Do you watch TV anymore? – An Emperical study of India’s Content Consumption

 

Why would Media companies display their content on free online video streaming platforms like Youtube, Hotstar, or Voot? 

Have you ever noticed in the recent times, people have their eyes glued to their phones, watching movies, streaming a cricket match, video chatting while traveling? I had one such experience where I noticed this guy sitting next to me with his head buried in his phone. He was watching an IPL match on Hotstar using Jio 4G services. This triggered a long-term thought process that resulted in the following article.

So to follow up on my experiential learning, I went on YouTube: the most famous website for streaming videos online. I found out to my surprise that among the top ten most viewed video channels, major Media companies, which were famous for their debut through Television, were present. This raises the obvious question: Why Media companies come to free online video streaming platforms?

Statistics of various channels on YouTube

The above example is one of the many ways Indian companies and the audience is reacting to the dynamic changes in the Media and Entertainment Industry. Moreover, inquisitively an array of questions follow up after the launch of Jio sim cards. The OTT industry has been on their toes to quickly grab the first mover advantage and grab maximum mindshare and market share in India.

The following article draws inferences from broadly two kinds of data; primary and secondary.

The primary data is collected as a part of our collaborative Live Project by our student researchers!

Data collected is weighed against one and another and compared to gain a holistic view of the industry.

One portion of the article is dedicated to comparing the various available Online Platforms for video streaming and analysis of each of their revenue models, content and positioning amongst the Indian population.

In this article, we attempt to foresee the impact of these dynamic changes that the industry has undergone and is undergoing on various individual segments such as original content providers, theaters,  TV service providers and cable connections amongst many others.

 The Primary Data

The Primary data consists of data that was collected from 654 individuals who are random people spread across India. There are 6540 data values both quantitative and qualitative out of which 212 blank spaces reside resulting in a 3.24% error in the primary data.

The primary data poses the following questions to the surveyed: –

  • Mostly on which day you go to watch movies or drama?
  • Which movies do you prefer watching in the theaters?
  • Do you think movie tickets have become expensive?
  • How much do you spend on an average on food per person?
  • Is your selection of Movie Theater based on price sensitivity?
  • What’s your age?
  • Do you prefer online platforms to watch movies?
  • Which online platform do you prefer for movies?
  • Which other content do you watch on these platforms?
  • According to you which one of these platforms is value for the money?

 Inferences about nature of the survey crowd:

The crowd seems to be slightly skewed when one considers certain parameters such as language preference, age etc. Before getting into the inferences on the data regarding the crowd, here are a few statistics that will help understand the survey crowd to a better extent.

  • 71% prefer to watch movies on weekends.
  • 52% prefer Hindi movies in theaters, followed by 40% who prefer English and the rest of them prefer Regional movies.
  • 83% of the people think that the ticket prices of movies in theaters have become expensive.
  • 62% of the people select a Movie Theater based on price sensitivity.
  • 58% of the people are between ages of 16 and 21; both included, and around 76% of the surveyed are between the ages of 16 and 26; both included. A very small percentage of 1% lie below the age of 16.
  • 67% of the people prefer online platform to watch movies and other content that is available.
  • The preferred and perceived priceworthy online platform amongst the listed are shown in the graphs below.

Understanding how the perception of ticket prices and theater price sensitivity affects the expenditure on Food in theaters

With theaters having very high prices on concession items, the further burdening of ticket price hikes have seen an inverse correlation with the food expenditure in theaters.

The primary data shows that people spend highest on Fridays and least on Mondays.

The age group of 16-22 spends the most on food and people above the age of 40 spend the least.

On average people spend a little over 200 on food per person in theaters.

People who think that prices have spiked up and who choose the theaters based on price sensitivity spend on an average of approximately over 29.34% lesser than those who don’t. Though only around 30% of the revenue is being earned through concessions compared to a 70% through ticket prices, with heavy competition from the online media sector.

English movies trump Hindi ones on Wednesdays and Thursdays.

71% of the surveyed prefer to watch movies on Weekends compared to weekdays. A close observation amongst the weekdays shows us that the Hindi to English ratio drops below 1 to as low as 0.33 on Thursday, and equals 1 on Wednesday. This implies that lesser people prefer to watch Hindi movies in theaters on Wednesdays and Thursdays than English movies in theaters. Though there are customers for the screened Hindi movies in theaters on Wednesdays and Thursdays, an equal or higher percentage of English movie customer base lies probably untapped.

