Beyond Prime Time: Era of digital enthusiasts

• There has been an unprecedented rise of a new class of people who are conspicuous for their consumption of digital content. This is due to the growing popularity of digital entertainment or over the top (OTT) channels in the country.
• The recent ‘A Billion Screens of Opportunity’ report reveals that while cinema and TV segments grew by 12% over the previous year, OTT usage increased by almost 42% in 2018.
• This has been accrued to numerous factors including increasing usage of 3G and 4G on portable devices by its growing young population; rising incomes, favourable consumer habits, investments and government initiatives.
• This trend is likely to continue in the future. as consumption patterns change, many traditional media companies will need to build marketing muscle around customer acquisition, engagement and retention.

Unarguably, a lot of you must have spotted millennials glued to their smartphones watching online videos or shows these days. You must have also seen shows like Mirzapur, Sacred Games, Mind The Malhotras, Orange Is the New Black and so forth becoming part of the office tea-time banter. In fact, if anything, ‘Netflix & chill’ has become a universally accepted cool way to spend time among the youth. What is common to all these seemingly mundane run-of-the-mill experiences is the rise of a new class of people who are conspicuous for their consumption of digital content. This is due to the growing popularity of digital entertainment or over the top (OTT) channels in the country.

The recent ‘A Billion Screens of Opportunity’ report (2019) authored by the researcher at FICCI in collaboration with Ernst & Young, points out that while cinema and TV segments grew by 12% over the previous year, OTT usage increased by almost 42% in 2018 (the only other mode of entertainment recording a bigger growth was online gaming, at 59%). Costumers today are spoilt for choice as over 30 different digital platforms have been added to the already extensive list of television channels recently.  Thus, the average consumer views 10-15 channels per day and 2-3 applications in any given month, according to the industry estimates.

This growth was part of the overall bright performance of Indian media & entertainment (M&E) industry, which seems to be immune to the downturn in growth that other sectors of the Indian economy are grappling with. According to KPMG’s India’s digital future’ report (2019), the country’s M&E is slated to grow 13% in FY19 and reach Rs 1,631 billion. Digital and online gaming segments are two of the fastest growing segments of M&E industry according to the report.

In fact, digital content germinating in Indian soil is also finding ground abroad. It was recently reported that Netflix’s first Indian animation show for children, ‘Mighty Little Bheem’, become the second most watched show in the world on the platform. Similarly, two of every three viewers of Netflix’s Sacred Games were from outside India! Further, thanks to the availability of content in local Indian languages, a lot of eyeballs were glued to online content. All the OTT platforms claim that over 90% of consumption on their platforms was in local languages; and Hindi accounted for between 50 and 70% of total consumption of multi-lingual platforms. This could be attributed to the rise of a wave of ‘digital enthusiasts’: speakers of Hindi/regional languages as well as pockets of English who watch digital content on their smartphones. The more affluent ones among this category also have access to TV streaming.

Indicator	2017	2022
Online population	446 mn	840 mn
Accelerating network speeds	9.5 mbps	31.2 mbps
4G Technology	20%	>70%
Smartphone usage	1.7 b	2.2 b
Broadband access	100,000 km	250,000 km
Video content consumed by Indians	1.2 EB	12 EB

Source: EY-FICCI: A Billion Screens of Opportunity, 2019

This rise in the consumption of digital enthusiasts has been the product of a string of factors including increasing usage of 3G and 4G on portable devices by its growing young population; rising incomes, favourable consumer habits, investments and government initiatives. Some of the government measures that have created an enabling environment include increasing FDI limit from 74% to 100% in cable and DTH satellite platforms, and granting industry status to the film industry for easy access to institutional finance. In addition, smartphone penetration in the country grew to 36% of total phones in 2018, up from 33% in 2017 and is expected to further increase to 39% in 2019. Internet penetration grew 28% driven primarily by rural subscriber growth. Impressively, with around 570 million internet subscribers, growing at a rate of 13% annually, India has the second highest number of internet users in the world after China. Further, the average data consumption in the country doubled in 2018 from 4-8 GB per month between 2017 and 2018, and is expected to consume 10 GB per month on average in 2019 and 15 GB per month by 2024, respectively. In terms of data usage, watching videos was the second most preferred habit, after visiting a social network.

This tectonic shift, which has rendered traditional prime time less relevant, is expected to grow further. “In the next four to five years there will be more individuals having access to streaming video than television. While the ubiquitous mobile phone will remain the primary device for streaming access, living room devices’ share will go up significantly too. Localisation & regionalisation will help video streaming go much deeper and wider”, opines Gaurav Gandhi Director & Head of Business, Amazon Prime Video India. It is hardly surprising why video streaming company Netflix is planning to invest Rs 3,000 crore to develop and export India-focused content on its platform.

Further, as consumption patterns change, many traditional media companies will need to build marketing muscle around customer acquisition, engagement and retention. With digital entertainment becoming ubiquitous in the next decade, media and entertainment companies will be placing bigger, more expensive bets on developing original, exclusive content: best talent (on and off-screen) as well as in new formats and genres. Also, the industry will have to gear up for constantly shifting customer preferences, adaption to technological innovations, regulatory and policy upheaval and a strategic reshaping of the competitive landscape.