Introduction

Entertainment has been an integral part of human civilization for centuries. Time and time again
it’s subjected to various changes. Take an example of hunting, in the British era, hunting was
quite prevalent amongst British officers, regional kings among others. But today, due to variety
of reasons it is not publicly accepted practice.

Time has led to transformation of entertainment repeatedly, whereas most form of entertainment
usually originate from a previous one. Yet the core remains intact. Putting in simple terms,
entertainment is any task or activity which provides excitement and engagement.

The invention of television could be considered as one of the greatest disruptions in the way
entertainment was consumed earlier. In India, terrestrial television was introduced in the year
1959 with experimental telecast. By 1975, Doordarshan, then part of All India Radio, transmitted
one-hour programs twice a day. In the year 1982, National telecasts was introduced, and Color
TV was launched in India. Year 1991 brought variety of reforms and broadcasting industry was
liberalized. Fast forward to 2016, the television industry in India had over 857 channels watched
over in more than 167 million households.

With the arrival of OTT (over-the-top) media services 2016 witnessed arrival of another
revolution. OTT streaming could be defined as delivering of content over the internet directly to
the consumer. This marked a significant change into a modern on-demand age of choice from the
standard tune-in, “consume-what-you-are-fed” paradigm of traditional television.

In this report, we would be focusing on the emergence of OTT services and studying the
consumer behavior during the pandemic.

What is OTT media services?

OTT can be defined in many ways, one of the old school definitions is ‘All types of services- for
the users over the internet directly without any contribution of mediators like in case of old-style
or traditional modes.’. Typically, OTT is associated with video on demand, but it also refers to
audio streaming, messaging services or internet-based voice calling solutions.
Service providers of an OTT can be well-defined as a facility provider presenting ICT
(Information Communication Technology) services, but neither functions a system nor rents
system capacity from a system operator. Instead, OTT providers trust on the worldwide internet
and contact network speeds [ranging from 256 Kilobits for messaging-Megabits (0.5 to 3) for
video streaming] to spread the user, hence going “over-the-top” of a telecom service provider’s
(TSP’s)network.’- 2015 TRAI (Telecom Regulatory Authority of India). In other words, OTT
can be explained as the distribution of content via internet connections (fixed broadband/mobile)
instead of traditional ways of broadcast over TV spectrum or satellite networks. Primary
difference between traditional video and OTT is mode of distribution of content to the viewers.
In recent past, OTT platforms have bypassed third part networks. The consumer only requires an
active internet connection and a compatible hardware device to access the services.

 Mobile devices: OTT applications are downloaded on smartphones and tablets via
Google Play Store or Apple Store
 Personal computers: Laptops or computers are widely used to browse OTT websites or
desktop-based applications
 Smart TVs: Latest models come with pre-installed OTT applications and wireless
connectivity.
 Digital media players: Devices like Sony Play Station or Microsoft X Box also support a
range of OTT services.

Emergence of OTT Services

The streaming industry for over-the-top content (OTT) content consists of the transmission and
sale of video content over internet. The demand for OTT streaming is increasing substantially on
an ongoing basis and this is drawing interest from many major global players such as Apple,
Disney, Hulu, etc.

At a compound annual growth rate (CAGR) of 55.0 percent, the global OTT streaming market is
projected to grow from $104.11 billion in 2019 to $161.37 billion in 2020. The explosive growth
can be attributed to the lockdown caused by COVID 19 pandemic, which led to significant
increase in the OTT subscriptions and their viewership. The demand forecast is expected to
stabilize and hit $169.4 billion in 2023 at a CAGR of 14.0% from 2021 onwards.

As of 2019, North America OTT market is the largest in the world, but according to PwC, Global
Entertainment and Media Outlook report 2019, Asia Pacific countries are expected to overtake
OTT video market by the end of this year.

The increasing shift from tradition entertainment is expected to grow at rapid pace due to add on
benefits like on demand services and ease of access. The report also suggested a decline of 2.3%
per year of US Traditional TV market.

BIGFlix, introduced by Reliance Entertainment in 2008, was the first India-dependent OTT
website. Digivive launched the first OTT smartphone app in India in 2010, called nexGTv,
which offers access to both live TV and on-demand content. In the year 2013, nexGTV become
the first application to live stream Indian Premier League. In the same year, launch of Ditto TV
and Sony Liv caught the eyes of Indian audience.

