Foreign streaming platforms avoid big push into India

New Delhi: Foreign streaming apps that have recently entered India’s crowded market are taking baby steps as they shy away from investing heavily in local original content due to low returns in a price-driven market.

While Warner Bros. has indefinitely delayed the launch of its streaming app HBO Max and instead licensed content to JioCinema, Apple has tied up with Bharti Airtel to offer Apple TV+ to Airtel XStream customers, which will not feature local originals. Others, such as Crunchyroll, a global anime brand, operate in India but do not produce local content.

Bad advertising, subscription revenues

Industry experts attribute this cautious stance of the platforms to weak advertising and subscription revenues, as well as the fact that their niche content, which does not require large investments, appeals to a limited audience.

“For global OTT players looking to succeed in India, understanding the complex audience dynamics is vital,” said Chandrasekhar Mantha, partner, media and entertainment leader, Deloitte India. “Given the price sensitivity of the market, recognising audience segmentation and offering dedicated subscription plans along with AVoD (ad-supported video on demand) models are key strategies for success. While producing original content is costly, leading platforms will have to effectively balance their content slate with a mix of originals and significant licensed acquisitions. Getting the content strategy right can be challenging for new players,” said Mantha.

New entrants also face significant challenges in competing with established OTT giants, given the significant investments required in technology, content and marketing. Subscriber acquisition costs are high for OTTs in the early stages. Often, ROI can be negative or low in the initial years, Mantha added.

According to Manpreet Singh Ahuja, Chief Digital Officer and TMT (Technology, Media, Telecommunications) Leader, PwC India, in such a scenario, licensing partnerships and affiliates are being tried to increase penetration levels and build a strong subscriber base before investing in localised content offerings.

Akshat Sahu, senior marketing manager for APAC at Crunchyroll, said the company sees huge potential for anime in India because it transcends cultural barriers. “That’s why we’re localizing our content into Tamil, Telugu, and Hindi, so more Indian fans can watch anime in their preferred languages. We believe that understanding and catering to the unique needs of Indian viewers is key to succeeding in this vibrant market. We’ve also introduced special pricing for Indian anime fans. ₹“It costs $79 per month,” Sahu added.

Less paying subscriber

Media consultancy Ormax estimated India’s streaming audience at more than half a billion in an August report, but paying subscribers are under 100 million. Pricing strategies and local language content remain key in this market.

“Indian audiences are price sensitive and value-oriented, which requires new entrants to match the pricing of existing players and deliver great content to attract viewers,” said Mehul Gupta, co-founder and CEO of digital agency SoCheers. “It is also important to understand the cultural nuances and beliefs of the audience as Indians are sensitive to religious interpretations and statements. Another factor that foreign OTT platforms need to consider when expanding into India is language diversity. While India has a large English-speaking audience, the demand for local and regional language content is high.”

Apple TV+ can reach a niche audience that is interested in premium global content and is willing to pay for it, Gupta said. “You will not see them investing in regional content for markets like India yet; they prefer to bet on content that will work across borders. Apple TV’s overall market share in India is negligible with major players like Prime Video, Netflix, Hotstar, JioCinema, ZEE5 and SonyLIV and a few regional OTTs covering over 90% of the market,” Gupta added.

Differentiated content

In an earlier interview with Mint, Warner Bros. Discovery South Asia general manager Arjun Nohwar had said that despite having their own OTT platforms, the companies leverage the large user base of other platforms and offer different content to the consumer. “This symbiotic relationship allows OTT platforms to leverage their content libraries, attract a larger subscriber base, while the parent companies generate additional revenue without the costs and risks of operating a standalone platform in India’s competitive landscape,” he added.

The price-conscious Indian market poses other challenges. With so many affordable options already available, the average consumer is wary of paying a premium for content. This puts pressure on foreign platforms to match the low price points or offer compelling value propositions that may not always align with global pricing strategies, says Bhavesh Joshi, founder and CEO of content discovery app MovieMe.

“On the advertising front, while the potential is huge, CPM (cost per thousand impressions) rates in India are significantly lower than in western markets. For foreign platforms accustomed to higher returns on ad spend, this could impact the profitability of launching ad-supported models in India. Moreover, advertisers in India have varying expectations around ad targeting and audience segmentation, requiring platforms to be highly adaptable and innovative. The multitude of ad networks has created a highly fragmented landscape in India, which can be difficult to properly monetise,” Joshi explained.