Take the first. The $5.5-billion Netflix, a video streaming service, is about extremely high-bandwidth content - films and TV shows. A standard definition film takes anything from 0.3 to 0.7 gigabytes of data and a high definition one anything up to 1.5. The only homes with that kind of bandwidth in India would be the wireline broadband ones - that is just about 19 million of India's 319 million internet subscribers. This could go up if cable, the best type of broadband, starts offering internet access across the 100 million homes (or 500 million people) it is present in. Currently, only a few cable companies offer internet. And only a fraction of India's cable-subscribing homes buy it.
You could argue that more than 100 million Indians with smartphones are watching video on the go. So what about wireless broadband? Over the last two years, as 3G grew, so has the average consumption of data - from just over 200 megabytes per second (mbps) on 2G to more than 680 mbps on 3G phones. While this is good for watching short videos, it is nowhere close to allowing users to watch even one film a month. Speak to the people who run online video services such as Star India's Hotstar or Zee's Ditto TV: Films and other long form content are not consumed as much as short, snacky sports, news or webisodes are.
Enter 4G. The technology helps compress huge amounts of data, making it easier to transport it over the airwaves. Four major telecom firms - Vodafone, Bharti Airtel, Idea and Aircel - have rolled out 4G services. Reliance's Jio will do so by April this year. Won't we then be awash with bandwidth, albeit wireless?
4G could be a game changer. (See "The 4G era: Will it change the game for media firms?"). But currently, just two to three per cent of India's billion-odd mobile users own 4G-enabled handsets. It costs anywhere between Rs 4,000 and Rs 20,000 and there aren't many in the market right now. Also, most 4G players have very small quantities of spectrum. According to the OpenSignal State of Global LTE (4G) Market's March 2015 report, "not all LTE networks are created equal, with big differences between countries and networks". It states that Spain has the fastest mobile network speeds in the world, averaging 18 mbps per second. The US has one of the worst 4G speeds, at seven mbps. Considering that India barely manages an average of five mbps on 3G, it is a long time before we can start seeing full-length films and TV shows on cell phones.
The second aspect is the ecosystem. Netflix came in at between $8 and $12 in the US, where cable services retail for anywhere between $50 and $80 a month. The gap was huge. Also the offering - English films and TV shows - made sense in a largely homogeneous market. In India, TV homes have paid an average of Rs 200-300 a month for years. The idea of paying data charges of anywhere between Rs 80 and Rs 125 per gigabyte on 3G/4G, plus Rs 500 or more as subscription (for Netflix), will take time to digest.
Zee's Ditto TV, the only online video subscription service in India apart from Netflix, has an average revenue per user of Rs 50 and had 1.8 million subscribers till late last year. Note that Ditto offers more than 100,000 hours of TV shows and 3,000 movies in several Indian languages. For now, Netflix has a limited service - only English content. This limits it to a small, albeit premium market in India. The most popular streaming service, Star's Hotstar, is advertisement-based, giving away some of the most expensive programming across sports, soaps and films, free to its 50 million users.
Even if bandwidth and pricing work out, the global experience is that long form content doesn't work on mobile phones. "Less than seven per cent of Netflix's consumption is on wireless," says Punit Goenka, managing director and chief executive officer, Zee Entertainment Enterprises. Anurag Dahiya head, content and advertising sales, Singtel, says: "4G has not changed substantially what people consume and how. Unless inconvenient, wherever possible, users prefer to watch on the biggest screen possible. As signal quality goes up, the large-screen experience matters more and more."
The online video boom will take a long while coming.
Twitter:@vanitakohlik