Can OTT platforms displace cable TV and DTH?

Penetration of the television market in India is at 64 percent and is intensely competitive. Television networks such as Zee, Sun and Star continue to increase their programming hours, offer new content and TV shows in many genres. However, with cheaper internet and less expensive mobile data plans, more people are taking to watching video content online through mobile phones and tablets rather than on television.

A recent KPMG-Eros Now report says nearly 87 percent of daily online video content is viewed through mobile phones. Over-the-top platforms such as Netflix, Amazon Prime, and Hotstar, are trying to gain more eyeballs to challenge traditional TV platforms’ dominance, but this might not be as easy for them as it seems.

Growing OTT market:

Data consumption in India has increased 32 times in the last five years to 9.06 GB. The KPMG Eros Now report says that Indians, on an average, spend 70 minutes a day per person on video platforms. That’s 8.2 hours per week on OTT platforms such as Netflix, Amazon Prime or Zee5.

OTT platform is pushing the envelope in the quality of content that they commission to garner people’s attention, with Netflix releasing Sacred Games and Amazon Prime recently releasing Family Man, which features big Bollywood stars.

With the increasing threat from internet content, TV networks, including Zee, Star, and Sun have launched their own OTT platforms to retain their urban and rural audiences and expand their viewership. Over 85 percent of Indians prefer to watch content in regional languages, according to the KPMG Eros Now report. This makes it more comfortable for players such as Sun TV and Zee TV to reach a captive viewer base through their OTT platforms.

The price points at which multiple OTT platforms are operating are expensive compared to monthly cable/DTH charges that users must pay. Some DTH players, including Tata Sky, have partnered with OTT players to offer content to their customers. Amidst this churn, it would take a considerable time for OTT players to replace cable TV and DTH operators completely.

The one change that might hasten this transformation of video consumption could be the high monthly bills that some cable TV and DTH users had to pay after TRAI allowed TV channels to offer their services on an a la carte basis. TRAI is currently reviewing the implementation of this policy. 

But if the monthly cable/DTH bills stay at elevated levels, the shift to OTT will be faster.

The chains no longer compete with other networks, but with digital platforms that take part of the revenue from their ads and subscriptions. And yesterday's models are and will continue to be eroded slowly.

According to the latest report of the Center for Telecommunications Studies in Latin America, the TV subscription sector began to decline since 2014 with a rate of only 4.5%. Likewise, the study explained that by 2022 TV subscriptions will grow to only 1.7%, resulting in SVOD / video on demand subscriptions representing 40, 1% of the pay-TV.

The more valued the relationship with a platform, consumers are willing to offer more, consume more and, of course, pay more. Platforms must continue with testing and design processes that generate authentic, differential and useful experiences for users so that, from this bidirectional relationship, a true differential can be achieved in the consumer's mind, preferring one platform over another.