AVOD, SVOD To Turn OTT Into $13 Bn Industry
Recent years have seen unprecedented cord-cutting in TV and cable industries as people in millions have been shifting to alternatives like OTT platforms or VOD (video on demand), which offer convenient methods of consuming content, an ideal alternative to traditional media delivery. India currently has about 102 million SVOD subscribers and this number is estimated to increase at a CAGR of 17 per cent to reach 224 million by 2026, according to TMT Predictions 2022 report by Deloitte.
The report has predicted that India’s AVOD market is expected to increase its current rate from USD 1.1 billion in 2021 to USD 2.4 billion in 2026. Over the same period, SVOD is expected to grow from its current USD 0.8 billion to USD 2.1 billion. The overall OTT space is expected to grow at a CAGR of more than 20 per cent to reach USD 13-15 billion over the next decade.
The shift has resulted in advertisers taking a hard look at their media mix and OTT platform owners aggressively revamp their revenue strategy with pros and cons for both the mediums.
Since AVOD or ad-supported video on demand allows viewers to consume content in exchange for viewing advertisements, the model enables users to consume content for free giving platforms a certain audience base quantum that can be monetised. While there is the daily risk of user retention, we are witnessing more emphasis on various innovations from advertisers to create seamless advertising units ensuring less intrusion for the audience.
SVOD allows OTT consumers to have an entire content library at their disposal for a nominal fee enabling access to ad-free, exclusive quality content. The subscription model encourages viewer loyalty via various programmes and exclusive benefits unlocking, establishing a bond between the platform and the viewers, thereby encouraging advertisers to create innovations such as in-show integrations, surround advertising, celebrity participation, etc.
Regional content boost
The overall OTT expansion is said to increase the consumption of regional content in India, crossing 50 per cent by 2025, thereby breaking the language barrier. Regional content presence on OTT platforms helps advertisers do sharp targeting and ensures their brands create a deeper connection with the local audience. Parallelly, the Indian audience has woken up to wholeheartedly accept dubbed international content, especially Korean or Spanish, leading to the ability to attract a wider audience that streaming service providers are now adding to their revenue strategy for the Indian market.
Also, sometimes content cannot be monetised optimally on just one business model perfectly and that’s what has given rise to hybrid platforms. Combinations of SVOD and TVOD offer a general subscription service and charge extra for gated/ premium content; trying a combination of SVOD and AVOD model for cross-selling and upsell; utilising TVOD for live streams, adding a layer of ads for certain streams, are all moving pieces and experiments that OTT is experimenting with constantly.
This growth of OTT in India is driven by heavy investment in original content, pricing innovations, low data costs, and the rise of short-form content and as the users get to select between the AVOD or SVOD or TVOD models, unlike television, it consequently gives the viewer more freedom and convenience. With a slew of benefits for all stakeholders involved, the entertainment takeover of AVOD and SVOD will undoubtedly happen.
