Zenesys Consulting certification

Assignment 1
Group 13
Market Trend Analysis for
Indian Video On demand market

Index
1. Industry Overview and current trends
a. Key levers for Video on demand Industry
2. Drivers of Change in the Indian VoD industry
3. Consumer Trend Analysis
4. On Demand Content: Music and Video Streaming
a. Music streaming
b. Video streaming
5. Video On Demand Practices
6. Solutions and the way ahead
a. Categorization of video on demand service:
b. Key developments
7. Key challenges

Industry Overview and Current trends

Video on demand (VoD) is the most popular medium for Internet protocol television.
It is an emerging technology, the fees associated with VoD are still high and may not be accessible to
people with slower connections. VoD evolves as the technology evolves which is at a slower rate as
compared to abroad. Video on Demand is fragmented in India, targeted more toward middle class and
upper-middle class consumers, which is not the case in other countries. However, as the on demand
process is streamlined, video on demand will become more accessible to the general public in India.
Currently digital online video consumption limited only by internet speeds. An increase in the internet
speed is bound to increase the video traffic. As per report released by Vuclip, the mobile phone has
emerged as a strong alternative to traditional entertainment media like television, the most popular
genres is movies and music, though in non-metro areas, the popularity of TV shows and lifestyle
entertainment videos spikes.
Key levers for Video on demand Industry
Product

Operations
Customer

Device
Service
Quality
Monetization
Content access
Segmentation
Usage

Laptop/PC
Download
Bit Rate
Subscription
Create
Geographical
Location

Smartphone
Streaming
Availability
Transactional
Buy rights
Age
Frequency

Tablet
Broadcast
User interface
Advert supported
Partnership
Income
Duration

Drivers of Change in the Indian VoD industry

With favorable demographics (more than half a billion people are under the age of 25) and a rise in
disposable incomes, the propensity to spend on leisure and entertainment in India is growing faster than
the economy itself. The key drivers which are affecting change in the Indian VoD market are:
Convenience and immediate accessibilty
With increasing number of service providers and tariffs lower than ever in 2014, the traditional
Indian media business models had attained maturity. Consumers, backed by purchasing power,
started moving towards digital experiences, embracing new distribution platforms and expanding
revenue model.
To start watching, the viewer has to make a few clicks on the device-of-access , tapping into
thousands of hours of content stored by the service provider. The user can browse the electronic
video libraries consisting of a vast array of content and make their choice of what they want to
access. The user is given the power to decide the level of satisfaction from the service.
Service providers also benefit by providing the convenience to end-users. Average revenue per user
(ARPU) increases as user stickiness improves while customer churn reduces for the services.
Increased usage of supporting devices
In India, the number of smart phones grew 54 percent during 2014, reaching 140 million in number;
and Cisco system estimates it to grow 4.7-fold between 2014 and 2019, reaching 651 million in
number. There will be 895.6 Mn (67 percent of Indias population) mobile users by 2019, up from
590.3 million in 2014, a CAGR of 8.7 percent.

A larger proportion of mobile phone users will have access to the internet over their smartphones
and will be likely to have access to on-demand content.
Increased internet penetration
In India, smart phone mobile data traffic will grow 20.8-fold from 2014 to 2019, a compound annual
growth rate of 83 percent. And, smart phones will account for 76 percent of total mobile data
traffic by 2019, compared to 48 percent at the end of 2014.
While, tablet mobile data traffic will grow 75.4-fold from 2014 to 2019, a compound annual growth
rate of 137 percent. It will account for 12 percent of total mobile data traffic by 2019.
Increased number of service providers
Despite low levels of broadband penetration, India has experienced a burst of entrepreneurial
activity in over-the-top (OTT) video streaming sector over the past few years, with homegrown
services delivering live and on-demand content on mobiles and PCs.
DTH Service Providers like Tata Sky, Dish TV and Videocon DTH offer on-demand movies as
well as Catch Up TV service.
Media companies like Star, Eros and Reliance Entertainment have begun offering OTT video
on demand portals like Hotstar, Eros Now and BigFlix in many Indian languages.
Independent mainstream VoD companies like Spuul and Muvi let users stream on demand
videos on the go through multiple platforms.
Supporting technology
Operators will have to overcome the challenges associated with delivering mobile content such as
those of high transfer rates over longer distances and efficient bandwidth so their consumers can
seamlessly watch any content at any time. For delivering the content to all types of devices, it will
have to be converted to fit different screen sizes, bandwidth constraints, media/codec processing,
and protocol capabilities, which involves several intricate steps.
The needed Media Adaptation can be done through strategies for smart encoding, real-time
transcoding, and dynamic bit-rate adaptation available today through VAS providers. VAS providers
can provide these essential elements for scalable software-based deployments to help operators
deliver a high-quality customer experience at a reasonable cost.