Theaters vs Online Platforms

 With 83% of the surveyed observing that ticket prices have increased, it is observed that 66.8% of them are choosing movie theaters based on the price sensitivity and 68.5% of them prefer online platforms. Amongst the 62% of people who select movies based on price sensitivity, 71% prefer online platforms. It is clearly visible that people are moving to more comfortable and cheaper options to watch movies and other content and the online platform offers them both and more through other content sections. The figures are not absolute and a lot of overlap does lie, thus resulting in the co-existence of theaters and online platforms but the data shows a higher encroachment of online platforms into the theaters’ customer base.

 

Untapped Regional Content Market

Amongst people who watch Regional content, only 48.2% prefer online platform, whereas around 73% of English content watchers and 65% of Hindi content watchers prefer online platforms. Higher levels of English and Hindi content is available relative to Regional content on online platforms. The regional market’s potential isn’t being realized.

Age Factor to the preferences of Online Platforms

Netflix sees a higher percentage of preference amongst millennials than other age groups and over 76% of the surveyed crowd belong to this group.

The age has a big role to play in the choice of an online platform since the preferred content varies from one age group to another. Online platforms are more preferred by millennials than older age groups.

Comparison of the Players in the OTT Video Streaming Market

Reach of Online Platforms amongst Non-Online Platform users

Amongst the 33% of the people who don’t prefer online platform for watching movies or other content, 57% entered their preferred online platform as Hotstar. This essentially shows the Hotstar has the highest reach of the platform even amongst the people who don’t prefer online platforms. Possible answers could be through watching advertisements, word of mouth and other ways for these people to have perceived Hotstar as a good online platform. Similarly, Netflix and Amazon Prime have a close measure of visible reach in the Indian market, followed by the rest. Ozee live has a very low reach amongst the compared online platforms.

Preferred vs Priceworthy

Hotstar and Netflix are relatively the most preferred and Priceworthy online platforms.

 A close observation into these two parameters shows us that 75% of the people who prefer Netflix also think that it is priceworthy, while 71.26% of the people who prefer Hotstar think that it is the most priceworthy platform.

 This shows us that Netflix customers are more satisfied with the service they are getting for the price they pay. When we look at this parameter of Sony LIV, we see that only 17.65% of the customers who prefer Sony LIV think that it is priceworthy, showing us that the customers perceive Sony LIV as a very pricey service.

  

Language-wise Positioning of various Online Platforms

Amongst the people who prefer English movies, 44% of them prefer Netflix making it the market leader amongst compared ones.

 Hotstar is right on its tail with 32.5% amongst the English preferences. For Hindi preferences, 55% prefer Hotstar.

Hotstar is very clearly positioned itself as an Indian based online platform.
While Netflix is expanding and slowly in this area of Regional and Niche content, Amazon prime who entered the market recently has almost caught up to Netflix.

Amongst the Regional movies, Voot has a preference of 17.3% right behind Netflix with 19%. Hotstar again leads Regional preferences as well with 44% of the surveyed

 

Inferences of Secondary Data on the Media and Entertainment Sector

Media and Entertainment Industry

The Media and Entertainment Industry will be witnessing a Compound Annual Growth Rate of 13.9% based on the FICCI-KPMG Report 2017. This shows really high growth and attractive fundamentals for the Media and Entertainment Industry.

The Indian economy is growing at a rate of 7.2% and the population of the country and the disposable income as well has been steadily increasing. Moreover, the median age of Indians is 27.6 which essentially means a huge market of millennials are waiting for the next best thing that the Media and Entertainment Industry can
offer for us.

Film Industry

The Indian Film Industry is seeing a consistent revenue growth. In regard to the number of multiplexes in India, Currently we have over 2000 multiplexes in India and the number of multiplexes is projected to grow at 8.9% compounded annually. India has only 6 Theatre screens per million population and thus has a highly underpenetrated market. Despite the claims and complaints about movie ticket prices in India, India has only a Rs.190 average admission price which is the lowest amongst major countries such as China, Brazil, Russia, US, UK, and Japan.

Ticket Price Surge

Ticket Prices in movie theaters have been increasing over the years and this has is due to different percentage changes in different cities and based on various local factors such as the cost of living, entertainment tax amount, government vs exhibitor regulations etc. For example in Tamil Nadu, the government regulates the price and TN saw a 25% hike in movie tickets on October 17, 2017. While the reasons are many and debatable, the underlying fact is that the movie tickets’ price and the number of multiplexes have increased. Compared to the world, India’s ticket prices are much on the lower end and it may look for the rise to not miss out on an obvious profit if the industry sees a strong growth rate.

