Challenges that haunt OTT players in spite of a conducive market

The OTT industry has evolved from web-series on YouTube to a proper third screen experience, attracting a magnitude of viewers to the ecosystem. Having said that, as the industry is maturing, it faces the big kid problems which include customer acquisition, ad revenues, and a slew of digital oriented issues.

Social Samosa takes a look at the OTT industry challenges, predominant in India as the players such as Netflix, Amazon Prime, Hotstar, and many more fight tooth and nail.

Poor Infrastructure

India's non-uniform broadband infrastructure/current infrastructural capabilities do not allow a subscriber to view a video with optimal quality and at the same speed everywhere. The average speed in India is quite low and even a five-second delay in playback of video due to buffering can cost a content publishers a quarter  of their audience. This is improving as telcos promote their 4G service and bundle entertainment offerings with them.

Privacy

Indian OTT players generate significant traffic from streaming of live TV channels. As a result, the privacy of content , especially illegal live streaming of sports matches , is significant concern. With the growth of broadband , privacy of content may further increase, impacting subscription revenue potential for OTT providers.

Also Read: 7 steps that the Indian OTT industry climbed in 2017

Complex IP and licensing regime

As audience fragment and platforms diversity , different content window, geography restriction , formatting terms, character rights etc. emerge, leading to a very complex rights environment .The IP ownership and royalty definitions between artists , producers aggregators etc are also blurring ,leading to intermittent litigation.

Limited storage on devices

Several smart devices and feature phones have limited storage , with OEMs using storage for price differentiation . This limits the number of apps , videos and other media propositions on the phone. The uninstall rates are hence over 60%, leading to system installed apps gathering a large user vis-a-vis. user-installed digital media apps. However, with the passage of time , this issue is getting resolved as the price of storage reduces.

Low Life Time Value(LTV)

Through the quantum of digital advertising has increased , the fragmentation of users and platforms combined with high churns rates have led to low monetization. The LTV for consumers -revenue earned through a converted consumers - is far lesser than the cost of content and operations. The difference is stark especially for advertising proposition , and the success therefore depends on the partnership across content acquisition , customer acquisition and marketing.    

The article has been collated from FICC-EY report ‘Re-imagining India’s M&E sector’.