BCG-Entertainment Goes Online Report PDF

Entertainment
Goes Online
A $5 BILLION OPPORTUNITY
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ENTERTAINMENT
GOES ONLINE
A $5 BILLION OPPORTUNITY
KANCHAN SAMTANI
GAURAV JINDAL
November 2018 | The Boston Consulting Group

CONTENTS
3 EXECUTIVE SUMMARY
4 ONLINE VIDEO
Exponentially Growing Phenomenon in India and Globally
2 0 INDIAN CONSUMER GOING ONLINE FOR ENTERTAINMENT

Insights from Consumer Research
3 9 THE INTERNATIONAL OPPORTUNITY FOR INDIAN CONTENT

Serving the Indian Diaspora
4 3 REALISING THE OPPORTUNITY

Six-point Agenda for the Industry
4 9 APPENDIX
5 3 FOR FURTHER READING
5 4 NOTE TO THE READER
2 | Entertainment Goes Online—a $5 Billion opportunity

EXECUTIVE SUMMARY
T he past decade has seen a global transformation in how

consumers watch videos and listen to music. From the days of
terrestrial broadcast, social viewing of television to highly person-
alised, small screen consumption - the media industry is witnessing a
transformation like no other. The rate of change in the industry only
continues to accelerate, with hyper-competitive dynamics coming into
play in India. There are the traditional players, and a strong push
from global and more nimble companies to get into the OTT space. At
the same time, India’s appetite for entertainment continues to
increase as high speed broadband connectivity, ease of payment
options and availability of multiple platforms creates the right
environment for the consumers.
Powered by a first-of-its-kind consumer survey, this report seeks to ad-

dress the changing Indian consumer, learnings from other global mar-
kets, niche areas such as internationalization, music and regional act-
ing as the key strategic imperatives and the agenda which can drive
success in a market with a potential for $5 billion.
The Boston Consulting Group | 3

ONLINE VIDEO
EXPONENTIALLY GROWING PHENOMENON
IN INDIA AND GLOBALLY
G lobally, OTT has become the key

driver for video watching and media
consumption growth, with an increasing
Smart TVs, STBs, and gaming consoles can
also be used for the provision of OTT ser-
vices. The advantage of using OTT service is
number of people consuming over the top that it is less costly in contrast to other tradi-
(OTT) content through varied platforms. In tional modes and more efficient and custom-
the last few years, OTT content, which is ized in terms of consumption. Moreover, it’s
video content that is delivered over the more customized and convenient compared
internet as an alternative to traditional to the traditional modes.
media, has seen substantial prevalence when
compared to conventional forms of video
consumption. Revenues from OTT content The Global OTT Opportunity
has seen a CAGR of 40 percent+ for the The global OTT opportunity is huge and has
period 2005-2017 and is expected to see a been pegged at ~USD 76 billion for 2018 (as
growth of 20 percent in the period 2017-2023. shown in Exhibit 2). Such a large canvas al-
In comparison, Public TV, FTA TV and Pay lows both SVOD (Subscription Video-on-De-
TV have seen a growth of 2 percent, 1 mand) and AVOD (Ad-supported Vid-
percent and 6 percent, respectively, in the eo-on-demand) models to not only co-exist
period 2005-2017. but also thrive. United States and Canada
dominate the OTT market due to better con-
nectivity which allows for wider circulation of
A Plethora of Services and OTT apps. Their continued dominance in the
Devices are Driving OTT market can be credited to factors such as the
Adoption, Globally availability of high-speed connectivity, the
A key factor perpetuating this growth in con- presence of established content creators and
sumption of OTT content is the fact that a providers in the region and the significantly
considerable part of OTT content is delivered higher costs associated with more traditional
over smart and mobile devices (as shown in modes of media consumption (like PayTV)
Exhibit 1). Key players are giving an addition- which has made OTT into a more cost-effec-
al fillip to this demand by investing in inno- tive solution.
vative technology and development of origi-
nal content exclusively for OTT consumption.
Furthermore, broadband connectivity has in- APAC—Growing at a Fast Clip
creased its footprints globally. Due to this, the The OTT market is growing at a fast clip in
other Internet-enabled devices including Asia-Pacific (APAC), Europe, the Middle East

EXHIBIT 1 | A Plethora of Services and Devices are Driving OTT Adoption
<Devices Services >

Youtube brings
2005 YouTube streaming
Apr-05 mainstream
2006
Apple TV
Jan-07 Netflix switches
Netflix
The iPhone 2007 from DVD to
iPhone VUDU Jan-07
revolutionizes streaming movies
mobile Jun-07 Sep-07
connectivity
Roku hulu
May-08 2008
Feb-08
Android Hulu Plus created
Oct-08 paid subscription
2009 for streaming
current TV
content
Apple iPad hulu plus
Mar-10 2010
Nov-10
Google TV
Amazon Instant
Oct-10 Amazon Video released in
2011 Prime video 2011, rebranded
Feb-11 to Prime Video in
2015
2012
2013
Amazon
fireTV
Apr-14 2014
Sling television Non traditional
AndroidTV Jan-15
streaming
Inexpensive Jun-14 HBO NOW services offer live
streaming devices 2015 Mar-15 and linear
Chromecast
make every TV a programming
Sep-15 PlayStation Vue
smart TV Mar-15
2016 DIRECTV NOW
Nov-16
YouTube TV
Mar-17
2017 Trend - sports
hulu with live TV
May-17 streaming
services going
FI TV Pro direct to
2018 Jun-18 Facebook Watch consumer
Jun-18
DAZN
ESPN
Jun-18
Apr-18
Source: Press Runs, BCG analysis.

and Africa (MEA), and Latin America. There- While traditional media continues to be the
fore, OTT platforms in these regions have im- media of choice for consumers with an over-
mense scope for enhancement. Asia Pacific is all share of 84 percent, India is seeing an in-
expected to be fastest growing market for crease in the share of digital in media con-
OTT content during the forecast period 2017 sumption (as shown in Exhibit 4). This will
to 2022 (as shown in Exhibit 2, 3). This is pri- most likely influence the impact and growth
marily attributable to the increasing number of digital advertising as well.
of viewers as consumers adapt and get used
to OTT consumption and a steady but signifi-
cant rise in local content creators and provid- The Indian OTT Phenomenon,
ers. This is also driven by the rest of the en- Already Large, So Far Additive
ablers (connectivity, payment ecosystem, Not Cannabilizing
device availability) coming together. Overall, it is estimated that 16 percent of me-
dia consumption in India is already on digital
The Indian media industry seems to be an media. Relative to developed countries, India
outlier relative to more developed markets in is lagging. However, for the Indian youth, al-
terms of ad growth and penetration. This gap ready 25 percent of media consumption is
creates an opportunity for India to grow from digital (as shown in Exhibit 4). This indicates
current levels. As per our estimates, India that the growth in India is likely to catch up.
reaching China / Brazil levels would imply 6
percent CAGR + GDP growth (5-7 percent) i.e. There is a distinct difference in the shape of
10-13 percent CAGR for the next 10 years for digital consumption in India. The digital con-
the overall media industry. sumption (relative to traditional TV and print)
in India has been additive and not cannabiliz-
As more and more people spend a larger por- ing traditional media consumption. For e.g. in
tion of their time in the digital realm, it is in- the past one year (between 2016 and 2017),
evitable that advertising goes digital as well. overall media consumption grew for all seg-
EXHIBIT 2 | Global OTT Market is a ~ $76B+ Pie With Both SVOD and AVOD Models Co-existing
27% GROWTH IN OTT MARKET, APAC ROUGHLY 30% THE

SVOD PROJECTED FOR 22% IN 2017-22F GLOBAL OTT MARKET
CAGR CAGR
('17-'22F) (%) ('17-'22F) (%)
141
141 126 9% 31%
126 8% 9%
110 19% 19%
110
93
+27%
93 47% 22%
76 29% 24%
76
57
57
43 43
32 32
23 45% 20% 23 43% 16%
17
13 17 13
2018F
2019F
2020F
2021F
2022F
2012
2013
2014
2015
2016
2017
2012
2013
2014
2015
2016
2017
2018F
2019F
2020F
2021F
2022F
TVOD SVOD AVOD Other Europe APAC NAMR
Sources: Ampere analysis, Magna Global, BCG analysis.

