Keysight_Bengaluru_20190817

Dell_20181213

Rachit Gulati
Senior Research Analyst
6Wresearch

Telcos And OTTs – A New Kind Of Partnership Beckons

Alerts from my telecom service provider that remind me to claim my free premium membership of some online content streaming platform have become a part of my daily routine. Though smartphones buzzing with promotional text messages is not a new phenomenon, the messages themselves have undergone a tremendous change with telecom service providers promoting certain content platforms left, right and center having become the norm.

Given the drastically reduced prices of data plans, increased availability of affordable 4G-enabled smartphones and rise in internet literacy of the country, it’s clear that India’s broadband scene has witnessed a major overhaul in recent years. It is, thus, no surprise that OTT platforms, such as Netflix, Voot and Amazon Prime, are becoming household names in the country.

According to 6Wresearch, OTT video streaming industry in India is predicted to reach more than INR 5.5 thousand crores in value by 2022, growing at a CAGR of almost 23 percent in the process. At present, four out of five Indian consumers use advertising-led video-on-demand (AVoD) services, while the remaining use subscription-led (SVoD) platforms. The number of major players in the Indian OTT domain has grown more than three folds over the past six years, reaching 32 in 2018. For the better part of this, telecom companies seemed to be getting the short end of the stick as they played the role of mere pipelines meant to deliver content of other providers.

Over the next five years, rural areas are predicted to account for almost 50 percent of internet users in India. Further, with the availability of electricity and TV screens still being major challenges for the rural pockets in India, the use of OTT platforms in such regions would see an even faster acceptance in the future. Internet infrastructure is also expected to become more robust in the coming years, with the government setting a target of 1 Gbps in rural areas and 10 Gbps in urban areas. With internet expected to become even more accessible and affordable in the future, it would be safe to say that telco and OTT partnerships are the way forward.

Free OTT platform memberships and subscriptions are one way to attract consumers towards your services. The OTT platform also benefits due to the reduced customer acquisition costs and free advertising courtesy the telecom service provider’s promotional campaigns. In early 2018, telecom giant Airtel partnered with Hotstar to bring the live streaming of IPL matches to their customers, free of cost, via their app. The company also partnered with digital content creator, ALTBalaji, to bring the latter’s offerings onto its mobile app platform.

Going a step further, telecom companies may soon play an even bigger role in avenues such as television show production, live sports broadcasting and original content creation by investing in, or setting up their own, media houses. This would make bring the entire supply chain under their umbrella – from content creation to distribution to consumption. For instance, in late 2017, Reliance Jio entered into a multi-year partnership with Roy Kapoor Films which would see the latter produce original digital content for the former’s platform.

As dreadful as it may sound. the concept of families gathering in the drawing room to watch their favorite TV shows may soon become a thing of the past as content consumption becomes a more customized, personal and individualized experience. The ecosystems of both the content creator and the content provider are bound to become even more intertwined in the coming time, with isolated existence not remaining a viable option for either. The coming together of media, technology and telecom giants for cross-industry partnerships and exclusive premium content creation is all the rage now. Over the next few years, things are indeed looking very interesting for the Indian telecom industry to say the least.

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