Things got heated up with the launch of Hotstar in year 2015, the most subscribed to OTT
platform with more than 400 million application downloads and 100 million active users as of
2020. Introduction of American OTT giants, in 2016, Netflix and Amazon Prime changed the
Indian OTT landscape forever. Netflix has the longest average watch time of more than 120
minutes, which is six times average watch time of Hotstar, according to Morgan Stanley
Research. Netflix and Amazon Prime brought a library of unique and original content which
quickly become popular with Indian youngsters. The number of players in the India OTT market
increased by 3.5 times in the last 6 years and soon they realized the need to ante their game, to
stay competitive against the new players.
With a projected revenue of US$2,315 million in 2020, Indian OTT video segment is expected to
grow an annual growth rate of 16.8% to reach a revenue of US$ 5.041 million by 2025. It is safe
to suggest that OTT space is hyper competitive and is attracting players with unique value
propositions and different business models. According to BCG analysis, OTT players are making
huge investments in fresh content to deliver on their promises and core propositions.
Monetize with the right model

OTT has transformed the way videos have been consumed traditionally. Changing viewing
habits and giving more control to viewers to view what they want, when they want is
fundamentally shaking up pricing structure. Channel bundles or DTH packs are things of past.
Opting for finest monetization model depends upon the type of content one offer along with
targeted audience segment and business strategy.

Broadly, there are four main business avenues applied to OTT which are gaining significant
traction in global space: AVOD, SVOD, Freemium and TVOD.

 AVOD – Advertising Video on Demand

AVOD is one of the most common and popular revenue models in India. It works on the
principle that the inclusion of ads covers the costs involved with content creation and hosting.
For users who can log in and view content, this model is usually free, in exchange for viewing
advertisements. This paradigm of monetization produces lower income but has a large base of
fans.

AVOD services would be gaining more popularity in coming years, with rich exhaustive data
inherent to online channels, it provides massive opportunity for targeted and automated
advertisements.

Some of the prominent examples who use this model are YouTube, Yahoo Screen, AOL On,
Voot, MX-Player, TVF Play, etc.

Advantages: AVOD has inherent advantage due to its free nature, leading to low customer
acquisition costs. It also provided hassle free sign in process with one step sign up using google
or other social media accounts. Availability of vast consumer data helps advertisers to run
targeted advertisements. To increase revenue streams, this model can be clubbed with SVOD
which we will discuss later to provide a premium package for the consumers.

Disadvantages: Advertisements usually ruins overall customer experience. It can possibly bother
consumers, leading to increase in dropout rate of customers. To serve them well, platforms come
up with dynamic and multitudinous revenue model.
  TVOD - Transaction Video on Demand

TVOD is the next popular video on demand model. Core proposition of this model is that user
pay for what he gets i.e. user pays one-time fee to watch the content they want without any long-
term commitments.

In absence of any long-term commitments, TVOD finds it difficult to acquire and retain
customers. On of the ways of achieving above mentioned goal is by offering attractive prices on
select pieces of content to gain recall, while monetizing high demand content like live sports
events or new movie or web series releases. TVOD demands high marketing skills as small fees
can add up to considerable amount when targeted to the right audience.

Some of the examples who use this model are Google Play, Amazon Instant Go, VUDU,
CinemaNow and iTunes.

Advantages: The TVOD model's unique selling proposition is immediacy. Users can access new
movies and series by renting or buying them way before they are broadcasted on television. This
model provided value for money experience for consumers and better revenue opportunities for
popular on demand content.

Disadvantages: TVOD has fell short of other models in recent past, due to stiff competition good
quality content is widely available at a fraction of cost leading to low customer retention. One of
the biggest downsides is its inability to counter piracy. Consumers instead of paying for a movie
can simply download it from websites which offer it for free.

 SVOD – Subscription Video on Demand

The subscription word in this monetization model suggests that the consumer must subscribe to a
video service for specific duration and access variety of content available on the platform
anytime and anywhere during that period at a fee. This concept is the exact reverse of TVOD,
where the user gets access to specific pieces of content.

SVOD subscriptions can be monthly, quarterly or annually, and renews automatically until
cancelled by the user. “Easy in – easy out” is a key feature of SVOD, which offers freedom to
the user to leave whenever they want to.
SVOD pricing models: SVOD offers different pricing models which platforms can consider
according to their target consumers and content they offer.

1. Free Trial: This model provides a glimpse of variety and quantity of quality content on
offer to the potential users for a limited amount of time usually free of cost. The users if
satisfied can subscribe according to their wish.
2. Freemium: This model is apt to bring immense user traffic on the platform by offering
content free of charge with or without advertisements. However, if the user wishes to
watch premium content without advertisements, they must pay for it.
3. Varied Access: This model provides differentiated user access to the content according to
their subscription plan. For example: Netflix offers plans for 1 screen, 2 screens + HD or
4 screens + Ultra HD. In such a system, user can opt for a plan according to his needs.

