Entrepreneurs and investors have been obsessed with online retail over the past two years as India’s Internet user base has (arguably) approached 150M today. As the sheen wears off of that set of opportunities, both constituencies have begun to look for others in what should soon be the second largest online market in the world (source: McKinsey, Avendus). Music and video are obvious choices but these are much more complex ecosystems, in any geography, but more so in India.
Today, lets take a look at the video opportunity. Bear in mind that most pundits are projecting India to be a “mobile first” online market, so most of my thoughts apply equally to mobile video as to online video consumption. I am consciously leaving out user-generated content as these are ostensibly well served by global platforms like YouTube and Vimeo. These platforms do present opportunities for Indian entrepreneurs to build moderate scale businesses, e.g. content based marketing, video advertising, monetization of existing content libraries or to deliver innovative educational and healthcare related content. Beyond this, lets examine online consumption of television, movies, live events like cricket games and fashion shows.
Global and secular trends in video consumption
Content owners have had a cushy ride (“content is king”) until the past decade but the tumult now underway resembles an assault on King’s Landing (as fellow fans of the hit show “Game of Thrones”would concur)
- Distribution channels are changing
- Cable is going digital in many countries, DTH (an all digital technology) is edging out cable in many markets
- IPTV has seen limited success but video on the internet is a huge success
- Piracy and digital have both driven compression of content release windows (e.g, movies coming to TV and Internet soon after release)
- Viewing habits are changing even more
- If last century was about broadcasting, this one is about narrowcasting and personalization
- The viewer is taking control by place-shifting and time-shifting her consumption
- The audience is self organizing into communities via co-viewing and social viewing which is breaking down traditional ad-targeting models
- Globalization and labor mobility has created “expat” or non-local audiences
- Devices – the third leg of this stool – have been transformed
- TVs getting “smarter” with IP connections and app stores
- Tablets, PCs and mobile phones are increasingly “TV screens”
Content owners have had to adapt
Traditionally, movies have been licensed by medium (DVD, video on demand, theatrical) and by geography(by state, overseas, etc.). Television has been a complex mix: (i) ad-supported free-to-air channels, (ii) cable and DTH providers paying premium channel producers by subscriber, and (iii) some channels paying carriage fees and ad-revenue-share to cable/DTH operators.
But the trends listed above have had far-reaching effects:
- DVD players routinely ignore region codes
- Pirated videos are available within hours if not prior to a new release on bit-torrent tracking sites
- Pirated TV streams abound for major events like NFL/NBA games – the Internet blurs geographical boundaries
- Side-loading has brought mobile video consumption to bandwidth constrained markets
Consequently, DVD sales/rentals are down 30% over the past 5 years and streaming is now the primary form of video consumption.
How have content owners adapted? Very slowly, but surely we have witnessed the rise of new distribution channels.
- Mobile apps and smart-tv apps, preloaded on devices and in app-stores
- Ad-supported channels on YouTube
- Subscription streaming on Netflix, Amazon Prime, Hulu Plus, etc.
- Over-the-top services like Apple TV, Roku, Google TV
- Content distribution via side-loading licenses
- Mobile streaming via operator services or direct to consumer
In India, where we are the home of the “media paradox” (more on that in an older post), a few intrepid entrepreneurs have been trying to capitalize on the shift of content from traditional to new channels. In no particular order (and there are countless more that dont feature here but are trying hard):
- The video streamers/snack-vendors: iStream, Jigsee
- The sunk-content-cost capitalizers: Shemaroo, Rajshri, Yash Raj Films
- The indie-producers: Anurag Kashyap on Youtube
- The mobilizers: Apalya, Zenga
- The conquistadors: Youtube Box Office, Facebook Video, Vimeo (when the over-zealous censorswill let them)
- The expats/repats: YuppTV
- The untouchables/inaccessibles: Hulu, Roku, Boxee, Apple TV (see them compared here, blocked in India mostly but amazing what a proxy server can do to transcend IP streaming geo-constrainers)
- The ad-servers: Vdopia
- The data-plan-skippers: eMojo, The App Kiosk
But they do not have it easy! Next time, let us examine the challenges.
Shyam Kamadolli is with a private equity fund investing in India where he focuses on growth and early stage investments in technology, media and telecommunications. Previously, he founded several entrepreneurial ventures in the Boston area before joining a venture capital fund there. He can be followed on LinkedIn or on twitter (@kamadoll).
This post was reproduced with the author’s permission from his blog which features coverage of digital and online ventures in India among other topics.
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