What's Happening with Video-On-Demand Streaming in 2019?

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India is one of the fastest-growing smartphone markets in the world, with the number of smartphones expected to nearly double by 2022 from 468 million to a whooping 859 million. The tremendous growth in smartphones has given the country’s 1.2 billion population unprecedented access to a wide range of services through the Internet. On-demand video streaming is one such service that had, for the most part, eluded the Indian subcontinent - until recently. India, one of the biggest smartphone markets, has now opened its doors to the video streaming industry that’s capable of growing at a compounded rate of 18.7%.

Explosive Digital Growth in India

Reliance Jio, a telecom operator that officially debuted in 2016, has been the biggest catalyst in the digital transformation of India. Out of 493 million active Internet users in the country, 331 million are Jio subscribers.

As a direct consequence of Jio’s disruptive plans and pricing for 4G mobile Internet, data consumption and penetration in India has only grown in the past year and is on track for record growth rate - especially for the VoD industry.

However, there’s also the argument of “quality” of traffic. The majority of this 493 million active user base comes from rural India where services like on-demand streaming aren’t that popular. While many would believe that streaming services would not be technically feasible in these regions due to intermittent connectivity or lacking infrastructure, 65% of all video streaming traffic surprisingly comes from rural India. The data indicates that for a large chunk of the Indian population, on-demand streaming is the primary method of media consumption. In other words, there is currently not a lot of competition from alternatives like satellite television.

Current Market Penetration by On-Demand Streaming Services in India

Surprisingly, the Video-On-Demand (VoD) industry in India doesn’t have one of the usual names like Netflix and Amazon Prime on top. Instead, home-grown Hotstar takes the lead at 29%. Here are the top four players in the Indian VoD industry:

  • Hotstar - 29%

One of the oldest VoD services in India, Hotstar gained traction by offering live cricket broadcasts for free. Hotstar’s parent company, Star India, launched the service in 2014, in time for the 2015 Indian Premier League (IPL), for which it had already acquired streaming rights.

Hotstar made its mark in the Indian market before Western incumbents such as Netflix and Amazon Prime Video gained a foothold in India. As a result, it continues to enjoy a first mover advantage, holding a whopping third of the total VoD market share. While this number will likely give way to competitors in the future, live sports is a defining feature for the service.

  • JioTV - 23%

Given that JioTV is completely free for all users with an active Jio mobile or broadband subscription, over 300 million users already enjoy immediate access to the service. By offering a complimentary VoD service with all high speed data plans, JioTV was able to grab a sizable chunk of the live television streaming market.

However, with the number of new entrants joining the fray, JioTV will soon face tough competition. In such a scenario, the extensive capital reserves from its parent company Reliance should come handy. 

  • Amazon Prime Video - 10%

Compared to Hotstar and JioTV, Amazon Prime Video is a premium service that focuses on originals and big-name productions. Amazon’s service offers two advantages, namely a significantly larger collection size and supplementary Prime benefits.

Prime Video comes bundled with Amazon Prime, which includes perks like free delivery, next day shipping, Amazon Prime Music, and more. This makes it a very compelling purchase, especially considering that the yearly cost of Prime is about Rs. 999, roughly 12% of the American price.

  • Netflix - 5%

Netflix, the most well known video streaming service in perhaps the entire world, comes at a hefty price premium. In India, plans cost exactly the same as every other country. With so many free alternatives, it only makes sense that the company is serving a somewhat niche audience. 

The Indian market is currently flooded with dozens of other such video on demand streaming services. The vast majority of them are backed by established media houses, that are dabbling with the streaming market for the very first time. Over the past couple of years, we’ve seen VoD services from big names like Balaji Telefilms (Alt Balaji), Viacom 18 (VOOT), and ZEE Media Corp (ZEE5) rise to the top. Surprisingly, a new crop of smaller startups like Zomato (Zomato Originals) and myNK have emerged to compete with the incumbents.

Market Opportunities Rising 

As competition in the sector heats up, venture capitalists are increasingly looking to identify the most promising investment opportunities in their early-stages. As a result, the staggering number of new VoD startups in India presents a unique opportunity for venture capitalists and larger companies looking to dabble in the video business for the first time.

According to Jackie Lam, Co-founder and COO of Oddup, “While live and insightful data is pivotal for almost any business today, players in the Video-On-Demand industry are perhaps able to benefit the most from it due to rapidly changing consumer preferences, increasing competition, and untapped demographics. High quality investment data on VoD startups is also an invaluable resource for venture capitalists and deal advisory teams looking to invest in the next startup unicorn or expand their portfolios.”

Although Video-On-Demand has not attained critical mass yet, it’s already showing tremendous potential. For potential investors, venture capitalists, and large companies looking to find the next unicorn, this is perhaps the perfect moment to make a strategic investment, acquisition, or deal. Oddup tracks each movement of the global startup ecosystem in real-time to provide in-depth region and industry-specific insights. Investors can use this data to learn about emerging market opportunities while they’re still within reach, like Video-On-Demand services that are quickly gaining traction. 

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