Examples of SVOD are Netflix, Amazon Prime, HULU, Curiosity Stream, HBO Now to name a
few.

Advantages: SVOD model is considered best for Video on Demand and linear TV services as it
offers a steady recurring revenue stream and high customer retention. According to various
Industry experts, SVOD also offers higher revenue per user.

Disadvantages: One of the drawbacks of this model is that pricing tends to be inflexible. With
increasing costs of content production and small subscribers base, profits margins are shrinking
like never before.

 Hybrid Video on Demand

With soaring admiration of Video on Demand amongst diverse target segments, platforms are
coming up various bundles or hybrid models to monetize their content and capture bigger piece
of market share. Service providers like YouTube have come up with hybrid model of AVOD or
SVOD, giving users the option to select a model for themselves. User can opt to pay no
subscription fee but have to see advertisements or he can pay a premium fee for an add free
viewing experience. Hotstar on the other hand, offers a combination of AVOD and SVOD i.e.
Hotstar’s subscribers even after purchasing premium membership often view advertisements.
Advantages: Hybrid model has been gaining a lot of attention as data costs are gradually
reducing and content costs are soaring. AVOD service providers are creating an environment for
smooth transition of their audience to subscription model. They are taking this one step ahead by
offering tiered subscription model. The TVOD model's unique selling proposition is immediacy.
Consumers will access films and TV shows even further than their general release on a TV
broadcast by leasing or purchasing them. SVOD players are not very far behind, they have
changed the manner in which products were promoted or advertised. Keeping its core
proposition intact, Netflix has stepped up its advertisement game by placing sponsored products
within their content. Hybrid Video on Demand model is proving to be go to strategy for players
who want to target different market segments without losing their core proposition.

Disadvantages: Not exactly a disadvantage, but a weakness is customer retention. If users do not
feel incentivized with premium content offered, they can anytime switch to low value plan
making it difficult for the service provider to keep right balance between premium and low
valued content.

Key Differentiators of an OTT Platform

 Understanding Customer Behavior

 To understand different customer segments
 To provide a complete consumer experience - reduce churn rate & increase retention
 Make use of Analytics for personalization
 In India: Regional Content is in high demand
 Content
 For OTT Platforms “Content is King”
 Varied Content – Originals, Long/Short type, Catch-up TV etc.
 Different types of content developed and syndicated by OTT Platforms

 Distribution, Promotion & Marketing

 Select the right distribution mix
 To create awareness - For customer acquisition
 Setting the right price point
 To cater to various customer segments to create value-for-money sentiment
 Differentiated Plans – free trial for Netflix, VIP V/S Premium for Hotstar
 Will also depend upon the revenue model

 Technology
 Platforms that are not sharp in addressing consumer expectation on quality of technology
and interface struggle to scale up
 Significant investment in technology and marketing / branding to build critical mass

Key factors

OTT growth is at the cusp of inflection point in India. Several growth drivers are falling in place:

 Improving connectivity and fall in data prices

On the go consumption of content have been easy but introduction of Jio made it affordable for
the whole nation. Since the launch of data prices have decreased drastically and data
consumption has increased by ten folds, leading to creation of significant demand for digital
content by Indian consumer.

 Increased smartphone penetration

In India, smartphones penetration has been a key drive for OTT consumptions. In recent years,
smartphone have become an essential part of human civilization. Only in India there are more
than 450 million active smartphones. Deep penetration of smartphone in India market with
affordable data service is just the perfect combination for current government’s Digital India
campaign.

 Favorable demographics

Urban migration has been a common phenomenon in last decade. Due to this more and more
people become upwardly mobile. India is also witnessing major shift income distribution as
significant portion of low-income segment have been uplifted. Democratization of internet has
led to expansion of consumer segments from urban metros to rural India.
  Increase in supply of content
With the incoming of OTT giants like Netflix and Amazon, there is a shift of waves in the India
OTT market. Indian OTT players have been playing a long catch up game, but entry of these
players forced them to move beyond catch up and licensed content.