Preference of  People to Visit Theaters against Online Platforms for Watching Movies

While  online platforms have been slowing down revenues of the theaters to a certain extent, the Theater vs Online Platform topic is synonymous with the Experience vs Convenience debate.  While the best, talented and passionate filmmakers vehemently oppose viewers from viewing their movies first on a phone, only a few of them stay on that course. For example, Christopher Nolan’s recent visit to India for headlining a Film Heritage Foundation event called ‘Reframing the Future of Film’ on 31st March and 1st April of 2018, brought to spotlight the importance of preservation of photochemical film in the digital age.

Theaters are not the major victims. The number of multiplexes is increasing steadily every year and there is considerable and fast innovation in the theater industry with the introduction of IMAX screens and more lively sound systems that truly elevate the experience of a theater above the convenience of online platforms.

The Compelling Digital Opportunity

With over 460 million internet users, India is the second largest online market, ranked only behind China. By 2021, there will be about 635.8 million internet users in India. Moreover, after the introduction of Jio, the base rates for internet usage has dropped from Rs.4000- Rs.20000 per GB to Rs.250 per GB. Currently, India on an average consumes over 120 crores GB/month. With availability of high speed 4G networks after the introduction of Jio into the Indian market coupled with 130 million+ (and growing) smartphones being sold in India at costs much lower than a few years ago, has provided the viewers with the option of accessing digital media content on the go, This has finally opened up the Digital Opportunities for many Industries and also the Media and Entertainment Industry.

 

  The existing TV’s value chain has an extra middleman thus reducing the speed to reach the end customer and also increases the cost thus increasing the price of the service.

Moreover, the IP ownership falls to the broadcaster. In a Digital value chain, the middleman is cut down and the consumer, as well as the content IP, are owned by the parent company.

Prospective Growth in the Regional Content on Online platforms

Currently, considering the expansion of OTT players, both domestic and international, in India over the past 3 years, Deloitte’s Technology, Media, Telecom (TMT) Predictions 2018 report foresees a further boom of original content on OTT, with a sharpened focus on regional content. The regional content market is a perceived to have a huge untapped market share. When we observe the exploding new content that is listed below this becomes clearer.

  • ALT Balaji (Balaji Telefilms):Has 11 original shows. Launched the first regional Tamil show “Maya Thirrai” in May, also releasing soon are shows in 5 other languages.
  • Voot (Viacom18):Has 7 original shows in Hindi and English. Active subscribers pegged at about 22 million spread across 1,500 cities, plans to offer content in Kannada, Marathi, and
  • SonyLiv (Sony Pictures Network):Runs a Marathi and Gujarati web series, plans to air regional short films soon.
  • Amazon Prime:Likely to invest around $300 million in the Indian market for acquiring rights of Bollywood films and also producing original content. It has a 5-year deal with Salman Khan Ventures, which gives it exclusive digital rights to stream films of the actor before their television premiere.
  • Netflix:Netflix has several originals, Hindi film actor Saif Ali Khan to appear in its upcoming original series “Sacred Games” based on author Vikram Chandra’s novel.

The report by Deloitte’s Technology, Media Telecom Predictions 2018 explains that the current focus would be on expanding and enriching the regional content to attract more customers. A statistic expectation reads that the vernacular users will be more than 2.5 times of English internet user base by 2021.

Advantages of Indian OTTs over Global OTTs

As we observed in the primary data, Netflix has been concentrating on pushing its global content such as House of Cards, Orange is the New Black, Master of None, Stranger Things, Narcos, Daredevil, etc., to the Indian market. Netflix has been making a huge improvement in its efforts to make regional content available for the Indian subscribers, players such as Hotstar and Voot are much ahead of Netflix mostly due to the higher access to Star India and Viacom 18 media libraries respectively. Thus, it is obvious that these players will leverage their advantage to capture the Indian market.

Though Netflix is making tremendous efforts to produce original regional content and establish tie-ups with production houses to do the same, it has done a good job with its millennial marketing. The youth of India has been quickly introduced to binge-watching and are clearly in favor of the Netflix original like Orange is the new Black series. This clearly sets them apart amongst the millennials and heavily influences the choice of an online platform amongst the millennials. This also supports the skew in the primary data towards Netflix due to a higher number of candidates being millennials.

While Indian channels play to their strength of regional content and push their content through their own channels and apps, global players such as Netflix and Amazon should focus of their own core strengths which are global content, while parallel innovating and collaborating with new production houses and producing original content for their own respective channels.

