Despite low levels of broadband penetration, India has experienced a burst of entrepreneurial activity in over-the-top (OTT) video over the past few years, with homegrown services delivering live and on-demand content on mobiles and PCs.

Most domestic viewing on these platforms, however, gravitates towards live streaming of linear channels, despite the availability of more ways to watch TV.

News channels seem to be the most popular, followed by sports with some entertainment viewing in third.

“We found that surprising, given that the whole point of having an OTT service is that you can catch up on content, snack on content, as and when you want it,” remarked Aravind Venugopal, an analyst from Media Partners Asia (MPA) speaking on a webinar held yesterday, ‘Developments and Trends in the Asia Pacific Online Video Market’.

Despite early traction for pioneering start-ups, OTT video is nascent in India, where consumer attitudes and behavior, as well as business models, are still taking shape.

Just 12 million people in India watched a video at least once a month last year, mostly for ad-supported rather than paid content, according to analysts from Media Partners Asia.

Viewing patterns at this early stage of development could say more about general awareness of what else is on offer, rather than a lack of demand.

“The one thing that seems to be mentioned universally by all the platforms we spoke to, especially in emerging markets, is that consumers don’t know what terms like video-on-demand or catch-up stand for,” Venugopal said.

“There’s a clear lack of awareness what those refer to.”

A COMMON LANGUAGE

TV jargon doesn’t often translate well in the consumer space, noted co-host Brendan O’Shaughnessy, sales GM in Southeast Asia for video tech specialist Ooyala.

While consumer education is important, the priority should be finding the right words and terminology to use, which can vary by market.

“It’s important to think about how you describe the services you’re offering, and do that in a way that consumers can readily understand,” O’Shaughnessy suggested.

Linear channels still meet a consumer need, on online as well as traditional platforms, O’Shaughnessy pointed out.

The challenge is getting the right balance of on-demand and linear services, especially on user interfaces designed for smaller screens.

“One of the worst outcomes you can deliver to the marketplace and for your business is to think that [as] linear is important, the quantity of linear channels is equally important,” he said.

“From our experience it’s not. What we see in more mature markets is that a lower level of linear channels but the right linear channels is probably a better strategy for success.”

MAJOR NEW ENTRANTS IN 2015

India’s OTT market, meanwhile, is poised for a big shake-up of both business models and consumer awareness this year.

Star, the country’s biggest broadcaster, recently unveiled its own ad-supported video service called Hotstar, backed by around 35,000 hours of TV content from Star’s library, as well as 300 or so movies with some live sport.

Some of these shows used to be on YouTube, where they rated well, but Star took most of them down in preparation for its own market play, which could add paid elements over time.

Two other powerful players, Airtel and Reliance, are also poised to enter the market with services of their own, signaling the start of a major shift in OTT video dynamics in India.

The number of monthly active video users in India is set to grow at a 43% CAGR over the next five years according to MPA, rising from 12.3 million people in 2014 to more than 105 million by 2020.

The India base for paid video, meanwhile, will grow even faster at a 57.4% CAGR, but from a much lower base, as more companies develop and promote subscription-based or SVOD services.

MPA analysts project that the number of paid video subs in India will rise from 830,000 in 2014 to almost 9 million by 2020.

Advertising will continue to drive India's OTT video ecosystem however, contributing more than 75% to a pie that could top US$325 million by 2020.

Sizable challenges lie ahead but the size and promise of the Indian marketplace provides a firmer foundation than smaller growth markets in Southeast Asia, especially for emerging paid revenue streams where Arpus are likely to be low.

“In India, there exists a huge ad sales opportunity which just isn’t present in Southeast Asia at the moment,” Venugopal said.

“That gives players like Star the ability to offer a low-priced SVOD model."

At the same time, pay-TV Arpus are relatively low in India, at US$3-4 a month.

"In Southeast Asia, Arpus are high, especially in Malaysia and Singapore," Venugopal adds.

"There’s a very robust video subscription industry but a fairly small in-home video advertising market. People often forget that."