Benefits of OTT Platform

1. Connectivity: OTT platform are user friendly and require limited resources. Only active
internet connection along with mobile or computer are enough.
2. Cost Friendly: In comparison to conventional TV, OTT platforms are cost friendly. The
content one would get with a premium pricey bundle on TV cable is available on OTT at
minimum price.
3. Convenience: Whenever, anywhere and as much as you want, OTT channels allow you to
access your favorite media content.
OTT also provides freedom over geographic location, considering physical criteria for
cable TV depending on location. By only signing into your streaming service account, it
can be viewed from anywhere.
4. Variety content: One can access hundreds and thousands of movies and shows via the
Video on Demand applications. Often, news, sports, material for children and several
more are included. Users can watch and enjoy most content from other countries, thanks
to OTT.
5. Device: As mentioned earlier, OTT supports multiple digital devices, so one can enjoy
content irrespective of availability of specific gadgets.

Literature/Report Review

The OTT market has, in the last few years, witnessed phenomenal growth, bolstered by the
democratization of internet access to millions across rural areas. As per PricewaterhouseCoopers,
India’s OTT market is poised to grow at 21.8% CAGR, from US $628.8mn in 2018 to US
$1.68bn in 2023 (Thakraney, 2018). This will make India the eighth biggest market in the world,
overtaking South Korea.

As per a FICCI report, there are four factors that attract new players to India’s OTT market –
pipe, data, devices and habits (Fitzgerald, 2019). ‘Pipes’ is the development of digital
infrastructure that has witnessed a rapid rise in the past few years, fuelled by the government’s
Digital India initiative and private initiatives around providing free Wi-Fi (such as by Google).
More than 112,000 km of optical fiber had been laid out by end of 2018, which will further drive
digital consumption. ‘Data’ is reduction in costs due to price wars that started with the
introduction of Reliance Jio. Data costs have fell from Rs. 250 per GB in 2015 (for high-speed
internet) to Rs. 5-7 per GB in 2020. ‘Devices’ is the third component, where India has witnessed
a mobile phone penetration that is unmatched by developing world standards. Mobile screens
have emerged as an alternative screen for media consumption. The report further highlights that
urban consumers have been early adopters of OTT platforms, especially in the age group fifteen
to thirty-four. The final factor, ‘Habits’, is the increased reliance on watching content on-the-
move due to long commute hours and a greater exposure to a wide variety of content.

The rise in consumption of OTT services not only benefits consumers, but also gives marketers
with tons of new data points about what consumers are watching, liking and sharing. While
brands have been reluctant to tap into this new sphere for marketing, that trend has been
changing of late. Digital advertising growth is measured by the rise in the number of
impressions. An impression is logged whenever an ad is displayed to the user. This is different
from a click as the user does not have to interact with the ad in the former case. OTT advertising
impressions have grown by 182% in Q1 2020, as per Nielsen (Clapp, 2020). Previously (in Q1
2019), OTT devices and services accounted for 11.1% of the total number of digital impressions.
This has increased to 22.2% in the first quarter of this year (Clapp, 2020). OTT advertising
allows for precise targeting, gives access to measurement metrics and offers better ROI. OTT
platforms also attract younger and more affluent customers, who have a larger disposable
income, enabling advertisers to tailor content specifically for them. Digital ad spends has been
projected to grow rapidly, with the market forecasted to quadruple to Rs. 294.5 billion in 2021
from 76.9 billion in 2016 (growth of 30.8 percent annually). Presently, advertising on OTT is
meant to complement traditional forms of advertising.

Contrary to the US OTT market, the Indian OTT providers derive majority of their revenues
from advertising. This is true for freemium subscription model as well, as only a small
percentage of Monthly Active users (MAU) pay subscription fees. Ten of the top twelve
platforms in India are based either on freemium or AVOD (Fitzgerald, 2019). By the end of
2020, it is expected that subscription-based models will account for one-tenth of the total OTT
market revenue. Two years ago, this figure was a meagre 2-3 percent.

When it comes to transactions, a big divide is observed across Asia Pacific region and other
geographies. While PCs remain the dominant device for conducting transaction on the OTT
platforms in India and other Asia Pacific countries, Mobile is the preferred device for payment
related tasks in Middle East, Africa, Europe and North America (Euromonitor, 2020).

The willingness to pay for content varies across regions as well. There may be a correlation
between the prevalence of piracy and how willing users are in parting with their money for
subscription fees. An interesting case is observed in Malaysia. The amount of free content and
pirated content has led streaming platforms to move from a subscription-only service model to
either a dual model (freemium), or a completely ad-supported business model (Financial Times,
2019). Another factor at play is the uniqueness offered by a platform. Netflix, for example, has
more pricing power than its competitors. A Wall Street firm studied 2,500 Netflix users and
concluded that there is a rise in consumers of Netflix who are willing to pay more than they
presently do, from 47% in December 2019 to 55% in May 2020 (Variety, 2020). This trend is
more significant among consumers who heavily stream content. 60% of them are ready to pay a
higher subscription fee. The reason behind this rise can be attributed to how essential Netflix has
become as a source of entertainment in the Covid-19 era.