EXHIBIT 3 | APAC is a fast Growing Market for OTT
NORTH AMERICA EUROPE ASIA PACIFIC
$61B
+16%
$56B 10%
$50B $41B
+24%
$43B $36B 5%
40% +19% $31B
$37B $27B
$24B 12% $26B
$29B $21B 54%
15% $18B $20B
$14B 39%
38% $14B
$11B 8%
50% 16%
41% 49% 59% 40%
47%
43% 33%
2022F
2017
2018F
2019F
2020F
2021F
2017
2018F
2019F
2020F
2021F
2022F
2017
2018F
2019F
2020F
2021F
2022F
SVOD
ARPU $10.5 $7.6 $3.2
2018E
SVOD AVOD TVOD
Sources: Ampere analysis, Magna Global, eMarketer, January 2018, BCG analysis.
EXHIBIT 4 | Digital Video Consumption in India has Become Sizeable and Very Relevant
DIGITAL MEDIA CONSUMPTION BY COUNTRIES INDIAN YOUTH IS AT 25%

Share of digital in media consumption (2018E)
(Hours/week)
16% 11% 15%

20% 18 % 22%
25% 25%
34% 31%
39% 38%
8 9% 8 5%
80% 84% 8 2% 78 %
75% 75%
66% 69%
61% 62%
USA UK JPN RUS CHN BRA IND 72+ 54-72 39-53 24-38 <23
Age group
Digital media Traditional media
Sources: PQ Media, BCG analysis, Digital advertising includes search, video, display, social media.

ments of consumers. Those who also consume e.g. Hotstar, Voot, Sony Liv and Zee 5.
digital media—total consumption grew more These broadcasters have put their exten-
sharply, however consumption of traditional sive TV content libraries online, supple-
media did not decline substantially (as shown mented by additional content through
in Exhibit 5). This indicates the robustness of licensing and originals. In India, these
the underlying consumer trend in India—there players enjoy a strong brand and consum-
is headroom for growth for media overall, with er awareness driven by their strong TV
digital media growing more sharply. This is in brands. These OTTs have a combination
stark contrast to developed markets where of ad supported and behind the paywall
OTT has taken share from traditional media. content. This is unique to India—as
broadcasters were quick-off-the-block in
the OTT space and are hence, well
The Indian OTT Space is Already entrenched in the OTT space.
Hyper Competitive With All the
Ecosystem Players Vying for •• Global OTTs e.g. Netflix, YouTube,
Consumer Attention Amazon Prime have extended their
services into India. Historically, India
Indian OTT space is hyper competitive and developed a video watching habit with
has attracted varying types of players which YouTube. The global OTTs (e.g. Netflix,
offer varied value propositions to the con- Amazon Prime) have started investing in
sumers and have different business models. local Indian content in a significant way.
There are multiple business models evolving •• In addition, the telcos e.g. Airtel, Jio and
in India (as shown in Exhibit 6). Vodafone-Idea are building aggregator
models- aggregating content across
•• All large successful broadcasters in India multiple platforms and providing a
have launched their own OTT platforms payment interface. They are also leverag-
EXHIBIT 5 | Digital has been Additive to Overall Media Consumption in India
2016 2017
Time spent on accessing media (Hrs/day) Time spent on accessing media (Hrs/day)
+62%
+61%
1.7
1.5 (42%)
(41%)
0.7
0.7
0.7 0.6 (26%)
(17%)
(31%) (17%)
1.8 1.6
1.5 1.5
(74%) (41%)
(69%) (42%)
Non-internet users Internet users Non-internet users Internet users
Digital1 Print TV
Sources: BCG CCI Digital Influence Study 2016, 2017 BCG analysis (N=18,000).
1Digital - Respondents accessing internet for non-work related purpose.

EXHIBIT 6 | Indian OTT Market is Hyper Competitive and has Attracted Various Players With
Different Business Models
Broadcaster OTTs Telecom OTTs
Hotstar Zee5 Voot Airtel Jio Vodafone
Sun NXT SONY LIV
Global OTTs Social Media
Netflix YouTube Facebook Twitter
Amazon Prime video HOOQ
Distributor OTTs Others
Tata Sky DishTV EROSNOW Viu ALT Balaji
Hathway(Ditto TV) Sun NXT

Hoichoi TVF YUPP TV
Source: BCG analysis.
ing access to other OTTs as a differentiat- Investment for original content by OTT play-
ing factor to drive consumer retention and ers is increasing at a fast clip. In addition to
acquisition live sports rights, the nature of shows pro-
duced is also evolving—tent pole properties
•• We are also seeing independent OTTs built for OTT are at a cost per hour of 3-4X
evolving, being supported by content cost of traditional TV content (as shown in
creators. Exhibit 8). The need to differentiate to attract
eyeballs is enabling aggressive bets on origi-
•• Social media platforms continue to be an nal content.
important source of video consumption,
and social media players are leveraging this We have analysed the types of investments
by increasing their focus on video content being made on OTT content across platforms.
These investments are in very varied forms of
•• Traditional TV distributors (cable, DTH) are content with different propositions (as shown
also experimenting with different models to in Exhibit 9) e.g.
participate in the digital media space
•• “Tent poles” or “hero content”: heavily
Most of these players and models have marketed, premium content (higher cost
evolved and entered the market in the past 5 of production)—meant to bring new
years. The year 2017 saw the first burst of eyeballs on the platforms
“big money” being deployed behind Indian
content on OTT. Heavy investments are now •• Hit movies—expensive to buy, but attract
underway across multiple players. The num- eyeballs
bers of players in the Indian OTT market
have witnessed a 3.5x increase in the last six •• High profile sporting events
years growing from just nine players in 2012
to 32 in 2018 (as shown in Exhibit 7). •• Syndication of international content