Consumer Trend Analysis

Online video
viewers(millions)

India is the third largest internet user country and is growing at a tremendous rate of 12.01% yoy growth
rate. Total internet users crossed 267 million as on December 2014. Mobile Internet users are the most
dominant segment among the users. Rural areas portion comprises of 35% of the total Internet
penetration in the country.
Demographic segmentation of the basis of
Number of online viewers in India
Age and sex shows that around 75% of the
users are below the age of 35 and out of
by age and gender (in Millions)
which we have 37% approx. are female
14.2
13.8
20
8.5
8.4
5.6 3.8
3.1 2.1
users. Out of the total users 45% of the
0
users are from the top 4 metro cities.
15-24

25-34

35-44

Age
Male

Female

45+

On Demand Content: Music and Video Streaming

Music Streaming
Growth Model
In India, music is considered as one of the easiest and most accessible form of entertainment. Study
from Delliote states that in large metros, a listerner spends 1000 minutes every week on average music
listening. With the advent of multimedia capable devices and improved bandwidth(3G, 4G), number of
online music listeners were 27 million in 2015 which are expected to increase to 273 million in 2020.
Most of the growth would be driven by youth in the age group of 18-35 years and almost 85% of these
users would access the music on demand.
Revenue Model
Digital music industry ad revenue are expected to mirror the growth rated to be seen by total digital ad
revenues in india and is expected to grow from 55% to 72% in 2017. The growth of digital music industry
revenues including streaming, downloads and other formats revenues and subscription and ad revenues
are expected to cross Rs 310 billion.

Video Streaming
Growth Model
The faster growing internet penetration and access to multimedia devices, more and more time is being
spent on consuming digital videos. The traditional form of TV viewership is giving way to the new
segment of consumers who are choosing to consume multimedia content on-demand. About 65% of
indians shared their videos through mobile as compared to 53% globally during 2013. With that high
usuage of internet, video traffic in india is ecpected to grow to be 72% of all Indian Internet traffic in
2018 up from 45% in 2013. This traffic will include Youtube and VoD like Netflix, Ditto or Tatasky.
Revenue Model
Digital video subscription market is estimated to be around Rs 35-40 billion by 2020 at a monthy ARPU
of Rs 60 with ~ 10% paid penetration among online video users. Further, online videos services would
garner around 5-7% of the overall digital ad spend by 2020.
Digital On Demand Monitisation Model

Video On Demand Practices

VoD practices can be broadly classified into following categories:
Practice
Video Streaming
over Internet
VoD over coaxial cable

VoD by DTH
players as Value
added service

What it offers
Both free content & paid content
available. Paid content comes in the form
of monthly subscriptions.
Videos, movies, tv shows and other VoD
services are offered over co-axial cable TV
infrastructure. No internet required. No
buffering hence superior quality
Monthly subscription & video content is
streamed over internet though special
VOD set top box.

Features
Monthly subscription Picture
quality & experience dependent on
quality of internet service.
Over 5000 hours of video content is
available for user through monthly
subscription packages.
Add on service to the existing plan.
Generally, left to user discretion to
either subscribe it or not

Solutions and the way ahead

Currently, VoD service can be available instantaneously or one can download the content for future
viewing. Download:
1. Download VOD services are practical to homes with cable modems or DSL connections.
2. Instantaneous: Streaming video servers can serve a wider community via a WAN, Here,
responsiveness may be reduced due to less connection speeds.

Categorization of video on demand service:

1. Subscription Video on Demand (SVOD): Viewers or consumers are charged a monthly fee that
allows them to have access to the digital content of their choice. In India, we only have SVOD
services offered by players like Airtel, TataSky, Qwik Entertainment etc.
2. Transactional Video on Demand (TVOD): Viewers or Consumers pay for individual video on
demand program. Its pay per view. DTH
3. Advert-supported video on demand (AVOD): Viewers are allowed to watch content for free;
however they must watch advertisements at various points throughout the film. A portion of
the ad revenue is then returned to the content provider. E.g. YouTube

Key Developments
1.
2.
3.
4.

Most of DTH players in the on demand and small screen video space.
Movie studios, television networks, and smaller production houses entered.
Drop in internet surfing charges has reduced so people are using this service.
Popularity of YouTube as a platform. Channels like TVF, AIB, The Viral Fever etc.

Service Providers:
Service
TataSky
ErosNow

Provider
Tata Sons & Stars
India
Eros International

Features
Value added service to DTH
subscribers.
Offers music, movies and
catchup TV.

Qwik

Valuable group

DittoTV

Ogle

Zee
Entertainment
enterprises ltd.
Ogle

No internet required. Movies,

catchup TV, documentaries and
educational videos.
Edutainment videos like cookery
videos, start videos in languages
like Hindi, English & Regional.
TV shows, Movie, Events

BigFlix

Times Group

Indias first VOD service. For

watching movies online.

Payment
Monthly
subscription.
AVOD. Paid
plan also
available.
Monthly
subscription

Devices
Television sets

Monthly/ye
arly

Mobile Apps

Daily/Month
ly/Annually
Subscription
basis.

TV/Laptop/Mobile

PC/Mobile/Tablet

PC/Mobile/Tablet

PC/Mobile/tablet

Key Challenges faced by video on demand industry:

1. Connection speeds: India ranks 52nd in terms of internet connection speed. Adoption of 3G/4G
technologies is expected to increase the connection speed in India.
2. Tendency to use pirated digital content: Easy availability of pirated digital videos is major
concern for Video on demand industry. Product offerings and ease of access can create positive
ecosystem for the industry.
3. Cost of ownership: Bandwidth cost to the consumer for video and media consumption over
broadband is extremely high. As most broadband plans in India are data usage based, this serves
as a hindrance for video consumption on broadband. Also these online video on demand service
providers charge periodic membership which is an additional cost.
4. Skewed towards younger age group: 75% internet users in India are under the age of 35. Also
about two-thirds of the YouTube viewers in India are below the age of 35 years. Therefore
elderly age group which is not so tech savvy is yet to enjoy the convenience video on demand
offers.
5. Limited Reach: Internet penetration in India is merely 20%. Surely video on demand as a service
has a long way to go before it serves 80% untapped population in India.