The option of viewing ads while watching content on streaming platforms for a reduced
subscription fee has also received broad acceptance among Indian customers. 1 in 3 users say
they would be willing to trade-off between ad viewing and lower fees. 25% want these services
to be free and change their revenue model to ad-only (Statesman, 2019). On the other end of the
spectrum, 14% are okay with paying a higher fee if the platform promises to never air an ad.
When asked about the advertising load (number of ads per break), 22% felt that two ads were
acceptable for a single break (Asia OTT Research, 2019).

According to an online survey which compared the cost of streaming across 13 countries, India
came out to be the least affordable country to subscribe to streaming services (Sebastian, 2020).
The average cost of a streaming service in India accounts for around 2.8% of the average
monthly income. In USA, this figure stands at 0.22 percent and none of the countries analysed in
the survey had the cost higher than 0.32 percent of the average income. Even from the
perspective of platform owners, developing countries like India and China do not offer a price
advantage. In US, the average revenue per user (ARPU) is $11/month for SVOD services,
whereas it is $3/month in China and $2/month in India (BCG, 2018). However, as more people
opt for subscription-based models rather than advertising-heavy models, companies will see their
profits rise.

China provides an interesting case study for the above trend. Within five years between 2014 to
2017, greater than 35 percent of industry’s revenues come from subscription fees. Many players
started out with AVOD services and later shifted to SVOD. To drive conversion, new and
original content exclusive to the platform was used as an incentive to convert free users to paid
ones. China also tried out a ‘watch-before’ model, wherein subscribers get to watch releases first
and later the content is available to free users for a short duration (BCG, 2018). As the platform
providers rely more on original content to entice viewers to pay, the average number of original
series produced by them increases rapidly. According to the Boston Consulting Group report,
China observed an increase from an average of 13 original series in 2012 to 143 series in 2016
for the top 3 players. A worrying trend is the simultaneous increase in cost per episode of
original programming.

The demographics of consumers is also witnessing a transformation. In 2016, 29 percent of OTT

consumers belonged to tier-1 cities. This is expected to go down to 23 percent by the end of
2020. The proportion of consumers who are males will drop drastically from 70 percent in 2016
to 60 percent by 2020 end. When it comes to the age divide, it is expected that the percentage of
consumers who are millennials (<34 years) will also decline from 74 percent to 67 percent in the
same period. The changing needs of the Indian consumer is evident from the greater
consumption driven mindset that has been witnessed recently. India’s top 20 lakh households
account for around 40 percent of the total consumption and hence OTT providers focus on this
bracket. 60 percent of urban consumers prioritize saving time over money, as per a consumer
trends study conducted by BCG in 2016.

Consumer satisfaction is higher for OTT platforms than traditional pay TV, with a recent
Digitalsmiths report stating that 92 percent of Netflix subscribers are satisfied with the service
against 76 percent of pay TV subscribers. 78 percent also mentioned that it is easy to find
something to watch on Netflix compared to 58 for linear pay TV (Baumgartner, 2016). To
combat this, many pay TV operators have invested into fancier, cloud-based interfaces and have
started providing recommendations to their users. The expectation is that they will follow
Netflix’s success with this approach, as personalized content drives 75 percent of Netflix views.

Consumer Behaviour and Usage Patterns

Many homes consider OTT platforms to complement traditional entertainment sources, and not
serve as a replacement (BroadbandTechReport, 2018). However, this may be changing. A recent
Indian survey stated that a higher percentage of users (55%) preferred to watch and consume
content through these platforms. On the other hand, only 41% of users still prefer DTH (ET
Brand Equity, 2019).

Smartphones are the primary devices used for consuming OTT content. However, with the
popularity of smart TVs, many viewers are expected to switch to the bigger screen. In 2014, only
5 million Indian households owned a smart television. By 2018, this was at 14 million,
showcasing a 180 percent growth rate in four years. This growth can also be partly explained by
the rise of disposable income. As per the CCI City Income Database 2016 (BCG, 2017), the
percentage of households who belong to the top consumption class, ‘Elite’, will grow by 2.4x
between 2016 and 2025 (There are five household income categories – Elite, Affluent, Aspirers,
Next Billion, and Strugglers). Elites are those who have a household income greater than
$30,800/annum. The threshold household income for Affluent category is $15,400/annum while
that for Aspirers category is $7,700/annum. Affluent is also expected to grow, albeit slower than
the Elite class, by 1.9x between the same period. The percentage of population belonging to the
Aspirers class is also increasing, from 15 percent of the population in 2016 to 20 percent in 2025.