EXHIBIT 7 | Heavy Investments in Content by Multiple Players Also Already Underway, No Longer "Just Lip
Service" as Market Clearly Important
NO. OF PLAYERS IN THE OTT MARKET HAVE 2017 INVESTMENTS (IN INR CRS) FOR
INCREASED 3.5X TIMES IN THE LAST 6 YEARS ORIGINAL CONTENT BY OTT PLAYERS
ErosNow
4000 CR INR1
Hotstar Hotstar
(~$300m)
HOOQ
500 – 600 CR INR (IPL Rights
Netflix
Airtel TV ($70-80m) for 5 Years)
Lattu
SONY LIV MUVIZZ Jio TV Kids
Amazon 500 CR INR
9 32 Prime video (~$70m)
2013 2014 2015 2016 2017 2018
# OTT # OTT
players players ~ 400 CR INR
(2012) hungama Netflix ALT Balaji (2018) Sony LIV
(~$55m)
Amazon
myplex Prime video Hoichoi
~ 400 CR INR
TriplePlay ErosNow
TVF! Sun NXT (~$55m)
Arre
Zee 5
YUPP TV VIU
120 CR INR
Asianet ALT Balaji
(~$16m)
Voot
Sources: Ovum OTT tracker, Media Reports, BCG analysis.
1Factor of winning bid for digital rights assumed to be same factor as winning global bid.
EXHIBIT 8 | Cost of Content Significantly Increasing as OTT Platforms Bet Aggressively on Originals
AltBalaji Example
"UPGRADE TO TV" "RETELL CLASSICS" "TENT POLE"
• TC Stars in a newer digital format • Adapt Classical stories for newer • Original and exclusive high impact
audiences content
• Storylines and ideas that would not • Build and develop on the immense • Utilize the best talent available
work on traditional TV fresh talent pool including Film talent
• Appeals to mass audiences • Appeals to Large segments of the • Appeals to niche but still large
audience segments
• Example karrle Tu Bhi Mohabbat • Dev DD – a modern take on Devdas • Bose Dead/Alive has an IMDB
Season 2 launched within 9 has over 1m viewers already and rating of 9.4 – one of the highest
months of Season 1 soon entering Season 2 for a web series
• Costs per hour at 2x to 3x cost of • Costs per hour at 2x to 2.5x cost TV • Costs per hour at 3x to 4x cost of
TV content content TV content
Source: Balaji Investor Presentation, BCG analysis.

EXHIBIT 9 | Different Types of Content developed and syndicated by OTT platforms
Tent Poles
Inside Edge, Sacred Games, Orange is the new
Black, Stranger Things
Netflix,
Amazon
Live Sports Prime Netflix, Movies
IPL, Premier league, FIFA Hotstar, video Amazon Dunkirk, Raazi,
World Cup Russia 2018 Sony LIV Prime Masaan, Udta Punjab
video
Netflix, OTT PLAYERS ARE Amazon

Web-series Amazon Regional Originals
ALREADY BETTING Prime
Ghoul, Comicstaan, Prime video, Gangstars, As I'm
Hotstar,
BIG ON VARIOUS video,
On Air AIB Hotstar suffering from Kadhal
Voot TYPES OF CONTENT
International content
Content around Voot,
Hotstar, syndication
content Hotstar,
Netflix The Big Bang Theory,
Bigg Boss Zee5 JioTV, Game of Thrones
Sony LIV,
Hotstar
Play along
Jio Cricket,
Bigg Boss, KBC
Source: BCG analysis.
EXHIBIT 10 | Competition for User Share is Intense
OVER 80% USERS HAVE 3 OR LESSER VIDEO ~50% USERS UNINSTALL AN APP WITHIN 7 DAYS OF
APPS ON THEIR PHONES USING IT1
% Uninstallers among 50% Avg. days before
new installers Uninstallation
Segment Share of users (%)

OTT App 1 63% 4
YouTube 1 app 32% OTT App 2 62% 4
OTT App 3 61% 4

2 apps 27%
OTT App 4 54% 5
3 apps 22% 5
OTT App 5 53%
4 apps 11% OTT App 6 49% 8
OTT App 7 47% 9

5 apps 5%
OTT App 8 44% 11
5+ apps 3% OTT App 9 43% 5
Avg. time before uninstallation = ~6 Days
Sources: Nielsen Panel of ~15000 smartphones recorded from Q2 '16 to Q2 '18, BCG analysis.
1Based on numerical average across select group of 9 apps.

•• Original content / web series (Hindi, ries of “web series” that would allow for the
English and regional) : build up library of manufacturing of hits and higher user en-
differentiated content gagement. These “hit” shows were used as a
vehicle to drive conversion of free viewers
•• CAC (Content around content) specifically into paid subscribers. Efforts were also made
around reality TV, sports and others also to have a deeper engagement with “free us-
covered on traditional TV ers” in an attempt to create more watch-time
and therefore ad-sales opportunities.
Intense Competition: Race to be The Chinese SVOD model enabled by a

Among the top 3 Video Apps for “paying members watch first” model that
Consumers was successful to get Chinese consumers to
Most consumers (81 percent) have up to 3 vid- pay for content—consumers are generally
eo / OTT apps on their smartphone (as shown more inclined to pay for exclusive content. The
in Exhibit 10 on previous page). Further, all Chinese developed a “paying members watch
platforms struggle with retention of consum- first” model that created exclusivity and en-
ers—on an average 50 percent of OTT apps in- ticed non-paying members to start paying for
stalled are uninstalled in the first 7 days of in- exclusive content. The four-step process of this
stallation. The competition for user share is model is as follows:
intense—every OTT platform is vying to be
among the top 3 of the consumer’s attention. 1. Free access to all users to the weekly
release of a single new episode
Lessons from the Dragon Nation 2. Free users are teased with trailers of
Case-Study: China—Content driven episodes to be released in future weeks
SVOD growth
It would be instructive to observe the evolu- 3. On the other hand, paying members are
tion of the OTT landscape in China. In both given instant access future episodes which
India and China, OTT is unlikely to be driven could sometime comprise and entire season
by consumer price advantage. In the United
States, the average revenue per user (ARPU) 4. After the shows competes all the weekly
per month is USD 89 and USD 11 for Pay TV releases, all the episodes except for the
and SVOD, respectively. In contrast, in China first one become exclusive to paying
and India the ARPU for Pay TV is USD 3 members
while the ARPU for SVOD is USD 3 and USD
2, respectively. The gap in what the consum- Led with few big bets, built watch-time with
ers are willing to pay for online content is sig- cheaper content library—in order to stay
nificant when you compare India and China ahead in the OTT game, players need to con-
with other more evolved markets like the stantly invest in creating original content (as
United States, Canada and Australia. shown in Exhibit 11). However, in order to be
profitable, these investments need to be done
Interestingly, the country has witnessed an judiciously keeping in mind the preferences of
exponential growth of 200 percent+ (2014- the target audience and their inclination to pay
2017) in SVOD subscribers. Over a mere for exclusive content. The Chinese model did
5-year period, >35 percent of China OTT reve- this right by making a few large investments in
nues are from subscription services. non-exclusive content and building watch-time
with a cheaper content library.
The Chinese Strategy—Giving legs to
SVOD Growth Heavy original content investments trig-
Top players leverage AVOD users base to cre- gered the huge SVOD uptake—the main
ate hits and drive SVOD conversion—good factor that perpetuated a huge uptake in
quality original content lies at the heart of SVOD was heavy investment in creating origi-
the OTT industry. A heavy push was made by nal content. The ubiquity of technology and
AVOD / SVOD platforms to build new catego- consequently access to a large amount of con-

EXHIBIT 11 | Led With Few Big Bets, Built Watch-time With Cheaper Content Library
IQIYI example
TV RIGHTS PURCHASE CURRENT # OF PROFITABILITY/BENEFIT FOR FUTURE

PRICE ($/EPISODE) TITLES IN LINEUP VIDEO PLATFORM INTENT
> $5M • 30% shows profitable

3-5 series
(>$750k) • Break even on ability to improve traffic
$3–5M
10-15 series • 60% shows profitable Stay put
($450-750k)
Non-exclusive
licensed library
$1.5–3M • Mostly unprofitable
20-30 series
($225-450k) • Limited ability to improve traffic
< $1.5M 10 series

• 70% shows profitable
(<$225k) (not incl. indies)
> $5M • Can bring in millions of paid users

