Online video consumption is a substantial market opportunity in India

28 January 2019 Consultancy.in

As the developed world moves towards the consumption of digital content, India continues to rely strongly on traditional media consumption avenues. According to a new BCG report, India’s digitalised population combined with this low level of digital penetration represents scope for substantial growth.

The introduction of low-cost data services such as Reliance Jio have driven online access in India up by a significant amount in recent years. A BCG report from 2017 predicted that India would have as many as 850 million online users by as early as 2025, which makes it one of the largest digital markets in the world.

However, access does not necessarily translate into consumption, which is evident from the fact that the digital media sector in the country currently operates far short of its potential. Based on the sheer size of India’s online market, analysts have predicted that India’s media and entertainment sector could reach a staggering value of $35 billion by as early as 2021.

Digital Video consumption in India

According to BCG, however, this potential is far from being realised, given that as many as 84% of Indian consumers continue to rely on traditional sources of media content rather than on online means of consumption. Some attribute this gap to a lack of knowhow amongst Indian users, particularly in rural areas. 

Reports have found that a number of Indians remain unaware of basic applications on the internet such as Google, Wikipedia and email, which contributes to the hesitation to use it for other means. Irrespective of the causes for this gap, however, BCG perceives this deficit as an opportunity of sorts.

The digital media sector, as well as the digital advertising sector, both have the potential to grow at a compounded annual growth rate of up to 13% over the next decade, which will take it to the online media consumption levels of Brazil and China, and bring it within the sphere of competition amongst developing countries.

Digital has been an additive to media consumption

Worldwide, digital media consumption is growing at a staggering rate, specifically on the back of an increase in popularity of over the top (OTT) content. The ability for users to access OTT content on a variety of portable devices at relatively low costs has contributed to a boom in the consumption levels.

As a result, the global OTT market has now reached an estimated value of approximately $76 billion. While the figure in India might not necessarily match global levels of consumption, the growth in the global market has permeated the Indian market to a large extent, particularly among the youth.

Video consumption on digital platforms is as high as 25% amongst the youth in India, constituted according to the report of individuals below the age of 23. For the population between the ages of 24 and 38, the figure falls slightly to 22%, and drops further to 18% for those between 39 and 53.

Hyper competitive OTT market in India

In essence, the youth is increasingly adopting digital forms of media consumption, which is contributing to the overall media consumption levels in the country as well. Between 2016 and 2017, media consumption not only went up in the digital domain but also in the traditional domains of TV and print.

The report attributes this growth to increase in OTT consumption, which has been brought about in India through a wide variety of OTT business models. The OTT market in India consists of global players such as Netflix and Amazon Prime as well as more regional operators such as Hotstar and Zee5.

“Most of these players and models have evolved and entered the market in the past five years. The year 2017 saw the first burst of “big money” being deployed behind Indian content on OTT,” said the report.


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