The Indian OTT market, valued at $2.5 billion, underwent a significant bump in 2023, primarily triggered by Jio Cinema’s move to offer premium content like the IPL for free, which also impacted the subscription revenue growth of its peers. The subsequent response from Hotstar, offering the Cricket World Cup free for mobile customers, further intensified the competition.
The online streaming industry in India is facing a big challenge – it’s struggling to find the right balance between growing its user base and making enough money in a market where people are very sensitive to prices. Even though more people started using these streaming services since COVID, none of these platforms are making as much money as they spend. This means they are not breaking even.
The main problem is the cost of making content like movies and shows. The industry makes about $1.3 billion, but it spends between $1.5-2 billion on creating content. That’s a lot! Around 65-70% of their total spending goes into making these shows and movies. To fix this, streaming platforms are now being more careful about the shows they make, and they are not trying out as many new things. In 2024, you can expect them to be pickier about buying the rights to show movies online to reduce their losses.
In simple terms, they need to spend less money on making shows and movies or find ways to make more money from their users to keep going. This might mean we see fewer new shows and movies, but it’s necessary for these platforms to stay in business.
To tackle the money problems in the streaming industry, companies are teaming up. For example, Zee and Sony are joining forces, and so is Reliance with Disney. This teaming up is called consolidation. By doing this, they hope to catch a breath and get some relief from their financial struggles.
When these companies come together, their total market share in video advertising becomes more than 40%. This is a big deal because it gives them more power when negotiating deals and helps them control how much they spend on making content. So, consolidation is like a group effort to make things easier and more cost-effective for these streaming platforms.
Let’s see what changes it brings in 2024.