2-3 series
(>$750k) (The Lost Tomb brought 3.5M)
Platform
$1.5–5M
exclusive ($225-750k)
~5 series
Originals
< $1.5M • Dual income from paid and ad sales

~10 series
(<$225k) • 60% shows profitable
Source: Press Runs, BCG analysis.
tent makes it difficult for content providers to fline fans activities. Moreover, they frequently
attract and retain a consumer’s attention. organize celebrities to interact with fans on
The number of original series for the top iQIYI Paopao in real-time, to attract and re-
three players in China has been consistently tain users. iQIYI Paopao also serves as a key
increasing and has risen from just 13 in 2012 publicity platform for video content, includ-
to 143 in 2016 (as shown in Exhibit 12). ing inviting popular actors of original drama
series to interact with the fans in the “Celeb-
Building social media platform for driving rity is Here” section of iQIYI Paopao to boost
fandom and fan engagement—connecting the content’s popularity.
fans with celebrities and bringing them closer
to the content / content creators across for- In addition, with enabling mobile pay-
mats. By strengthening the connection among ments and telecom infra, subscription has
fans, celebrities and content, the platform en- over-taken advertisement revenues for the
hances user engagement and stickiness. top players—for any industry to thrive, a
supportive eco-system needs to be built
Paopao, for instance, is the social platform around it. A robust digital and telecom infra-
built and used by iQiyi. iQIYI Paopao features structure was instrumental in giving a fillip to
a wide range of social functions. Within each the OTT industry in China. It has been noted
topic of interest, fans can generate content by that a 26x increase in mobile payment value
posting texts, images and videos, as well as coupled with a 4.6x increase in broadband
interact with others through features such as speed between 2013 and 2014 has enable
commenting, giving likes and private messag- strong revenue growth in the industry, espe-
ing. By virtue of its social media nature, iQIYI cially for subscription based revenues (as
Paopao serves as the base for online and of- shown in Exhibit 13).

EXHIBIT 12 | Heavy Original Content Investments Triggered the Huge SVOD Uptake
IQIYI example
NUMBER OF ORIGINAL SERIES1 FOR IQIYI: FROM 18 MONTHS TO THE FIRST 5M "VIPS";
TOP 3 PLAYERS 20M+ NEW SUBSCRIBERS ADDED IN LAST HALF (2017)
143
63 80
The Mystic Nine
13 27 (10m VIPs (2X of Descendants), 43.0
1b views in 1 week – global record )
2012 2013 2014 2015 2016
Descendants of the Sun
(Attracted 5m+ VIP subs)
WITH CONSISTENT INCREASE IN COST/EPISODE
FOR ORIGINAL PROGRAMMING (UP TO $0.3-1
M/EPISODE) Legend of Zu 20.0
Cost/series $(M) (0.8m VIPs added in 1st hour)
30
The Mystic Nine (iQiyi - $27m) 10.0
Lost Tomb
20 (2.6m VIP subs, 2.7b views)
The Lost Tomb (iQiyi - $9.6m)
5.0
10
Soul Ferry 2 (iQiyi - $3.2m) 0.2 1.0
0
2012 2013 2014 2015 2016 Jan-14 Jan-15 Jan-16
Sohu Youku iQiyi Tencent
Sources: Entgroup research, JP Morgan, Press Runs, BCG analysis.

Note: 1 RMB = 0.16 $ conversion rate used.
1The original content numbers include TV series, Event, Movies, etc which are exclusive/original to one of the 3 channels, Tencent, Yoku, IQIYI
EXHIBIT 13 | In Addition, With Enabling Mobile Payments And Telecom Infra, Subscription Has Over-taken
Advertisement Revenues For The Top Players
…HAS ENABLED THE STRONG GROWTH, ESP. FOR
26X INCREASE IN MOBILE PAYMENT VALUE + SUBSCRIPTION BASED REVENUES
4.6X INCREASE IN BROADBAND SPEED … (56-67% OF TOTAL REVENUE)
Indexed, 2013 (to 100)

Revenues ($M)
1.9
3,000
2,664 1.0 1.0 44%
YOUKU.com 82% 66% 56%

18% 34%
2,000 2.9
36%
1.2
1,229 4G launched TENCENT 0.7
71% 64%
in 2014 84% 16% 29%
1,000
3.4
607
465 33%
337 1.8
100 236
120 0.8 55% 67%
100 IQIYI
81% 19% 45%
0
2013 14 15 16 17e 2015 2016 2017
Mobile Payments Amount Broadband Speed Ad based Subscription
Sources: KPCB – Mary Meeker, JP Morgan, Press Runs, BCG analysis.

Note: 1 RMB = 0.16 $ conversion rate used.

India is Potentially at an Inflexion nearly ten-fold (as shown in Exhibit 15). This un-
Point for OTT Growth precedented growth has largely been driven by
Several drivers for growth of OTT in India are media consumption on mobile. While on-the-go
falling in place: consumption of content is simple and efficient,
the launch of Jio has also made it affordable,
•• Improving connectivity and fall in data providing an avenue for the latent demand for
prices digital consumption of Indian consumer.
•• Increased smartphone penetration

Increase in Smart Phone
•• Favourable demographics (age, affluence) Penetration
Over the last five years, India has witnessed
•• Supply of content building up a tremendous growth in TV and smartphone
penetration. This growth has been more of a
It is estimated that by 2020, India will have global phenomenon as smart phone have
more internet users than the population of the become an integral part of every individu-
G7 countries combined (as shown in Exhibit 14). al’s life. Today, across the globe, there are 3
billion smartphones in which the Indian
market accounts for 450+ million smart-
Improving Connectivity and Fall phones (as shown in Exhibit 16). When it
in Data Cost comes to TV, in the last 2-3 years the evolu-
Access to affordable data has perpetuated a tion of smart TV has taken place, which
sharp growth in the consumption of data. The means that we are no longer at the mercy of
launch of Jio heralded a new era of affordable the set up box or cable for content. Consum-
data in the country. It has been observed that ers now have the choice to watch content on
post the launch of Jio in September 2016, the the web or on a mobile app or on their
quarterly consumption of data has increased smart TVs.
EXHIBIT 14 | India Already has more Internet Users than USA and By 2020, # of Internet Users in India Will
be More than G7 Population
Number of people (Million)
2020
2020
2016
650+ ~600 - 650
Million Million
~390
Million
Internet users in India Population of G7 countries
Source: TRAI, March 2017, BCG CCI Digital influence study, 2016.

EXHIBIT 15 | India Saw Content Consumption Exploding With Data Usage Exponentially Increasing as Jio
Launched and Prices Dropped
DATA CONSUMED PER USER (MB) VS.

QUARTERLY DATA CONSUMPTION (M GB) PRICE PER MB
10000 12,000
Jan 2018
8000 Unprecedented 10,000
growth driven by
media consumption
on mobile 8,000
6000
6,000
>10x
4000
4,000
Jun 2017
2000 Mar 2017
Sep 2016
2,000
Jio launch
0
Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 0 5 10 15 20 25
Data Realization per MB (paise)
Sources: Tefficient Industry analysis 2016, TRAI, BCG analysis.
EXHIBIT 16 | Tremendous Growth in TV and Smartphone Penetration has Been Witnessed in the Last Five
Years With More Scope for Growth From Rural India
2014 2015 2016 2018
62%1 62% 63% 66%

TV
160m HH 164m HH 183m HH 197m HH
Smart TV
5m HH 6m HH 8m HH 14m HH
26% 30% 36%

Smartphone users 21%2
173m 301m 389m 478m
Sources: Internet and Mobile Association of India, Ovum, BARC, BCG analysis.
1TV penetration measured as % of households which have a TV.
2Smartphone penetration is % of mobile phone users.

