Higher share in ad spends and path to profitability: Experts share OTT trends for 2024

The sports streaming war on OTT platforms, which began in 2022 with Disney+ Hotstar losing its IPL rights, continued into 2023 as platforms fiercely competed for digital rights. 

This year, the sports frenzy has gone global, with Netflix entering the live sports market by securing a deal with WWE. On the domestic front, Tata Play Bigne announced the inclusion of the sports platform FanCode.

The Indian OTT audience is currently 481.1 million people in  India, which translates into a penetration of 34% as per the Ormax report. Despite this, experts believe the market may not be very lucrative in the country. 

“No OTT platform is profitable in the Indian market. Almost all of them are loss-making businesses, thanks to their ridiculous spending on content creation,” said Kunal Kumrawat, Founder(s) Office, STAGE. 

To address this challenge, the OTT market is changing its modus operandi. Last year, many players opted for mergers and took measures to curb password sharing in the country. 

Despite this, Kumrawat thinks hyperlocal players are at the forefront and are on a path to profitability. Taking notes, mainstream giants like Netflix and Amazon Prime Video have amped up their regional content. 

Experts believe that, alongside the emergence of hyperlocal OTT platforms and giants like Amazon and Netflix announcing entry into the AVOD (Advertising-Based Video On Demand) market, the streaming industry is set to enter a new era. 

Hyperlocal & Globalization

A recent FICCI report stated that the share of regional languages in overall OTT (over-the-top) video content will double from 27% in 2020 to 54% in 2024 as more streaming platforms take to vernacular programming and films. 

In fact, earlier last year, Arha Media earmarked Rs 1000 crore as its marketing budget over the next three years to expand its OTT platform aha. 

Experts believe this trend will continue to take shape this year, too. Kunal Kumrawat, said, “In 2024, there will undoubtedly be a rise in the production of locally sourced content as well as regional content consumption.” 

Saurabh Srivastava - Chief Operating Officer - Digital Business at Shemaroo Entertainment Limited said, “The regional space will see stronger growth, with the audience leaning towards watching content in their language and cultural milieu. We will see a lot more content experiments in regional languages.” 

Experts think that the main reasons for the rise in regional language content consumption are:

• Metro market saturation
• Improved bandwidth and extremely affordable data rates in rural areas
• The spread of affordable smartphones
• A boom in culturally appropriate material
• And, the rising ambitions of Tier II and Tier III individuals 

Due to this change in consumer behavior, OTT platforms are also amping up their content pipeline. The regional boom is evident in mainstream OTT’s strategy and communication as well. 

In 2022, Amazon Prime Video increased its focus on original content investments in India, with a particular emphasis on Tamil and Telugu language content. 

Similarly, MX Player provides dubs in multiple languages, including Bengali, Malayalam, Bhojpuri, Gujarati, Kannada, Marathi, Nepali, Punjabi, Tamil, Telugu, Urdu, English, and Hindi. 

Aman Srivastava, Head of Marketing, Sony LIV, said, “People will be looking for more habit-forming content. Thus, OTT platforms will try to diversify their content offerings across languages. This is a way that OTT will be moving in 2024.”

Last year, the regional content trend crossed borders. ZEE5 Global introduced add-ons in the US which will give users access to their  preferred South Asian entertainment platforms directly on the ZEE5 Global platform

Archana Anand, Chief Business Officer of ZEE5 Global, told the press, “The launch of Add-ons on ZEE5 Global is a significant milestone, further cementing our leadership position as the No.1 South Asian streaming platform in the US market.”

Similarly, Sony LIV announced its expansion into select countries in Africa and the Caribbean regions. 

Experts believe that globalization in the OTT market is expected to increase in the coming year. 

Sourjya Mohanty, COO, EPIC ON said, “OTT services might focus on expanding their reach globally, targeting audiences in different regions. This could involve the localization of content, languages, and user interfaces to cater to diverse markets.”

He also predicts the platforms will engage in collaborations and partnerships. He said, “OTT platforms might enter into more collaborations and partnerships with other media companies, production houses, and even other OTT services. This could lead to the creation of exclusive bundles or cross-platform promotions.

Advertising on OTT after AVOD

In 2018, it was predicted that the global giant Netflix would offer advertisements because of high competition in the market. In 2022, the OTT platform announced its ad-supported tier, which reached 15 million users by 2023. 

“Given the projected growth in OTT revenue, particularly from advertising video-on-demand (AVOD) services, it's highly likely that OTT platforms will command a larger share of ad spends in 2024,” said Kunal Kumrawat.  

Kumrawat noted that the trend is likely due to the expected AVOD revenue exceeding $318 billion by 2027. AVOD is already the leading revenue segment, reaching $180 billion in 2022.

