OTT biz at crossroad as paid subscriptions stagnate

The latest findings of Ormax Media’s OTT Audience Report released last week carry some worrying trends for India’s over-the-top (OTT) video streaming sector, home to 40 plus homegrown and international platforms.
The growth in the sector which boasts of services like Disney+Hotstar, Prime Video, Netflix, ZEE5 and others, has remained flat with the number of active paid subscriptions declining marginally in 2024 over 2023 from 101.8 million to 99.6. The average number of subscriptions per subscriber have declined from 2.8 to 2.5, underlining low interest in paying for too many services. The country has 547.3 million OTT users defined as those who watched at least one online video (free or paid) in the last one month, Ormax says.
OTT audience growth is similar to last year’s at 13.8%. “What’s different though is that the audience growth has come primarily from non-paying audiences who are watching free content,” says Keerat Grewal, head of business development (streaming, TV & brands), Ormax Media. These are AVoD (advertising-led video-on-demand) audiences. Most new entrants into the category are watching video content only on YouTube and social media. Stagnation in SVoD (subscription video-on-demand) audience size shows that free content is driving OTT growth in small town and rural India, Grewal says.
The AVoD viewers have increased from 328 million last year to 396 million this year. Though there’s a slight increase in SVoD audiences who buy direct subscriptions of paid platforms, the growth is the same as last year. The concern is that paid subscriber penetration has grown only in the metros which are already saturated. Growth needs to come from less saturated smaller towns which haven’t picked up.
Manish Kalra, chief business officer at ZEE5 India, says OTT’s current challenges “are reflective of a maturing market where the fast growth we saw at the beginning is now slowing down. As the market evolves, a deeper understanding of consumer preferences and behavior will be critical.”
One reason behind the slowdown is the price sensitivity of the Indian consumer towards a paid monthly subscription be it telecom or any other service, says Chandrashekhar Mantha, media sector lead at Deloitte India. “We have the tendency to move out or shift if we find the same data at a cheaper price elsewhere. We are too price sensitive to be loyal to a particular platform beyond a point,” Mantha says.
Also, having tasted blood with premium sports content like the Indian Premier League free on their mobile, viewers now expect all premium content — sports or general entertainment – to come free.
Subscription slowdown may be a result of OTTs reviewing their customer acquisition strategies and focusing more on profitability, says Mantha. “They are evaluating their costs and looking at other key parameters beyond subscriber growth. To get the new small-town audiences, they need different content which they are not investing in right now,” he says.
However, the biggest roadblock to OTT subscription growth has been Google’s video sharing platform YouTube that offers a plethora of content to audiences who do not mind watching ads. YouTube’s enormous reach and eyeballs has helped it corner a bulk of digital advertising too giving free tiers of paid OTT platforms a run for their money.
The way forward for streaming is to go freemium – that is, partly pay and partly free – which several broadcaster-led OTTs are doing anyway, says Grewal. Kalra says ZEE5 caters to the price-sensitive Indian market with a range of subscription plans, including a free tier, to make the platform accessible to a wide audience.
However, advertisers cannot fill in the gap for lack of subscription revenue, says an executive of a broadcaster-led streaming service. “The ad spends may be shifting to digital platforms but what you make is not commensurate with the investment you’re making in the platform. And that’s the industry’s conundrum right now,” he says.
Deloitte’s Mantha says the challenge will only get compounded as consumers are attracted to models like AVoD or FAST which are Free Ad-supported Streaming TV channels that are emerging quickly.
For growth, streamers must drive OTT penetration in small towns through content that resonates with them. “As internet penetration increases, more people are buying smart TVs. But 93% of the country is still a single TV home. So, you need content that can be watched together”, says Grewal.