Supply of Content ability of smartphones has led to a spurt in
When most OTT platforms first made their consumption of online content.
entry into the market, they started off with
catch-up shows. However, the entry of global In addition, there is a democratization of in-
players like Netflix and Amazon Prime Video ternet access taking place which will expand
that brought with them a plethora of rich, the consumer sets (move away from just met-
original content, has now compelled existing ro, male, millennial) and expand into rural In-
Indian players to move beyond just catch-up, dia (as shown in Exhibit 18).
syndicated and licensed content. The entry of
Netflix also indicated that the Indian consum- The rural story in India is likely to be even
er is now ready to pay for compelling content. more interesting. There are an estimated 197
million households with a TV, of which 160
Availability of a wide variety of content has million are C&S households—while smart-
attracted a large number of people across the phone penetration is multiples of that and
country with differing sensibilities and choic- growing. Given the challenges of electricity
es. With a growth in viewership, share of on- availability, TV screen, C&S connections, it is
line video advertising is also set to increase. possible that rural India adopts OTT even
ahead of C&S viewing in some pockets. Our
estimate is that nearly 50 percent of internet
Favourable Demographics users in India, by 2020, will be from rural In-
India is witnessing significant shifts in india and rural internet penetration could
come distribution patterns with a rise in “af- grow to as much as 35 percent (as shown in
fluent and elite” (as shown in Exhibit 17). Exhibit 19). This creates a very healthy envi-
With increasing urbanisation, we are seeing a ronment for OTT to take off in rural India.
shift in demographics as more and more peo- There is a strong possibility, given prices and
ple become upwardly mobile. This coupled penetration, that rural India may be an OTT
with increasing connectivity and easy avail- first market.
EXHIBIT 17 | Significant Shifts in India's Income Distribution with the Rise of “Affluent and Elite”
NUMBER AND % OF HOUSEHOLDS (M) IN DIFFERENT INCOME BRACKETS

Annual gross
HH income1
(Per Annum ($))
2010 2016 2025
Elite 4 (2%) 6.5 (2%) 15.8 (5%)

2.4x
>30.8k
Affluent 12 (5%) 17 (6%) 33 (11%)

1.9x
15.4k-30.8k
Aspirers 31 (13%) 40(15%) 1.5x 61 (20%)

7.7k-15.4k
Next billion 102 (42%) 121 (45%) 1.2x 140 (46%)

2.3k-7.7k
Strugglers
91 (38%) 82 (31%) 0.7x 55 (18%)
<2.3 k
Number of HHs 241 267 305

(in mn)
X Growth in # of HHs ('16-'25)
Sources: CCI City Income Database 2016, BCG CCI analysis.

1Income distributions on 2015 prices.

EXHIBIT 18 | Profile of Users to Go Beyond 3M's—Metro, Males, Millennia’s
PEOPLE WHO WE THINK USE INTERNET IN INDIA…

METRO/T1 MALE MILLENIALS (<34 YRS)
29% 23% 70% 60% 74% 67%
7% 8% 11%
… BUT PROFILE OF INTERNET USERS WILL BE BEYOND 3MS BY 2020
NON- METRO FEMALE NOT SO YOUNG (35+ YRS)
71% 77% 30% 40% 26% 33%
17% 25% 24%
Digital consumer’s profile is well beyond the stereotype! % of all Internet users in 2016
% of all Internet users in 2020
Source: BCG CCI Digital Influence Study 2013, 2014, 2015, 2016 analysis (N=18,000 per year), BCG CCI analysis.
Gender data only for urban India.
EXHIBIT 19 | Next Wave of Internet Users will be From Rural India, Will Contribute to >50%
of the Growth in Next 3-4 Years
FUTURE GROWTH IN RURAL INTERNET USERS
>50% OF INDIA'S INTERNET GROWTH IN NEXT 3-4 SHOULD BE SIMILAR TO WHAT CHINA WITNESSED
YEARS IS EXPECTED TO COME FROM RURAL INDIA A FEW YEARS AGO
# Internet users (Million) Rural internet penetration (%)
650+ Million
+19%
28%
12%
~390 Million 52%
China
2008 2013
67%
+28% 35%
48%
33% 10%
India
2016 2020E 2015 2020E
Urban Rural
Source: BCG Digital influence study 2016, CNNIC reports – 2008 & 2013, TRAI, March 2017, BCG analysis.

EXHIBIT 20 | $5 Billion: The Potential of the Indian OTT Market in 5 Years
INDIAN VIDEO OTT MARKET, 2018-2023
Revenues ($B)
$4.5-5B Underlying drivers for SVOD

growth: strong content
development & ability to pay
25% International Market
We expect ~40-50 mn paying subs in
India by 2023, while ~600 mn users will
be users of AVOD
Consumer pay
32%
(SVOD, TVOD)
As in developed markets, the

phenomenon of multiple apps per
43% AVOD
$0.5B
person also playing out
On an average1 Indians use 2.3 OTT
18%
82% video apps; 68% users1 have 2 or more
than 2 OTT video apps
2018 Market Potential
2023
Source: Ampere analysis, Ovum, Magna Global, BCG analysis.

Note: YouTube revenue included in AVOD.
1Nielsen Panel of ~15000 smartphones recorded from Q2 '16 to Q2 '18.
Just the Tip of the Iceberg As the market evolves, the phenomenon of
We believe that the Indian OTT market is second screen, privacy etc will surface more
poised for growth and both ad supported and strongly. Consumer will likely to continue to
consumer pay model will continue to co-exist. have few apps on their phone that are active-
The consumer pay model could take many ly used. Consumer pay models will evolve
different shapes ranging from pure OTT driven by supplier actions and consumer be-
SVOD to Telco drive aggregator model as well havior. However we believe that in India
as TVOD particulary in categories such as AVOD, SVOD, TVOD etc. will all co-exist and
films and sports. It is expected to reach a serve different consumer needs, While con-
market potential of $4.5 to 5 bn by 2023 (as sumer pay models will grow faster than ad
shown in Exhibit 20). However, tapping this supported ones.
potential will require a host of player actions
to fall in place; these include availability of
relevant differentiated content, development
of regional markets and many others. These
are described in the next section of this re-
port. As content evolves and becomes differ-
entiated, we believe that consumer pay mod-
els will evolve further in India—with SVOD
becoming a substantial part of the market.

