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Technology Other News 25 Aug 2016 Amid OTT dominance, ...

Amid OTT dominance, traditional cable cos drift to digital space

DECCAN CHRONICLE. | KOUSTAV DAS
Published Aug 25, 2016, 7:05 pm IST
Updated Aug 25, 2016, 7:05 pm IST
Over the past year, independent OTT players such as Netflix and Eros Now have grown rapidly in the country.
 Traditional cable operators are realising the importance of providing demand-based content through fast channels.
  Traditional cable operators are realising the importance of providing demand-based content through fast channels.

A recent report by India Ratings and Research showed that traditional cable companies have amplified efforts to employ over-the-top (OTT) content providing services, citing rapid growth of independent OTT service providers.

Indian Ratings and Research said: “Traditional cable companies are joining the bandwagon by launching their own OTT (over the top) content to cash in on the buzz in the digital space and tap a new revenue stream.”

 

One of the main reasons for this drift, as cited by the Telecom Regulatory Authority of India, is the large number of wireless telecom subscribers in India. The Cellular Operators Association of India has also explained that the internet penetration has been increasing rapidly in the country; 3G users in India are expected to double (to 330 million) whereas 4G has been pegged to grow tenfold (to 42 million) by 2017.

With such rapid growth in the digital space, traditional cable operators are realising the importance of providing demand-based content through fast channels.

 

Over the past year, independent OTT players have made their presence felt in the country, and have clearly impacted the businesses of traditional cable companies by offering on-demand content.

Rise of independent OTT players

A 2016 Frost and Sullivan market insight report on the Indian OTT market indicated that there are about 66 million unique connected video viewers in the country every month, and about 1.3 million OTT paid video subscribers.

The rise of independent OTT players in India has seen a boom over the past year as bigger players such as Netflix, Eros Now, Yupp TV, and others. In broadcasting, OTT is the delivery of audio, video, and other media over the Internet, without the need of a traditional cable subscription from Multiple-System Operator (MSOs) who control the distribution of content.

 

With on-demand content delivery from independent OTT players gaining popularity amongst individuals, broadcasters such as Ditto TV, Hot Star, Voot have now been forced to start their own OTT services.

Another reason why traditional cable companies are setting up their own OTT services is the industry-wide shift of consumers towards consuming digital content.

Asianet Satellite Communications became the first MSO to launch OTT-based broadcasting services in various regional languages. Hathway Cable and Datacom is expected to launch its OTT soon. India Rating and Research also expects other MSO’s to also follow the OTT trend, in order to keep up with this shift in consumption pattern.

 

Broadband boom

Large player such as Hathway Cable and Datacom, Den Networks, and SITI Cable Network are considering rolling out OTT service due to the high number of broadband subscribers they have.

Broadband subscribers grew in FY16 for Hathway Cable and Datacom to 6,27,200 from 4,55,800 in FY15; DEN Networks to 95,000 from 23,000, and SITI Cable Network to 132,000 from 60,000 showing the growth in broadband penetration.

According to India Rating and Research senior analyst Amit Mital, the main strategy for these MSO’s is to grab the attention of subscribers initially through lucrative offers and monetising it later.

 

“Some players in the media value chain are offering OTT free or at prices as low as Rs 20/month. Even for the yet to be launched OTT services, Ind-Ra expects these services to be free initially to develop a user base and then move to a subscription based service with gradual price increases,” he said.

Internet penetration

Though Internet speeds in India continue to lag behind other developed countries, online presence is increasing rapidly. Mital said that faster internet in the country would compel most traditional cable service providers to delve into the OTT space.

 

“The next leap forward for the industry will be post the introduction of better 4G data services by telecommunication service providers which will enable wire-less and on the go streaming,” he said.

Another problem for traditional MSO’s is that of reaching the consumer directly. There are several occasions where there is discrepancy in content distribution through local operators and MSO’s tend to lose out. With OTT adaptation, broadband-enabled cable operators will be able to reach the consumer directly.

“The rush to encash on the digital frenzy is pushing MSOs to experiment, but the consumer is likely to choose the OTT provider based on- the availability of a variety of content, end-user experience and price point,” said Mital.

 

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