Streaming services beware of poor free-to-paid-user conversions

Of the estimated 99.7 million Indian users on ad-based video-on-demand (AVOD) platforms, only 18% are ready to turn to subscription-based video-on-demand (SVOD) services, it added.

Experts said that very few small-town users are ready to pay for entertainment as free video platforms such as YouTube and MX Player offer variety, choice and convenience. He added that short-form video services are also a catalyst for the growth of the AVOD platform.

A section of experts said that the recent changes in online payment rules by the Reserve Bank of India (RBI) has made it mandatory for users to authorize recurring payments every month as the process is too cumbersome.

A report by Deloitte said that AVOD is expected to generate more revenue than SVOD in India. AVOD is projected to grow from $1.1 billion in 2021 to $2.4 billion in 2026, while SVOD is expected to grow from $0.8 billion to $2.1 billion.

The report said that after the rapid adoption of such services during the two years of the pandemic, SVOD subscription growth may also decline with the decline in COVID-19 cases.

“The audience in India is in the habit of getting video entertainment for free or at a very low cost. A family of four can still watch around 100 TV channels 400, which is approx. comes 3 per person per day. “Paying for content is not hot for everyone in India,” said Shailesh Kapoor, Founder and CEO, Ormax Media.

Kapoor expects the overall digital video user base to grow at 15% every year and SVoD at 10-12% over the next few years.

“Video streaming platforms are also not expecting a major change in consumer behavior, especially in Tier-2 and Tier 3 cities, as all types of content are available for free on AVOD, such as YouTube, which has a paid offer. , but still relying on ad-supported programming as a mainstay,” said Sourya Mohanty, chief operating officer of EPIC ON and Stream-Sense, owned by IN10 Media Networks.

“It is even more difficult for users to upgrade from a monthly to an annual subscription plan, but many services have now started moving to annual plans,” Mohanty said.

Users are more attracted to particular shows or movies on the platform and hence, prefer to take a quick subscription to watch those individual titles. Such behavior reduces the ARPU or average revenue per user on a paid service. For example, Disney+, the international video streaming service owned by Walt Disney, produces an ARPU of $6.32 in the US and Canada and $6.35 in other international markets. However, its service – Disney+ Hotstar – which operates in India and other Asian countries, saw an ARPU of $0.76 as of its latest earnings.

There is a huge appetite for short-form video content in India, driving growth for the AVOD ecosystem, said Subhasish Gupta, Brightcove, Managing Director, Sales, India and SAARC Region, a global provider of cloud solutions for video. “Connecting with the audience to capture the attention of the audience is an important factor in increasing the viewership for the AVOD model. AVOD services offer a low barrier to entry for most consumers, requiring minimal information to start watching. This ease of access to high quality content, widespread Internet availability and reliance on smartphones are fueling the growth of AVOD services. Many streaming services are moving back to the AVOD model because it is easier to reach and engage with viewers and achieve ROI.”

Vibhu Agarwal, CEO and founder of video streaming app Ullu, explained that while viewers in tier-one and tier-two cities who have the ability to pay are subscribing, many in smaller cities still have access to pirated content. are making. “These are the people who are mentally prepared for commercials, unlike metros who don’t have time for them. The second challenge is the recent RBI order which has made online payments difficult.”

Siddharth Singh, co-founder of marketing agency Kapshup, said that India’s OTT market is still nascent. He added that the audience would like to see the scene unfold and the market strengthen before handing over their hard earned money to the leader. Also, during the lockdown, viewers may have subscribed to the platforms in view of the times, but with life returning to normal, many customers are not renewing the subscription and have to reconsider their decision and return to the platform. It may take time to arrive, Singh added.

Mihir Shah, vice-president, advisory, consulting and research services provider Media Partners Asia (MPA), said that with movie theaters now open and many live entertainment experiences available, there is bound to be some slowdown in subscriptions compared to the past two years. “As GDP increases, there will be a higher consumer propensity to pay. The idea behind platforms that invest over $1 billion annually in content is that a large portion of it will be behind paywalls,” Shah explained.

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