INDIAN CONSUMER
GOING ONLINE FOR
ENTERTAINMENT
INSIGHTS FROM CONSUMER RESEARCH
O ver the last few years, consumer

behaviour in India has witnessed several
major upheavals.
This transition of today’s consumer towards
increased watching of video opens a major
opportunity for OTT players who can provide
highly immersive and engaging viewing expe-
From a cost-sensitive, middle-income demo- riences. In order to decode the size and shape
graphic, the country is now more affluent, of the OTT opportunity, a detailed consumer
with a concurrent preference for conve- research (n=5000) and analysis of Nielsen’s
nience, as a key driver as ~60 percent of ur- smartphone panel (n=15000) was undertaken.
ban consumers prioritize saving time over The objective of the research was to gain in-
money. By 2025, India’s two leading income sights around consumer behaviour on the
segments will double and account for 40 per- triggers and objectives for OTT usage, pat-
cent of all consumption. With increasing terns of actual usage and how those are
reach and influence of internet in India, the evolving, to retention and churn behaviour.
general profile of internet users of India is The in-depth qualitative research also threw
also widening. Research suggests that by up insights on the content and genre prefer-
2020, internet penetration among users in ences of consumers.
non-metro cities will reach 77 percent, and
among females will reach 40 percent. This is
propelled primarily by the mass adoption of Insights from Consumer Research
smartphone technology. This isn’t simply be- The consumer research threw up many inter-
cause smartphones are perceived as a mod- esting insights. Many data points confirmed
ern necessity—55 percent buyers report pur- our going-in hypotheses while others chal-
chasing a smartphone for an ‘upgrade’ factor, lenged them.
without any real need or ‘push’ (as shown in
Exhibit 21). The following are the top 6 consumer insights
from the research and their implications.
Online Video Viewing has been 1. Three archetypes of consumers based on

the Highest Growth Category their current usage patterns—TV heavy
In less than a year, time spent on video has (“traditionalists”) ~60 percent of our
jumped 11 percent, even as smartphone us- sample; AVOD heavy (OTT experiment-
ers spend incrementally less time on social ers) ~30 percent of our sample; SVOD
media, browsing, gaming and calling (as heavy (the early adopters) ~10 percent of
shown in Exhibit 22). our sample (as shown in Exhibit 23)
20 | Entertainment Goes Online—a $5Bn opportunity

EXHIBIT 21 | The Indian Consumer is Changing
RISING DIGITAL SHOPPING IS A CONVENIENCE AT CONSUMERS

AFFLUENCE WILL INFLUENCE AND 'LIFESTYLE ANY AND ALL SEEK VALUE, NOT
DRIVE UP SPENDING NO REFLECTION' COSTS NECESSARILY
CONSUMPTION LONGER DISCOUNTS
STEREOTYPED
• India's top 2 income • Profile of Internet • ~55% of urban • ~60% of urban • ~60% of recent
classes (>2M)) users in India is consumers bought a consumers prioritize smartphone buyers
combined share to changing, with 2020 new smartphone or saving time over believe their
increase from 8% to penetration TV as they simply money purchase was value,
16% in 2025, expected to rise wanted an upgrade, though they did not
• Accounting for 40% among non-metros with no real need to avail any deals
of the total (77%), females (40%) change
consumption etc.
Sources: BCG CCI Digital Influence Study 2013,2014,2015,2016 analysis (N=18,000 per year), BCG CCI Consumer Trends Study 2018 (N=5000);
BCG CCI analysis.
EXHIBIT 22 | Video Streaming is the Highest Growth Consumption among Smartphone Users in India
MINUTES PER DAY SPENT ON APP CATEGORIES

+11%
40
35.8
32.4 33.1
30.1
30
26.0
23.3 23.5 24.3
20.5
20 17.3 16.8
14.8
10
0
Video Chat and VoIP Social Games Internet Browsing Call
Networking
App Category
Q2 ’17 Q2 ’18
Source: Nielsen Panel of ~15000 smartphones recorded from Q2 '16 to Q2 '18, BCG Analysis.
Minutes per day for users that use the app categories
Video includes video streaming and media player apps

ǟǟ Experimenters using AVOD heavily— watch some types of content on the
to watch on the go, create a “second large screen still after experimenting
screen” in the household, and fulfilling with mobile usage
specific watch occasion of “snacking in
break times at work” / “while 2. Despite the abundance of existing
commuting” content, consumers seek even greater
variety for content, tailor made to their
ǟǟ SVOD installation driven by desire for specific needs; specifically, regional
popular / exclusive content as well as language content is a key need voiced by
ease of use consumers
ǟǟ Consumers seek “value for money”— 3. App combinations have a really long
with so much free content available tail—hence the quest for being in the top
demand justification for premium 2-3 apps will be really critical for players
charged by paid platforms. Hence, to gain scale in this market
there is an overall discomfort (among
both experimenters and early adopt- 4. “Hero” content is able to get consumers
ers) against subscription charges. on the platform—but cannot retain all of
There is a need to establish a distinct them
value proposition for consumers so
that they try services and then contin- 5. Awareness of available propositions
ue to pay continues to be a challenge—need to find
ways to break the clutter
ǟǟ Lapsing on AVOD driven by undiffer-
entiated value proposition, high / 6. Music has traditionally not been a large
hidden data usage, overall drain on opportunity, however, it does attract
mobile battery and preference to eyeballs
EXHIBIT 23 | Three Archetypes of Consumers
TRADITIONALISTS OTT EXPERIMENTERS EARLY ADOPTER

Heavy Watchers of TV but not OTT Heavy watchers of AVOD Heavy watchers of SVOD
50% metro; 50% T1+T2 60% metro Overindexed on metro (70%)

smart TV ownership at 8% and laptop smart TV ownership at 11% and Smart TV ownership at 20% and
ownership at 25% laptop ownership at 30% laptop ownership at 30%
Source: Consumer Research, BCG analysis

Q: How much time do you spend watching in a week?
N= ~5000
JioTV, Airtel TV and Vodafone TV included in AVOD

Three Archetypes of Consumers ness to pay to access favorite content in high
Based on Their Usage Behaviour quality, and subscribers tend to stop using
•• TV Heavy Users—The Traditionalists (~60 SVOD apps if they feel that the content does
percent of those surveyed) not justify the subscription charges.
•• AVOD Heavy Users—The OTT Experi- Exhibit 27 shows the genre preferences of
menters (~30 percent of those surveyed) each of the archetypes—as being quite dis-
tinct. SVOD usage only spikes for the third
•• SVOD Heavy Users—The Early Adopters segment of “early adopters”, both the tradi-
(~10 percent of those surveyed) tionalists and experimenters are not yet
switching any significant viewing to subscrip-
In today’s market, SVOD is a more “metro” tion platforms.
and higher affluence phenomenon while the
traditionalist TV watchers are 50 percent ate Freely accessing favorite content on
living in tier 1 & 2 (as shown in Exhibit 23). demand—Key driver behind choice of
OTT Experimenters (AVOD primary
The profiles below describe who is a typical viewers)
traditionalist / OTT experimenter / early The OTT experimenters use the freely avail-
adopters (as shown in Exhibit 24 to 26). able content of AVOD to explore the offerings
of the OTT space. The consumer research in-
The three archetypes display distinct prefer- dicates that watching on-the-go emerges as a
ences. Traditionalists prefer watching their key reason for AVOD use.
preferred genres on a bigger screen, which is
a key trigger for their use of TV. On-the-go On-the-go accessibility of content has al-
watching is the key driver for OTT use, as it lowed these users to watch content when a
allows access to consumers’ favorite content television might not be available. OTT exper-
on demand. There is a demonstrated willing- imenters indicate that they heavily use
EXHIBIT 24 | Sample Profile—Traditionalist

TRADITIONALIST
WHAT DOES HE INFLUENCES FOR
LIKE TO WATCH? PAIN-POINTS WATCHING
• Preferred genres: News, • Watching on phone means • Content that can be watched
Infotainment less time with family by the whole family
Pramukh, 38 • News on TV • Lack of preferred genres on • Availability of inspirational
Occupation: Professional • NGC and Discovery Channel Global OTT apps, like videos and content
Daily screen time: 2-2.5 hours on TV inspirational videos
• TV together with family • High subscription cost of
OTT apps: YouTube Global OTT apps
City: Bangalore • Mobile apps have same
"Unsubscribed Amazon Prime as I wasn't content as TV, hence no need
giving more time to my family, as soon as I to use apps
come back I was into the phone, that was
not good"
Platform choice
TV OTT
WATCHING ACROSS A DAY
Genre choice
Any Specific Context: Breaks during work Context: Family time after work
Content: Inspirational videos, online clips Content: News, NGC, Discovery, etc.
Platform: YouTube Platform: TV
Willingness to pay premium Screen time: 30 mins Screen time: 1.5-2 hours
Low High Key Reasons for lower OTT usage

Preferred genres already on TV and mobile screen unsuitable for family watching together
Source: In-Person Interview.