Content and Revenue Model: 

The Indian market, highly pricing sensitive by nature is clinging onto the free and ad-supported model on the platforms that offer it such as Hotstar. Hotstar hosts a variety of both global and local content giving access to gives access to TV Shows, Movies, Sports and News at a much lower price of Rs.199/- per month. Though Netflix does the same, Hotstar goes the extra edge to host content with mass appeal such as IPL, new Bollywood movies, thus, targeting niche audiences.

It targets a broad age range with Indian Soap operas to standup comedy groups such as AIB. Moreover, the Game of thrones broadcasting rights in early 2017 got them to a much better position in the market. Collaborations with Jio and Airtel, allowing their customers them broadcast IPL on Hotstar for free also boosts revenues heavily.

Hotstar in India with its hybrid revenue or ‘freemium’ model gets the best of both worlds as compared to Netflix’s strategy of an only subscription-based revenue model it or Voot’s only-advertisement based revenue model. Hotstar India gets their revenue via subscription and advertisements, with the majority of its revenue coming from advertisements. It monetizes it’s new and exclusive content alone. Meanwhile, Voot is also gaining traction recently through popular TV shows such as Big Boss, MTV Unplugged, Roadies, Splitsvilla, etc.

Netflix’s marketing strategies and its influence on the mindshare and market share of India.

At present, it is the fifth largest player in India, behind players such as Hotstar, Voot, Amazon, etc. is Netflix which has had significant growth in this market. However, it is still much behind the other major OTT players in India.

Netflix is the best at millennial marketing. This is essentially due to two main key features of Netflix that sets it truly apart from everyone else: –

Original Content: People are very impatient and Netflix acknowledges that people walk away very quickly if their expectations regarding content aren’t met. Thus, rather than focusing on other things such as major sponsors or right times to air, the company has invested in creating the best content specifically for its users to keep them hooked.

Encouragement of Personalization: Different users have different tastes and this is why the Netflix platform rather than trying to create cookie cutter content that applies to all viewers, personalizes and approaches each user differently. Ads based on previously viewed content to push customers to start binge-watching new TV shows promote the aspect of personalization in each account on the platform. This also helps in reducing multiple users using the same platform and causing a loss in prospective customers.

This aspect is a very important observation because, despite Netflix being only the fifth largest player in India, it was ranked second in the Primary data that was considered in the earlier phases of this report. As we saw that the millennials are the reason for this difference. The surveyed crowd are slightly skewed as 76% of the crowd are between the ages of 16 and 27 which lies well between the millennial crowd ranges that go up to 34. Hence this aspect of the primary data gave Netflix a higher perception in terms of preference and price worthiness when observed in terms of the Primary data alone.

Conclusion

The Secondary data is very much aligned with the Primary data’s inferences, apart from the age skewness of the Primary data. Overall, there are broadly three categories in the Media and Entertainment Sector; the Television industry, the Theater industry, and the OTT or app-based platforms. The OTTs didn’t play a big role in India until the recent availability of cheap smartphones and internet connectivity. This radical change has brought in three inferences

  • Producers of original content have nothing to worry about since for any platform content is key. Though some filmmakers do argue that their film should be seen in theaters and not on phones, their jobs or the jobs dependent on the film industry such as actors, makeup artists, cameramen etc., are not on the line.
  • The theater industry should focus on its core competence of offering an experience that no mobile or TV at home will be able to offer. This is being achieved with constant innovation such as IMAX 70 mm screens, better speaker systems, and 3D glasses etc.
  • All major TV service providers are jumping into the app world. They are using their expertise and original content in the Television sector and are slowly moving it to the online platforms. Those who have recognized the compelling digital opportunity earliest are at an advantage since in India there is clearly a first mover advantage in the OTT industry.

While the cable TV business has a high probability of extinction due to its relatively high prices and its low accessibility as compared to online platforms, the concept of a TV in every household will exist for quite some time to still cater to the older age groups. Being dynamic and ready to adapt to the next big innovation is a mandate in any field and that was the necessity after the introduction of Jio for Media and Entertainment Sector. The ones who were fastest to recognize this such as Eros, Sony, Star India etc., seemed to have survived through other platforms.

 

– Report by JaneshV  under the guidance of Mr. Ritesh Chavan 

Primary  Data obtained from a survey conducted pan- India as a part of The Money Roller’s Collaborative Live Projects



  • Lawang Sharma

    Intensive Report , and m very sure, there wouldn’t be any report of this sort across anywhere.Everything about Media and Entertainment sector under a roof along – with primary data analysis. wow!!!!! 🙂 🙂 🙂 🙂 Stats are always Excellent in all your reports!!!!!! 🙂