OTT platforms may upend multiplexes' run soon, set to be a Rs 12,000-cr industry by 2023

The OTT market is set to do an encore of what multiplexes did to the VCR/VCP/VCD segment in the early 2000s and is set to become a Rs 12,000-crore industry by 2023, up from Rs 2,590 crore in 2018, says a report.

According to SBI Research, the over-the-top or OTT market is expected to reach Rs 11,944 crore by 2023, up from Rs 2,590 crore in 2018, logging in a compound annual growth of 36 per cent.

This may lead to a repeat of the sudden death of the VCR/VCP/DVD industry that boomed in the 1980s, with the exponential rise of multiplexes since early 2000s across metro/urban areas, the report warns.

OTT has already chipped away 7-9 per cent of the entertainment industry share and revenue, and is consistently growing with over 40-odd players and offering original media content in all languages.

Quoting various industry reports, Soumya Kanti Ghosh, the group chief economic adviser, said there are over 45 crore OTT subscribers today in the country and this is expected to reach 50 crore by end-2023.

This strong growth is led by affordable high-speed mobile Internet, doubling of Internet users, increased adoption of digital payments and discounted price offered by global players such as Disney+Hotstar (14 crore subscribers), Amazon Prime Video (6 crore subscribers), Netflix (4 crore), Zee5 (3.7 crore) and Sonyliv (2.5 crore) offering plans at 70-90 percent cheaper than the US.

The OTT space is also seeing number of local and regional players with players like Sonyliv Voot, Zee5, AltBalaji, Hoichoi etc catering to regional demand.

The rise of OTT is expected to eat into cinemas' profits as over 50 per cent of the people use OTTs more than 5 hrs a month. What's more, major studios have realized creating streaming series and movies is far more profitable than traditional filmmaking, especially if they build their own streaming platforms.

He also warns that options such as Smart TV and Chromecast coming into the picture have impacted the traditional mode of entertainment the most.

It can be noted that the 1980s saw the exponential rise in video cassette recorders/players (VCRs/VCPs) that for the first time challenged the established modes and models of viewing a movie.

But the rise of multiplexes in the early 2000s across the metros and large cities effectively killed the DVD industry and single screens. And the onslaught of OTT platforms is set to do to multiplexes what they had done to DVD markets in the early 2000s.

And the biggest boost to disruption was the Covid-led lockdowns which completely shut cinemas--something even the two world wars couldn't do.

This had Hollywood heavyweights such as James Cameron and Martin Scorsese describing the shutdowns an existential threat to cinemas, and calling for government assistance to help the industry survive. But technology did more help than the government doles and that is OTTs.

Around 30 Hindi films had a digital premiere during the pandemic. However, now regional web series and films are focused more even by global players.

The OTT segment is still led by free (ad-supported) offerings which had 18.4 crore subscribers in 2017 and the same is set nearly double to 35.1 crore this year and scale to 46.6 crore by 2027.

The pay-per-view segment stood at 3.5 crore in 2018 and is on course to touch 8.9 crore this year and touch 11.7 crore in 2027. Video downloads were 4.2 crore and 7.7 crore 8.6 crore, while video streaming at 1.9 crore, 6.8 crore, and 10.8 crore, respectively during this period.

Going forward, it is expected that OTT platforms' expansion into education, health, and fitness will additionally cement its future. It has unlocked new routes for content creators, and the audience has begun to understand it as more than just a medium of enjoyment.