Internet access and mobile devices have undergone phenomenal growth in both urban and rural areas, adding to the opportunity to deliver media and entertainment to the billion-plus population.
Internet access and mobile devices have undergone phenomenal growth in both urban and rural areas, adding to the opportunity to deliver media and entertainment to the billion-plus population. The mobile industry has grown over 27X in the last fifteen years from 37 million mobile subscribers to over 1 billion mobile phones today. India also has the second-largest Internet user-base at 462 million users. This proliferation led to live streaming video apps, such as “Hotstar,” which was downloaded over 100 million times.
Access to broadband is critical in India where broadband internet is limited yet mobile penetration is high. Currently, India has approximately 481 million broadband subscribers at 35 percent penetration; this includes the 2.5 times increase in mobile broadband subscribers . Considering India is one of the largest telecommunications markets globally with over 1 billion subscribers and 80 percent penetration, the development of broadband infrastructure has become a priority for the government. Due to limited high speed internet, India claims 13% of global mobile subscriptions while accounting for only 2.7% of global revenues .
50 million subscribers are expected to upgrade to 4G over the next 12-18 months, and according to Deloitte’s India Predictions, an estimated 300 million customers are now using Voice over LTE (VoLTE) or Voice over WiFi (VoWiFI).
By providing universal access to customers in India, social inclusion will be accelerated, as well as the knowledge-based economy, entrepreneurship, jobs, and increased transparency within the government. A rise in broadband penetration in India is expected to translate to a 5-6% increase in the country’s GDP, or $135 Billion USD (Deloitte).
Content producers would like to own or co-own IP rights for content so that they can monetize the same on other platforms and in other markets. However, it is unlikely that broadcasters will easily give up on IP licenses. While this model can work for specific content which has a USP - Balaji Telefilms for ‘Box Cricket league’ and Endemol and Saraswati Creations for ‘Yudh’ - it is unlikely to become the norm in the industry.
This situation of so many devices without robust connectivity calls for an alternative model to move bits from publisher to consumer. A “hybrid” OTT system would have retail businesses, airports, cafés and other facilities that attract foot traffic utilize broadband Internet connections to maintain a local store of current digital video files. The files can then be distributed to consumers on demand via local networking technologies such as WiFi and Bluetooth, or through physical media such as solid-state memory cards, and stored on individual devices. There is precedent for these distribution mechanics in the Indian market; Aditya Music, a music label with close ties to the film industry, releases music and films on USB hard drives.
To illustrate, a local grocery store could maintain a relatively low-cost array to store a wide variety of digital video. A single broadband Internet connection would enable the download of new videos as they become available, ensuring that the inventory includes the latest and most popular releases. Customers can transfer the encrypted video files to local devices and unlock a variety of rights (rental, sell-through) depending on what the publisher has offered.
Arrangements like this are also compatible with existing consumer behavior. Mobile service in India is primarily sold on a prepaid basis. Nielsen reports that in 2013, 84% of Indian smartphone owners were on prepaid accounts. As mobile customers return to a storefront to “top off” their mobile talk time, they might also be sold on topping off their video content.
Another opportunity rests with the masses of “captive audiences” that take long journeys across the large Indian sub-continent, via busses, trains, airplanes and ships. In these cases, the mass transit vehicle can be fitted with local storage and Wi-Fi equipment from which passengers can download video without the need for an Internet connection.
Of course, the key to any hybrid OTT model is a flexible, modern content protection service that can robustly secure encrypted content on thousands of points-of-presence at retail, enable any variation of rights transfer (rental, sell-through) to the consumer, and exchange keys that will unlock the content for legitimate customers. Marlin, an open standard digital rights management (DRM) solution, is particularly well suited to the hybrid OTT model.
A robust local production industry suggests that latent demand for entertainment is strong among India’s massive base of consumers. But this demand cannot be effectively monetized without distribution solutions that can adapt to the country’s unique technological landscape. A mobile video distribution model that fits local conditions will unlock substantial revenue opportunity for both local and U.S.-based distributors.