Globally, the OTT segment is experimenting with other ad formats as well. Recently, Netflix announced the launch of a ‘binge ad’ format that will give users an ad-free episode after they’ve watched three episodes in a row. 

Furthermore, the US-based platform will now allow the global running of 10, 20, and 60-second ads, giving clients more format options.

Kumrawat believes that since OTT platforms are offering customizable, targeted, and personalized advertising, brands are incorporating them in their marketing plans. He said, “This level of customization is appealing to advertisers seeking to maximize the impact of their ad spend and moving away from unstable/costly FB ads and Google ads platforms.”

Despite increasing revenue coming in from AVOD, Saurabh Srivastava thinks that both AVOD and SVOD (Subscription Video on Demand) will co-exist. The reason is – the rising disposable income and consumers’ need for an uninterrupted experience. 

 He said, “In the short term, moving content from SVOD to AVOD will add volumes, but the long-term value for the OTT industry will be driven by its ability to sustain and support both Premium, Free and Freemium models.”

Sourjya Mohanty thinks the same. He said, “Indian viewers, known for their diverse preferences, may choose platforms based on a combination of factors, including content variety, language options, and pricing.” He further pointed out the pros and cons of both models. 

AVOD Model:

• Pros:
  • Free Access: AVOD platforms provide free access to a wide range of content, attracting users who are price-sensitive or unwilling to pay for subscriptions.
  • Ad Revenue: Ad-supported models generate revenue through advertisements, allowing users to access content without direct monetary transactions.
• Cons:
  • Ad Interruptions: Users might find frequent ad interruptions disruptive, potentially leading to a less favourable viewing experience.
  • Limited Revenue per User: While AVOD platforms generate revenue through ads, the revenue per user may be lower compared to the subscription model.

 SVOD Model:

• Pros:
  • Ad-Free Experience: SVOD platforms typically offer an ad-free viewing experience, which can be appealing to users who prefer uninterrupted content consumption.
  • Premium Content: Subscription models often provide access to exclusive and premium content, attracting users willing to pay for high-quality shows and movies.
• Cons:
  • Subscription Cost: The need for users to pay a subscription fee can be a barrier, especially in a market where price sensitivity is a significant factor.
  • Limited Reach: A subscription model might limit the overall user base compared to free AVOD platforms.

Tech & OTT

Technology is further shaping the way OTT platforms operate. The video-streaming providers are using advanced AI algorithms for precise content recommendations. These algorithms analyze user history, viewing habits, and real-time context to suggest relevant content.

According to Netflix’s website, it uses machine learning and other AI tools for different purposes, such as creating thumbnails based on watched movies or shows and predicting the number of subscribers it’ll have in the future. 

Paired with technology, personalisation is also becoming more prevalent in the OTT market. Last year, Prime Video launched Dialogue Boost, an AI-based innovation which lets users increase the volume of dialogue relative to background music and effects. 

Experts predict a continued rise in the use of technology and increased personalization within the OTT space in 2024.

Sourjya Mohanty said, “Marketers will have to use AI for data analysis, customer segmentation, and predictive analytics to enhance targeting and decision-making processes.”

“Marketing efforts will become more personalized, leveraging data and AI to tailor content and experiences to individual preferences,” he added. 

Experts also believe that since the OTT space strives to stay at the forefront of technological advancements, it might explore features like augmented reality (AR), virtual reality (VR), and enhanced interactive content to enhance user engagement.

Goals for 2024

The penetration of OTT content has been on the rise in India. Today, with 57 OTT platforms across the country, the Indian OTT audience universe has reached 481.1 million, thus growing by 13.5% since 2022. 

With the introduction of AVOD and the resulting rise in users, OTT platforms in India are aiming to personalise the experience for their audiences using tech and aiming for a global reach. Furthermore, platforms aim to penetrate the country deeper and go beyond the metros. 

Shemaroo plans on following these steps, too. Talking about their future plans, Saurabh Srivastava said, “We want to provide a personalized and relevant experience to every consumer by speaking their language and embracing their culture. Focus on enabling our platform wherever consumers visit, leveraging technology as a catalyst to enhance their experience.”

As for Epic On, the platform is aiming to improve a handful of things in 2024. Sourjya Mohanty mentioned that the platform aims to provide a diverse content library, diversify beyond borders and go global. Epic On also wants to involve user-friendly interfaces, personalised recommendations, and seamless navigation across devices. 

According to Statista, revenue in the OTT Video market in India is projected to reach US$4,144.00m in 2024. In this time frame, hyperlocal content penetration, personalisation and free-meiumization will shape the market, predict experts