EXHIBIT 25 | Sample Profile—OTT Experimenter
OTT EXPERIMENTER
WHAT DOES SHE INFLUENCES FOR
• Preferred genres: Movies and • Lack of variety in content in • Content driven: Used mobile
serials broadcaster OTT apps apps for specific content like
Diksha, 22 • Movies, serials, trailers, • Time-crunch doesn't allow Raazi and splitsvilla
Occupation: Student workout videos, etc. on mobile watching long durations • Older episodes of shows on
Daily screen time: 2-3 hours • News on TV and YouTube demand
• IPL on Hotstar • Shorter duration content
OTT apps (highest usage):
YouTube, Zee5, Hotstar, Voot
City: Surat
"I like to watch the repeated shows
sometimes I even miss some old episodes.
That's why I like to watch online"
Platform choice
TV OTT
Genre choice
Any Specific Context: After returning from college and tuitions Context: Relaxation after completing chores
Content: Movies, serials Content: Movies, serials, and online clips
Platform: TV Platform: YouTube, Zee5, Hotstar, Voot
Willingness to pay premium Screen time: 1 hour Screen time: 1-2 hours
Low High Key Reasons for AVOD Use:

Access to favorite content on demand and option of watching in shorter sessions
EXHIBIT 26 | Sample Profile—Early Adopter

EARLY ADOPTER
WHAT DOES HE INFLUENCES FOR
• Preferred genres: Web series, • Buffering and freezing of • Sci-fi and fantasy, horror, and
movies content on the app crime
Karthik, 38 • Web series on Amazon Prime • Lag in videos on the app • Content in Tamil language
Occupation: Professional and Netflix • Content in High Definition
Daily screen time: 3-3.5 hours • Movies on Airtel TV
• Content in Tamil language
OTT apps: Netflix, Amazon
Prime, AirtelTV
City: Bangalore
"I can’t even think of when was the last time I did a download,
because I watch everything that I want to. I pay for the content,
because of the easy availability of it."
Platform choice
TV OTT
Genre choice
Any Specific Context: After waking up Context: Short breaks during transit Context: Late night watch
Content: News in regional and office hours session
language Content: Serials, animated shows, Content: Serials, animated
Willingness to pay premium Platform: TV YouTube Clips shows, movies
Screen time: 30 mins Platform: YouTube, Netflix, Platform: Amazon Prime and
Amazon Prime Netflix
Low High Screen time: 1 hour (across day) Screen time: 2 hours
Key Reasons for SVOD Use:
Access to favorite content in high definition

EXHIBIT 27 | Preferred Platforms for Genres for the Three Archetypes
TRADITIONALISTS OTT EXPERIMENTERS EARLY ADOPTER
TV AVOD SVOD TV AVOD SVOD TV AVOD SVOD

Indian Serials/TV Shows
International Serials/TV Shows
Reality shows / game shows
Indian Films
International Films
Music Videos
Sports
Kids / Cartoons
News
Documentaries/Information based
Talk shows/ Interviews
Travel Shows
Religious/Spiritual
Cookery shows
Infotainment
Laughter and Comedy shows
High Medium Low
Sources: Consumer Research, BCG analysis.

Q: On each of the following that you use, which of the following genres do you watch
N= ~5000
High: Above 45% Medium: 15-40% Low: Below 15%
AVOD in watching while traveling, creating a apps, consumers are quick to move past the
second-screen at home to watch when the apps they don’t like, as evidenced by the fact
TV is occupied and fulfilling specific watch that over 25 percent of AVOD users delete
occasions such as watching in short breaks their apps in order to replace them with oth-
during work (as shown in Exhibit 28). The er apps (as shown in Exhibit 30).
discontinuation of AVOD is primarily driven
by three reasons: the undifferentiated value Value-for-money—Key driver behind
proposition of AVOD content, the inclination choice for subscription platforms
against ‘small-screen’ devices as a viewing With so much content available freely, con-
platform (after experimenting with these sumers who subscribe for video content seek
platforms) and the high consumption of data value for the money they invest in SVOD.
and mobile-battery life by AVOD apps (as Consumers want to conveniently access their
shown in Exhibit 29). favorite content, hence, when it comes to
choosing SVOD apps, desire for popular and
Consumers have a high awareness of AVOD exclusive content and ease of use of the app
apps, the awareness of of atleast one more drives installations (as shown in Exhibit 31).
app in addition to primary OTT ( primary While there is an overall discomfort against
app being Youtube in most cases) is at 88%. subscription charges, in both the experiment-
There is also a healthy 48 percent trial / up- ers and early adopters, ‘not value-for-money’
take with consumers choosing to use AVOD is the primary reason for the discontinuation
apps (as shown in Exhibit 30). Due to the vast of SVOD apps. Research indicates that the top
content offering on the many available AVOD reasons for deleting SVOD apps are high sub-

EXHIBIT 28 | AVOD Consumers Want to Access Favourite Content for Free, However Uninstall Due to
Undifferentiated Content and Poor Experience of Watching
% AVOD CONSUMERS % AVOD CONSUMERS
REASONS TO INSTALL AN AVOD APP REASONS TO UNINSTALL AN AVOD APP
Same content on
Available free
TV/apps
Access Mobile screen viewing

favorite content suitable limitedly
Better content on
others
Watch on the go
Download same
Short breaks show for free
in working hours
Consumes lot of
data
TV occupied
by family Drains battery of
mobile
Popularity Stopped once

specific show over
Layout/interface
Curiosity
not good
Range of responses: 45% to 55% Range of responses: 36% to 44%

Q: What are your key reasons to install the app?
N= ~5000
EXHIBIT 29 | Key Deterrent for Heavier AVOD Usage: Content not Customized for "Small Screen"
Consumption and Undifferentiated Relative to Traditional Platforms Like TV and Others
AVOD NON USERS (%)
No differentiated content relative to tv and other platforms
Better content on others
Same content available on TV/others
No latest content
Stopped once the show over
Bored of the content
Range of responses: 34% to 40%

Q: What are the key reasons for you to not use apps?
N= ~5000

EXHIBIT 30 | Healthy Consumer Funnel for AVOD
OVERALL
100% universe
(Total consumer base sampled
broad sample with N=~5000)
88% awareness
(Have heard of at least two AVOD apps
Aided recall)
50% drop off from
awareness to trial
48% trial / purchase
(Have used atleast one AVOD
app in the last 6 months)
35% retention
(Use an AVOD
app beyond
1 month)

