kicks in.
The road ahead
Globally OTT platforms have shifted focus away from subscriber bases to ARPU. It’s a more complex decision in India where OTT platforms are eyeing future market potential and yet have immediate profitability concerns to battle with. Ad supported models could help OTT platforms find this balance.
According to Omdia research, more than half of India’s 73 million subscriptions came from OTT bundling with Indian telcos, pay-TV operators in the mix. This could be one way to increase ARPU.
OTT platforms are also trying to figure means to reduce password sharing.
Most experts concur that India’s viewer numbers are much higher than subscription numbers since most users share user creds with friends and family. It all points to an interesting 0-24 months ahead. As consumers we might have more choices that include ad-supported models as well as complex subscription bundles as OTT platforms aim to improve their ARPU.
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