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Netflix's new mobile-only plan heats up race for biggest OTT pie

With the launch of a ₹199 mobile-only plan in India, premium video streaming company Netflix has toughened the race to grab the biggest market share in the over-the-top (OTT) segment. About 70 per cent of the people in India watch videos on smartphones and OTT players including Hotstar, Amazon Prime and Netflix are eyeing a bigger share of the market.

The OTT segment refers to content providers that stream media as a standalone product directly to viewers over the Internet.

Stating that the mobile plan for ₹199 a month is specially made for India, Ajay Arora,  Netflix Director of Product Innovation said, “Highest number of people who sign up for Netflix on mobile phones are from India. Netflix’s plan price is competitive as its rivals Amazon Prime Video and Hotstar charge ₹129 a month and ₹299 a month, respectively.”

Over the past few years, data plans have become more affordable that has led to a surge in online content consumption in India. As a result, many OTT players have come up in the market such as Amazon Prime Video, Hotstar, YouTube and local players like ALT Balaji.

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According to industry estimates, India is the tenth largest market for OTT or video on demand (VoD) in the world with overall revenue standing at ₹4,462 crore as of 2018. The video streaming industry is expected to record the highest growth rate among all segments of the media and entertainment industry. It is estimated to grow at a compound annual growth rate (CAGR) of 21.82 per cent to reach ₹11,977 crore by 2023, according to a June 2019 report by global accounting firm PricewaterhouseCoopers (PwC). The fast growth rate of the OTT segment, makes it an attractive area of investment.

Meanwhile, the number of smartphone users in India is expected to double to 85.9 crore by 2022 from 46.8 crore in 2017, according to an ASSOCHAM-PwC joint study on ‘Video on Demand: Entertainment reimagined’.

“With lower than ever data tariffs and increasing smartphone penetration in the country, it is safe to assume that the video on demand market will be a significant beneficiary of these developments,” the study noted.

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Currently, Hotstar is the top OTT player in the Indian video content market, followed by Amazon Prime Video, SonyLIV, and Netflix in terms of the percentage of respondents subscribed to each platform, revealed the India OTT Video Content Market Survey released in June 2019 by Counterpoint.

The Walt Disney Company-owned Hotstar, which entered the Indian market in 2015, has around 30 crore monthly active users (MAUs). While Jeff Bezos-backed Amazon Prime video has 1.3 crore MAUs, Netflix has 1.1 crore.

Industry experts say that Hotstar performed the best in the first half of 2019 because it provided live streaming of sports, which gathered a lot of traffic due to the ICC Cricket World Cup. Hotstar, is one of the first OTT players who realised that local content would be the key driver. It has been increasing the streaming of original content series and movies in different Indian languages over the last two years.

Netflix now seems to have realised the importance of both price and content in India as Arora pointed out that the idea is to dish out good content constantly.

During the earnings call earlier, Chief Product Officer of Netflix Gregory K Peters said, “We’re expanding that content offering and seeing that engagement grow. We think there is an opportunity to be able to broaden the access to the service so (that) more people can enjoy that increasingly relevant content offering.”

With more players now focusing on creating local and good content, the competition in the OTT market is set to shoot up.

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