The demand for OTT platforms is not consistent. Due to the ubiquitous nature of services such as
YouTube, the barrier to entry for a customer is very low due to the platform’s high popularity
and accessibility. On the other hand, Prime Video and newer, niche platforms do not have the
same user-base and hence, they have to roll out extensive trial periods and other offers to entice
new users. Moreover, YouTube also serves as a learning hub for Generation Z (Guijosa, 2018).
As per a survey conducted by Pearson, YouTube is the preferred medium for learning new topics
over in-person instruction. This difference is massive, as roughly 59% students said that they
prefer to use YouTube to learn, whereas the corresponding figure for in-person instruction was
only 39%. On an average, 47% of these 14 – 23-year olds spend greater than three hours daily on
the platform.

Another survey (Comscore, 2016) done on 2,940 respondents concluded that millennials tend to
be more tech-savvy and exhibit early-adopter tendencies. They also have a tendency to binge-
watch content. However, it is important to note that the survey also found out that presently,
millennials consume more traditional TV content than through OTT channels. When they were
asked to rate their preferred content provided, they chose OTT platforms. The professional
quality of content also does not impact watchability significantly, as the percentage of people
who watched videos made by other people against the percentage of people who watched videos
uploaded by brands, companies or professional does not differ greatly and is roughly equal. The
receptivity of this generation towards advertising is also higher. 62% of millennials said that they
take some action after viewing an ad (against an average of 51% for other age groups). Also,
47% mentioned that they pay more attention to ads when they realise that the ads are
personalised (against an average of 35% among other age groups). The high level of engagement
suggests that advertisers can create ads that resonate deeply with the consumers and offer high
conversion.

The notion of recommendations in the form of curated content being better for consumers is
contested in a few findings. A recent Atlantic article observed that Generation Z prefer unfiltered
over curated content. Privacy also is an important issue among this younger segment as they are
more concerned about the future of privacy (Baron, 2019). A reason cited by the article for the
increased popularity of video-based platforms among this segment points to the versatility
offered by OTT platforms. Another newer trend that is grabbing the eyeballs of younger kids is
the ability to watch live content. This live content is not in the form of traditional reality shows
that is broadcast on pay TV, but it is in the form of streams and vlogs that are televised live on
YouTube, Twitch etc.

The ability to connect to the content creators is also a plus for OTT platforms, especially multi-
sided platforms. Watching videos on YouTube and Twitch also allows viewers to comment and
ask creators questions. On many occasions, these creators also hold a Q&A session for the
watchers. The feature of watching content simultaneously with other viewers from across the
globe is a major reason why OTT services are replacing traditional social media platforms that
are text-heavy (such as Facebook).

The contrasting nature of preferences is also evident in another study that concludes that the
availability of de-stressing videos (like ASMR, ambience sounds etc.) has helped the younger
generation cope with depression, insomnia and other mental issues (Poerio, 2016). This
advantage is often overlooked in many studies that aim to understand the popularity explosion of
OTT platforms among the younger generations. The same paper also mentions that self-help and
de-stressing videos serve as a way to promote well-being. There is growing scientific evidence
that points toward the positive effects of such content, with close to 80 percent reporting a
positive effect in a controlled experiment.

While many papers conclude that the rise of OTT will end the dominance of pay TV and
watching movies in theatres, actual figures do not show a clear trend. There hasn’t been a clear
decrease in the demand of cinema screenings. PVR’s operating revenue grew to 3,118 cr in
FY19. The footfall has also witnessed a rising trend in pre-Covid times, with growth rate
reaching as high as 25% within an year. Coupled with the fact that India has very few big screens
(less than 10,000 screens in India compared to over 60,000 screens in China), with only 8
screens per million people (Quartz, 2019). This shows that there is too much demand chasing too
little supply.

While many reasons can account for the increased footfall in theatres, one primary reason is the
better quality offered by cinema halls. As the infrastructure improves even in Tier-2/3 cities,
viewers visit theatres more frequently to get an immersive experience that is not possible on their
mobile screens. Another factor is the freshness of content. Most of the new movie releases
happen on OTT platforms after a delay of 6-8 weeks from their release in movie theatres. Hence,
if one wants to watch a brand-new film, movie theatres have no substitute (Quartz, 2019).

