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What will 2018 hold for media broadcasters?

What will 2018 hold for media broadcasters?

2018 will see broadcasters streamline their content, technology, and operations for a new segment of customers who consume content on-demand. Driven by the changing content consumption, we foresee media organizations looking at following:

Dawn of the OTT Era

Industry reports reveal that an average Indian consumes 8.5 hours of video content every month on Facebook and YouTube, which accounts for 47 percent and 42 percent of market share. Add the popularity of Over the Top (OTT) platforms like Hotstar, Netflix, Amazon Prime Video, Jio TV, and VOOT to that, and you’d realize that the way Indians consume digital content has changed over the years.

In India, the popularity can be attributed to access to faster and cheaper internet, affordable smartphones, and the wide range of content on offer. With over 460 million internet users, India is the second largest online market[1] whose smartphone penetration rate is expected to reach more than 28 percent by 2018.

While some broadcasters have already launched their platform like Ozee, others will pick this trend in 2018 and look at launching their platforms. Some may also look to optimize and produce their content on commercially successful OTT operators. Broadcasters will be seen investing in tools and technology to prepare their content and distribute it to CDNs.

Solving the Content Conundrum

OTT has changed the way content is created and consumed. As viewers consume content anytime, anywhere, and on any device, the demand for short-form, high quality ‘snackable’ content has been on the rise. Citizen journalism is gaining momentum, with viewers recording events and posting live on social media for the global audience.

Original, consistent, and addictive content is on demand. With players like Apple planning to invest over $1 billion in original content and Facebook spending a chunk of its marketing budget on content, fresh content production depending on current affairs, mood, and preference of the viewers is on the rise.

However, creating fresh consumable content is only one side of the story. To retain subscribers and provide a shared experience across devices, OTT providers also need to recreate the legacy content with proper archiving, metadata and tagging, and digitization. For this, broadcasters will need to dig into their archives to sort, organize, digitize, restore and optimize legacy content to enable easy search, access, and distribution of content across channels.

Embracing Virtualization

Newer digital broadcast avenues like OTT are creating pressure on traditional broadcasters to lower their Broadcast Operations and Engineering (BO&E) budgets. A survey by Devoncroft reveals that more than 40% M&E vendors have products that operate in a virtualized environment. While it is debatable if ‘virtualization’ refers to only IT infrastructure or the entire content supply chain, the fact is – new, small, and medium-sized broadcasters are gradually migrating their infrastructure to cloud-based solutions.

Moving to IP comes with the benefits of using a standardized connectivity and infrastructure to transport videos from locations to the central facilities and on to distribution. Therefore, broadcasters will continue digital transformation keeping content at the center of business to achieve faster time-to-market, scalability, and agility at a lower TCO.

Enhanced User Experience with 4K, HD Formats

A 2016-report by Chrome Data Analytics and Media[2] reveals that 8.34 million households in India have HD televisions, of which 89 percent have DTH HD connection and 11 percent have digital cable HD connection. However, only 9 percent or 91 channels out of 857 permitted private satellite television stations and more than 190 government channels in India are High Definitions (HD).

With the market share of OLEDs, 3D and 4K television increasing every day, viewers often forget to ask – does India have enough 4K and 3D channels? Wikipedia lists only five 4K channels and one 3D channel.

To address the change in viewership, media organizations will continue to upgrade their technical infrastructure to broadcast in HD or beyond (4K). With 2019 General Elections in sight, it is expected that news broadcasters will upgrade their technology, investing in workflows and solutions for presentation and analysis of election results in high definition.

To summarize, 2018 and 2019 will be the year of digital transformation and adoption of technology focusing on improving the viewer experience.

State of OTT (Over the top television) in India

State of OTT (Over the top television) in India

OTT or Over the Top Services has taken the broadcasting industry by storm and given a new dimension to watching content. There is a plethora of video content reaching consumers directly via internet bypassing traditional controllers or distributors.  In US, 57% of Wi-Fi households have OTT devices, Smartphones, most definitely the front runner of them all.1 Based on a recent study done in US measuring 12,500 homes and 150,000 devices, showed that four major OTT streaming services, namely Netflix (40%), YouTube (18%), Hulu (14%) and Amazon Prime Video (7%) account for 80% of viewing time rolling out programs from all across the globe.

OTT in India

OTT Services have climbed the popularity ladder rather quickly and has definitely come in a big way in India giving watchers a whole new experience. With the onset of ‘Digital’ becoming a national phenomenon across the length and breadth of the country, audio-visual content available on OTT platforms has gone viral. With more than 30 OTT providers and approximately 90 million active viewers, the temperature is only expected to rise in the coming times.