N= ~5000
AVOD apps considered for the analysis are Airtel/Vodafone TV, Hotstar, Jio Cinema/TV, SonyLIV and Voot
EXHIBIT 31 | SVOD Drivers for Choice: Driven by Favorite Content and Popularity
% SVOD CONSUMERS REASONS FOR INSTALLING AN SVOD APP
Watch on Access Short breaks Popularity Curiosity Downloaded as TV occupied Value for
the go favorite in working allmy friends by family money
content hours did
% SVOD CONSUMERS REASONS FOR DELETING AN SVOD APP
High Consumes Downloading Drains Better Does not Download Same Stopped Free
subscription a lot of videos battery of content justify same show content on once version
charges data simpler mobile on other premium for free TV/Apps specific over
platforms over TV show over
Q: What are your key reasons to install the app?
N= 1322 SVOD heavy users

scription charges, better content being found app (as shown in Exhibit 32). The funnel indi-
elsewhere and free access to content else- cates several implications for SVOD players
where. Consumers demand justification for
the premium charged by current OTT plat- •• Improve awareness—create broader
forms, and hence, there is a need to establish recognition among consumers
a distinct value proposition for consumers to
want to continue paying subscription charges •• There is a 50 percent drop-off between
for content (as shown in Exhibit 31). recall and trial / purchase
The key drivers for subscribing to SVOD plat- •• Improving retention / reducing churn
forms are around access to favorite content, important for sustainable growth of user
popularity and curiosity—these are quite dif- base
ferent from the reasons for which viewers in-
stall AVOD apps. The issue among consumers In summary, consumer journeys are complex
seems to be one of “value for money”. Simi- and evolving. They involve multiple decision
larly it indicates why many consumers do not points both as triggers for use and discontinua-
subscribe to SVOD in the first place (as tion of use. It is clear that platforms need to
shown in Exhibit 33). evolve and communicate a distinct offering to
attract and more importantly continue to retain
SVOD apps have a healthy consumer funnel, consumers. The digital viewing behaviors are
with over 50 percent awareness (even when similar across consumer demographics. Howev-
awareness is more tightly defined as recall of er, it is clear that consumers are willing, able
atleast two SVOD apps) and over 25 percent and increasingly experimenting with online vid-
using an SVOD app in the last six months. 4 eo viewing in the course of their normal day. In-
percent of the overall sample discontinued dia, therefore, is on the cusp on an online view
the use of their SVOD apps which is ~15 per- boom which is likely to become the new nor-
cent as ratio of those who have tried an SVOD mal—if players can create distinct propositions.
EXHIBIT 32 | Healthy Consumer Funnel for SVOD
OVERALL
100% universe
54% awareness
(Have heard of at least two SVOD apps1
Aided recall)
26% trial / purchase

(Have used atleast one SVOD
app in the last 6 months)
22% retention
(Use an SVOD
app beyond
1 month)

N= ~5000
1SVOD apps considered for the analysis are Amazon Prime, Hoichoi, Hotstar Premium, Netflix, and Zee5 Premium

EXHIBIT 33 | Key Deterrent for SVOD—"Value for Money"
SVOD NON-USERS
Free version only
High subscription charges
Do not want to pay premium over TV
Prefer to watch big screen
Better content on other platforms
Consumes a lot of data
Drains the battery of mobile
Mobile screen viewing is suitable for certain type
Downloading videos is simpler than watching
Same content on TV/others

Q: What are the key reasons for you to not use apps?
N= 3670 SVOD non-users
Regional Content as a Key Need already recognizing this opportunity by add-

Voiced By Consumers ing specific regional content libraries to their
With the diversity in India, which has 22 official product offerings.
languages, content in regional languages has al-
ways been important. Historically, this prefer- OTT platforms have already started
ence can be seen in the circulation of newspa- on the path to regional content
pers. In the top 15 dailies (by circulation), 7 are Many OTT players are gearing up to tap into
regional newspapers. In the last decade, news- the regional opportunity. OTT players exclu-
papers in Hindi and vernacular language has sive to regional languages and originals such
grown at 8 percent, faster than English dailies, as Bangla content centric Hoichoi and Sun
which only grew at 2 percent, as literacy num- NXT, which has a library in Tamil, Telugu and
bers have climbed up across India. This prefer- Kannada, have already begun to emerge.
ence is also seen today, as content in regional There are many OTT players that are current-
languages is a part of the lives of conumers to- ly releasing originals in local languages. Hot-
day (as shown in Exhibits 34 and 35) star ran an original show in Tamil, ‘I’m Suf-
fering from Kadhal, AltBalaji has original
Strong preference for regional lan- shows in Bangla and Tamil, while SonyLIV
guage content among consumers created shows in Gujarati (Kacho Papad Pako
In a survey of ~5000 consumers in India, over Papad) and Marathi (Yolo).
40 percent of consumers said that they prefer
content in regional languages, indicating the While some OTT players are already operat-
strong preference for regional language in the ing in the local space, many global and broad-
country (as shown in Exhibit 36). Consump- caster OTT players also have plans in place to
tion of content in regional languages has al- invest in local content. Zee5 plans to release
ready seen a tremendous increase, with in- 90+ originals across 12 languages by 2019,
creasing demand and content offerings in and Netflix plans to release at least 10 origi-
regional languages. OTT players in India are nal shows and movies annually in India. Am-

EXHIBIT 34 | Sample Profile—Power User with Regional Preference
SUPER USER WITH KANNADA LANGUAGE PREFERENCE
NEEDS PAIN POINTS INFLUENCES

• Reality shows, Kannada, Tamil • Doesn’t opt for Global OTT • Actors in serials of Colors
and Telugu movies and music apps since she needs local Kannada suggesting to
Spoorthi, 22 • Needs only Kannada serials as content–“Again, not a lot of download Voot
Occupation: MBA Student Pitta Gowrie Mauve and Radha local language and again • Celebrities in Tent Pole
Daily screen time: 2 to 3 hours Ramana same with lot of Hollywood properties-Bigg Boss in her
• Religious serials like Shani and and Bollywood" case
OTT apps: YouTube, Jio TV, Jio MahanKali are a win for her • Doesn’t want to watch long
Music, Voot, Wynk • "Basically I watch only ads
Devices: Mobile (Oppo), Tab Kannada stuff” • Doesn’t want to pay as
(Apple), Laptop (Lenovo) content she likes is freely
City: Bangalore available
Platform choice
TV OTT
A DAY IN HIS/HER LIFE
Genre choice
Any Specific
Context: On the way to Context: Coming back Context: Spending time Context: After dinner,
college in a bus from college to home with parents through TV watching movies or
Willingness to pay premium Content: Kannada Daily on bus Content: Music, nothing videos
Soaps-Shani and Content: Music specific, flip channels Content: Old Bigg Boss
MahanKali Platform: Jio Music, Platform: TV seasons, Movies
Low High Platform: Voot, Jio TV Wynk, Offline music Screen time: 30 mins Platform: Youtube, Voot
Screen time: 30 mins Screen time: 45-60 mins Screen time: 1 hour
EXHIBIT 35 | Sample Profile—Power User with Regional Preference
"GIVEN A CHOICE, WILL ONLY CONSUME KANNADA"
NEEDS PAIN POINTS INFLUENCES

• Prefers web series, movies • Uninstalls OTT apps due to • Friends in metro city
• Pursues Kannada content “If I unattractive app interface and suggesting
Prajwal, 24 am given a choice, I prefer high loading time—“We new apps
Occupation: Student Kannada only” cannot forward it as much as • Specific actors and movies–
Daily screen time: 5 to 6 hours • Needs subtitles for other we want. Those things “Wills Smith movie was
south languages-“Telugu and irritated me.” released. I wanted to watch
OTT apps: Netflix, Amazon Tamil movies I do not • Faced low storage space on that movie.. So, I & my friend
Prime, JioTV understand in theatre. But, phone so uninstalled heavy subscribed for Netflix”
Devices: Mobile, Laptop those will be good movies, if apps “If I run two apps at the • