 "A screenshot of the Netflix website")
In a bid to cash the digital space and tap a new revenue stream, traditional cable companies are launching their own over the top (OTT) content, according to India Ratings and Research.
In broadcasting, OTT is the delivery of audio, video and other media over the Internet, without the need of a cable subscription from a multiple-system operator (MSO), who is usually in control of distribution of the content.
"In light of competition from independent OTT content producers/aggregators, like Netflix, Eros Now and Spuul, and broadcasters with OTT services — Ditto TV, Hot Star, Voot — and the industry wide shift of consumers towards consuming digital content, traditional cable companies are setting up their own OTT services," it said.
Asianet Satellite Communications has launched an OTT service called Asianet Mobile TV+ for streaming Malayalam content among other regional TV channels. This enables the company to expand its geographical reach, enable non-linear or on-demand consumption and offer the opportunity to cross-sell or bundle its broadband services.
Asianet had a broadband subscriber base of 167,000 at the end of financial year (FY) 2016-17, while Hathway Cable & Datacom is expected to launch its OTT soon.
Ind-Ra expects other MSOs to also follow suit, in order to keep up with this shift in consumption pattern.
Among the large players, broadband subscribers grew in the FY16 for Hathway Cable & Datacom to 6,27,200 from 4,55,800 in FY15, Den Networks to 95,000 from 23,000 and SITI Cable Network to 1,32,000 from 60,000 showing the growth in broadband penetration.
It observed that MSOs may try to bundle OTT services with their broadband services to create a bouquet offering.
"The entry strategy for MSOs launching OTT is to grab subscribers initially and monetise later. Some players in the media value chain are offering OTT free or at prices as low as Rs 20 per month. Even for the yet to be launched OTT services, we expect these services to be free initially to develop a user base and then move to a subscription based service with gradual price increases," it said.
"Eventually players will move to tap advertisement revenues using consumer demographics or analytics. Currently, the eco-system is still evolving with various intermediaries in the value chain offering digital services. The next leap forward for the industry will be post the introduction of better 4G data services by telecommunication service providers which will enable wire-less and on the go streaming," the rating agency said.
