Video streaming platforms are increasingly looking to complement their SVoD (subscription video-on-demand) offerings with AVoD (advertising video-on-demand) programming, and for India's price-conscious customers, the hybrid model is the most effective, according to a new report from professional services network Deloitte.
According to the analysis, SVoD revenue in India is predicted to climb at a CAGR of 19% from $1.2 billion in 2022 to $2.9 billion in 2027, while AVoD revenue may grow from $1.15 billion to $2.42 billion during the same period at a slightly lower CAGR of 16%.
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Increase in AVoD Revenues
But, OTT service providers in developed countries are likely learning from how the Indian OTT market has changed and adapted for price-conscious Indian clients as they move quickly to offer AVoD tiers. Customers in India were eager to choose the option of watching content across many platforms for a lesser price, therefore, AVoD revenues increased at a far faster rate than in established markets. In 2022, there will be 428.3 million OTT subscribers in India. According to Deloitte, only 30% of these, or 130.2 million viewers, are SVoD. The revenue from India's OTT market was approximately $2.35 billion in 2022 and is projected to be close to $5.3 billion by 2027.
Pursuing the highest-quality content at the most affordable price determines demand-side dynamics. This is particularly true in the context of India, where the fragmented market has led to price wars between international behemoths, national and regional firms, and smaller competitors. According to the survey, larger multi-national players invest $5–7 million in marquee series, but smaller regional platforms typically invest $0.4–0.5 million in every season of content. Over $500 million was spent on original content by Indian OTT platforms in total in 2021. However, despite rising content production investments, ARPUs are still low.
Moreover, OTT aggregators accounted for over 50% of India's 73 million SVoD subscriptions in 2021. According to estimates, aggregators can increase the user base of streaming services by at least 20–30%.
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According to Deloitte, the Indian sports market will grow from $27 billion in 2020 to $100 billion in 2027, representing a CAGR of over 20% and growing roughly twice as quickly as the global sports market. Sports viewership impressions accounted for 3.17% of all audience viewership in 2022, up from 2.97% in 2021 and up by roughly 20% YoY. Around 12% of this rise is attributable to live sports broadcasts, including repeat broadcasts.
ICC Cricket Matches
The Indian market places the highest value on the telecast and streaming rights for cricket. For instance, Disney+ Hotstar obtained the ICC media rights for $3.1 billion, which is an increase from the previous four-year rights bid of $2.02 billion. The rights are granted for a period of four years and also cover women's ICC cricket matches. Parallel to this, the most-watched IPL cricket rights saw an increase in worth over the course of the last three bidding cycles of more than 5.5 times, according to the research.
In 2021, it is predicted that sports will bring in a total of around $750 million in advertising income. Cricket accounts for 88% of this, while other rising sports account for 12%.
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Growing Subscriber Base
Digital sports streaming rights have aided OTT platforms in quickly growing their subscriber bases and generating more money from subscriptions and advertisements. As of November 2022, Disney+ Hotstar, the OTT that holds the streaming rights to the IPL, saw a 42% YoY increase in its subscriber base. Revenue increased nearly three times, from Rs. 5.76 billion to Rs. 16.7 billion, during the IPL rights period (FY18 to FY21).
Streaming platforms view sports as the bait "that will draw viewers in and enhance their valuations. According to the report, as there is still a lot of opportunity for adoption, they will continue to spend on sports rights for the time being.