Growth of the OTT sector due to Multiplex Shutdown

COVID-19 led to a nationwide lockdown, wherein multiplexes were forced to shut their operations until further notice. With people being forced to stay at home and TV channels re-running old shows, OTT platforms with their unlimited content & easy access, gained a lot of traction from people who have been looking for content to satisfy their entertainment needs.

But what is OTT Service?

OTT stands for “Over-the-Top” services, it refers to any type of video or streaming media that can be accessed directly through high-speed internet instead of the traditional cable/broadcast provider. OTT providers give the viewer access to a variety of old and new movies and TV shows along with the original content created by the service provider. Most OTT providers have their app, website, or page, where the viewer can log in and watch free or paid content (with or without commercials), as per his subscription. One can access OTT service through smartphones, smart TVs, tablets, laptops, computers or add-on devices like Amazon Firestick, Airtel XStream Stick etc.

OTT Service in India

• BIGFlix launched by Reliance Entertainment in 2008 was the first independent Indian OTT.
• nexGTv launched by Digivive in 2010 was India’s 1st mobile app which gave access to both live TV and video-on-demand. It was also the 1st app to live stream Indian Premier League on mobile phones in 2013 and 2014.
• In 2013, with the launch of DittoTV (Zee) and Sony LIV, OTT platforms started gaining momentum in India.

How COVID-19 affected Multiplexes?

The Indian film industry is the largest content creator in the world with 1400 to 2000 movies a year. In a virtual interview with ORF, Siddharth Jain, the director of INOX said that the Indian multiplex industry is facing an average loss of Rs.1500crore a month. It faced a decline of 29.1%, from Rs.1499crore to Rs.1062crore in Q1CY20. Even after the relaxations provided by the government to ease the lockdown, it seems like multiplexes will be the last to open.

Impact of the lockdown was also felt when Reliance Entertainment indefinitely postponed the release of Sooryavanshi and Irrfan Khan’s Angrezi Medium was pulled out of theatres within a few days of its release, the movie was later released on Disney+ Hotstar.

How are OTT Platforms benefiting from Multiplexes Shutdown?

People who hadn’t discovered OTT viewing until lockdown, have now started joining these platforms, to beat their boredom.

• 1 of every 3 Indians own a smartphone today and about 77% of the media consumption takes place through mobile phones.
  
• Cheap Internet made OTT content easily available in Tier-2 and Tier-3 Cities during the lockdown and with internet penetration being one of the key factors for the growth of the OTT sector in India, lockdown acted as a catalyst.
  
• Post lockdown, Non-metro cities saw a growth of 23% whereas metro cities saw a growth of 19% in OTT viewership over the mobile phone as per the Nielsen Smartphone Panel Report.
  
• Since OTT consumption has increased due to lockdown, Indian advertisers have increased their advertisement budget towards OTT platforms. Ad insertions have doubled from March to April.

How is OTT Platform capitalizing this opportunity?

Paritosh Joshi, media consultant and Principal of Provocateur Advisory predicted, “OTT platforms with a smaller base, such as Amazon Prime Video and Netflix, might even end up doubling their subscribers; Hotstar, which already has a substantial subscriber base, might see a growth of 20-50%”.

• Netflix expected 7.2 million new paid subscribers in the first quarter of 2020 but instead witnessed a whopping addition of 15.8 million.

• As per Forbes, Zee5 witnessed over 80% rise in total subscribers and a 45% rise in paid subscribers. They saw an increase in Daily Active Users (DAUs) and app downloads by 33% and 41% respectively.

• As lockdown halted the release of many movies and future projects, Amazon Prime announced the direct-to-digital release of Gulabo Sitabo starring Ayushman Khuranna and Amitabh Bachchan and Shakuntala Devi starring Vidya Balan. According to a Pan-India study conducted by Velocity MR titled ‘Surviving COVID-19 and beyond: A Consumer Perspective- Part 2’, Amazon Prime witnessed 67% growth in subscription. They have also planned to release 7 southern language movies in addition to the aforementioned Hindi movies in the next three months which will be available in 200 countries worldwide.

• Disney+ Hotstar debuted in April 2020 in India, and added 8 million subscribers within a week. In the early July, they announced the release of Sushant Singh Rajput’s movie ‘Dil Bechara’, available to its paid and unpaid subscribers to capture more viewership and is also set to release more 7 big Bollywood movies in the coming months.

• As per Nachiket Pantvaidya, CEO, ALTBalaji and Group COO, Balaji Telefilms, Alt Balaji is equipped to launch 11-12 shows that have been shot already and only require editing and post-production which can be done at home.

• Eros Now is seeing a 200% increase in paid subscriber on a daily basis, said by Ali Hussein, CEO, Eros Now to Hindustan Times.

Future Outlook

1. Experts believe lockdown will lead to a habit creation, which will make OTT consumption the new normal, as watching a movie on OTT platform is not restricted by time and place as with multiplexes, and one can access unlimited content with just one click.
2. However, as per many experts, releasing big-budget movies on the OTT platform will be a big challenge, as the Indian film industry largely depends on the box office collection.
3. But Disney+ Hotstar’s Rs.125crore deal to purchase exclusive rights to stream ‘Laxmi Bomb’ reflects that OTT has the potential to change the game and can become the mainstream media streaming platform.
4. Once the theatres open, footfall will be low due to social distancing norms and limited sitting capacity. Hence, the only option left for the theatres will be to charge high ticket fare for big-budget movies like Salman Khan’s “Radhe” which has the potential to cross Rs.200crore on normal days. Due to the high ticket fare, people are more likely to watch the movie at home and choose OTT over multiplexes.
5. But let’s not kid ourselves, cinema halls are not just seen as movie screening platforms but are considered to offer an experience, especially watching movies in the 3D and 4DX format. Hence, once the multiplexes start operating, people will still visit theatres to enjoy this experience as they follow the social distancing norms.