It can therefore be concluded that digital consumption in India is additive and has not
cannibalized on traditional media consumption. Data between 2016 and 2017 show that overall
media consumption has grown for all segments, indicating that consumers are spending more
time on entertainment and OTT is filling a void left untapped by the conventional players (BCG,
2018). This behaviour does not mirror developed markets, as OTT media has become a
replacement for traditional cable TV in US and European countries. In developed markets, cost
of pay TV is the primary reason behind cord-cutting behaviour. A L.E.K survey observed that
only 10 percent of these ‘cord-cutters’ would consider re-subscribing to traditional TV again.
Nielsen also estimated that cable TV subscription is at its lowest level since 2000s, with less than
80 percent of US households subscribing to pay TV (L.E.K, 2018).

Primary Research

We observed two broad gaps that haven’t been covered in papers published on the evolution of
OTT providers in India. Firstly, we felt that there needs to be more research surrounding the
factors that have led to rise in OTT adoption at an individual level. While numerous studies
cover the demographic trends in the past decade and how consumer behaviour pattern have
shifted, there is a lack of research digging deeper into what makes a person switch from
traditional television to OTT. Secondly, we also observed a dearth of quality surveys that
estimate the behavioural change that the current Covid-19 pandemic has caused across millions
of households.

Research Methodology

We conducted two different surveys for the two problem statements mentioned above. To ensure
that the respondents are fairly representative of consumers of OTT services, we reached out to a
broad base of individuals and households in both urban and rural areas. We also ensured minimal
overlap between the respondents of the two surveys to get a broader sample and also to eliminate
primacy effect and fatigue due to filling of time-consuming questionnaires.

Questionnaire Format

Survey I: Analysing why consumers shift from television to OTT

A sample survey is presented in Exhibit I. The survey begins with asking respondents on their
TV viewing habits and also gives a set of options where they have to fill their level of agreement
or disagreement with the statements mentioned.
The survey then asks whether the respondent has used any of the OTT services. If he/she respond
‘Yes’, the survey branches on to another set of questions that try to understand which OTT
platforms/services does the respondent use and their feelings around the same set of statements
that were asked previously in the survey. If the response is ‘No’, the respondent is asked to select
reasons for their non-usage. After this, a set of questions are asked to know more about the age,
gender, demography, and family background of the respondent. This is done so as to ascertain
whether a correlation exists between demographic attributes and behavioural patterns.

Findings

We received responses from 152 respondents selected from a representative sample of urban and
rural consumers.

Question: How many hours do you spend on Cable/ DTH TV per day?

Close to two-thirds of the sample said that they spend less than one hour daily, on an average,
watching traditional television. Heavy binge-watchers (those who watch more than 4 hours of
TV daily) are rare on cable TV, making up less than 4 percent of the population.

Question: How many hours do you spend on OTT platform per day?
On the other hand, binge-watching is very popular with the consumers of OTT platforms. We
observe that roughly 16 percent of respondents who watch content on OTT do so for more than 4
hours per day.

Question: Have you ever used any OTT services? (YouTube, Hotstar, Netflix, Amazon Prime,
Spotify, Jio Tv etc.)

Only 7 percent of our sample said that they have never ever used an OTT platform. This goes on
to prove that entry barriers to OTT is very low, irrespective of the demographic divide.

Question: What content you watch on Cable/ DTH TV? (You can choose multiple options)
Question: What content you watch on OTT? (You can choose multiple options)

We observe that one-fourth of TV viewers watch news, followed by movies (22 percent) and
sports (15 percent). Interestingly, the most popular form of entertainment among OTT viewers is
movies (21 percent), followed closely by web series (20 percent) and music (11 percent).
Another thing to note is the huge diversity observed in consumption of content on OTT
platforms. While only 4 percent of the sample watched documentaries on TV, 8 percent of them
watched it on OTT. The proportion of consumers using OTT for watching news is also
significantly fewer (8 percent for OTT against 24 percent for TV).

Question: Please rate on how each of the following statements associate with Cable/DTH TV
In the above graph, we can see that the primary purpose of TV viewing is family entertainment.
69% of respondents say that they watch TV to enjoy with family and friends. Around two-thirds
either disagree or are neutral about the convenience offered by traditional television. Only 30%
agree to the statement that television allows for private viewing. The proportion of respondents
do not feel heavily constrained by the choice of content available on TV, as 44 percent state that
they have many options to choose from while watching conventional TV.
In the above figure, we see the ratings given by respondents to each of the statements. A rating of
1 is ‘strongly disagree’, 3 is ‘neutral’ and a rating of 5 is ‘strongly agree’.