The launch of Star India’s Hotstar in 2015 proved to be a turning point in India’s OTT scenario. They were one of the first to have successfully blended world class technology with great content resulting in high viewership. And thereafter, many national and international players like Netflix, Voot, Amazon Prime Video, Viu, etc. followed, leveraging the ever growing popularity in this part of Asian Continent.

Furthermore, hi-speed 4G internet and free data packs with increased bandwidth being offered gave more power to consumers to view on the go. It upped the game forcing providers to aim for cutting edge content and seamless, high definition viewing experience.

Factors affecting OTT market in India

Multiple Players

The OTT market is segregated between original content creators, content aggregators and digital platforms owned by already established Television Broadcasters. For Voot from Viacom 18, where it is fiction and reality shows of TV on one side, they are going equally strong with tailor-made digital series as well. Also, Voot Kids and regional language content are equally big ROI churners. Foreign players like Netflix and Amazon Prime Video are banking high on investments made in acquiring videos and movies from across the globe. According to reports, Netflix has earmarked a whooping amount of $300 million to be invested in India in the coming times.

Cultural Structure

India’s social and cultural structure is an added advantage in this OTT content driven game. Being a multilingual market, it fuels up the demand for variety and compelling content. SUN TV Network has already launched its OTT platform, Sun NXT to facilitate viewers with portable content. But the early bird has been Viu which partnered with Annapurna Studios for Telugu originals Pilla and Pelli Gola with a surprise viewership of approximately 40% of regional language content. Foreign players are also not left behind. Amazon Prime Video are building a strong base of regional content through various licensing deals. Hooq, a joint venture of SingTel, Sony Pictures Television and Warner Bros. strategizes to offer Hollywood movies and famous US TV shows dubbed in regional languages. Increased investments pouring in non-Hindi market is expected to encompass close to 30% of total viewership in the years to come. As Indian language internet consumers surpass English content consumers, language-driven content will play a very important role in OTT players’ growth.

Demography & Infrastructure

With India’s urban market saturating slowly, the need to reach out to a wider audience is obvious to keep the business moving. Government’s initiative to connect the country digitally is just the right thing for OTT owners. Rural sector comprises a major part of India’s population and business experts have a major eye on them. Roll-out of 4G services, better infrastructure have aided in adding more viewership. According to statistics, internet use in rural areas which was 33% of the total internet population in 2013 is fast growing and is expected to reach approximately 55% by 2025 covering a major chunk of viewership. Smartphone users are expected to grow to 520 million by the end of 2020 which clearly means that individual content watching is going to outgrow the rest of the mediums.2

Pitfalls Faced by Platform Owners

  • Internet speed and its quality is the make and break point of OTT market. India, especially, will have to divert a lot of attention and finances to build up better digital infrastructure if it wants to break even in the global market.
  • New players will have to shell out more money to keep the business going. Entry costs are going to inflate. Also they have to keep the budget levels high for acquisitions in absence of library content which old players possess.
  • Technology is going to demand regular high investments in order to match up audience exposure and expectations. Today’s viewers expect seamless, high definition experience irrespective of the medium.
  • Content is the backbone of OTT world and originality and compelling and engrossing content would be the final winner. Repetitive or slackly produced content would be a strict no.
  • Irrelevant advertisements and micro second patience of viewers makes it a major problem where almost 60% revenue of the platform owners is lost in the hands of ad-blockers. Ad-tech company Amagi Media Labs is set to launch its Thunderstorm OTT Ad Insertion service in India, which is already working well in US and UK markets. It inserts ads seamlessly within the content stream and make ad-blockers ineffective. On the individual front, this nuisance can be controlled if advertisers start creating relevant and seamless ads which add some value to the consumers.

Future of OTT

Globally, OTT business is expected to grow from US$36.7 Bn in 2015 to US$158.4 Bn by 2025. 3

A major boom is foreseen in India bringing it closer to US which has always been the top contenders in content driven entertainment market.  Video accounts for India’s 51% data traffic which is set to rise to 75% by 2020. In terms of revenue, the Video-on-demand (VOD) market is anticipated to reach USD 168 million in 2021 from USD 64 million in 2017.4

Going by trends, it’s an exciting and an interesting phase in India, it being the second largest market for smartphones and having the biggest entertainment industry offering an entire ocean of content. But seeing how fickle minded Indian audience is, the onus would be completely on content, how original and diversified it can get. Infrastructure and high quality internet facility would also play a major role in it. Emphasis would be more on interruption free viewing at a lucrative price. It would be interesting to see how these entertainment carriers behave and strategies to be able to capture ever so changing consumer recall value and reach the winning end. 5