The bar graph that respondents associate TV most strongly with the communal aspect of
television viewing – the ability to watch and experience content with friends and family. On the
flip side, they also feel that the nature of television viewing does not allow for personal watching
and convenience.

Question: Please rate on how each of the following statements associate with OTT platforms

89% of respondents moderately or strongly agree that the quality and variety of content
available on OTT platforms is high, illustrating that this is one of the primary reasons why
consumers are adopting such platforms rapidly. 80% feel that OTT platforms give a feeling of
control, as opposed to only 28% feeling the same for conventional TV. When it comes to cost
effectiveness, we observe that 23% do not agree that OTT platforms are cost-effective. This is
not significantly different from the 17% of sample that feels the same about TV. This goes on to
show that OTT platforms, at least in their current state, should not be concerned about pricing as
one of the key factors influencing consumer’s decision. 85% also feel that viewing on OTT
platforms is convenient when compared to only 32% reporting the same for TV. Similar trend is
also seen when it comes to privacy offered by OTT platforms.

However, only 45% (against 69% for TV) agree that these platforms can be used for watching
with family and friends.

As can be seen here, the statement that elicited the strongest response is that OTT ‘provides high
quality and variety of content’, with almost everyone agreeing strongly to this. The downsides of
OTT is that entertainment becomes more personal and cannot be enjoyed with family members.
Another noteworthy observation is that consumers do not find OTT more expensive than
traditional cable TV. The graph shows that the respondents rated ‘cost-effective’ with a mean
score of 3.43 in the case of OTT, whereas the corresponding mean score for TV is 3.38. This
statistically insignificant difference does not conclude that OTT platforms face a cost-barrier to
adoption by the masses.

Question: How did you come to know about OTT platforms? (You can choose multiple options)
Word-of-mouth seems to be the dominant way of adoption of OTT services, as around 30%
agreed that they started using a particular service because their friends recommended it to them.
Advertising has also started to play a key role (28%), followed by bundled offerings (17%)
wherein telecom operators bundle either their own OTT platform or third-party platforms with
phone/broadband subscription plans.

Question: What device do you use to watch OTT? (You can choose multiple options)

Mobile is the most commonly used devices to access these platforms, and TV is the least
popular. This can be attributed to the low adoption of smart TVs in Indian households presently.
However, this can be expected to change as smart TVs become less expensive and consumption
expenditure of households increase.
Question: Which OTT platform you often watch? (You can choose multiple options)

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We received 482 total selections from 152 respondents for this question. YouTube is widely the
most watched platform, with 130 out of 152 respondents stating that they have accessed it.
Amazon Prime, Netflix and Hotstar have similar number of people watching their content. The
niche and local players, such as Eros Now, ALT Balaji can be seen to be struggling to attract
viewers. The entire market behaves like an oligopoly of major international players vying for the
consumers attention. One reason why domestic players are unsuccessful may have to do with the
variety of available content. As we saw in the previous graphs, consumers adopt OTT platforms
primarily because of the diversity that these platforms offer and lack of international content on
these local platforms could have driven users off from subscribing to them.

Question: Why don’t you spend more time watching OTT content? (You can choose multiple
options)
This question was asked to those respondents who said that they do not watch content on any of
the OTT platforms and stick to traditional print and TV media. Only 5 percent of respondents
selected this option. Hence, the results obtained in this graph is inconclusive due to the low
number of respondents. However, broadly, we can see that adoption is hindered not because the
technology is confusing, but because watching entertainment content on OTT is not a part of
regular schedule for these people.

Demographics

58 percent of our respondents are male, and 42 percent are female. The age group 22-32 is
represented the most in our sample, with approx. 47 percent of respondents. 15 percent of the
152 responses also came from those who are >45 years old.

Question: What is your age group?

Question: What is your highest education qualification?

Question: What is your current occupation?

Question: In which City category do you reside presently?

Majority of our survey’s respondents are from Tier-2 cities (49%). Tier-3 cities and rural areas
accounted for 13% and 4% of the total number of respondents respectively. When it comes to
family income, 53% of the respondents have a total household income greater than 8 lakhs per
annum, indicating a high disposable income to spend on entertainment and other needs. This is
consistent with the earlier findings which stated that respondents rate OTT platforms as high as
cable TV on cost-effectiveness.

Question: What is your annual income (Rs)?

Question: What is your family income (Rs)?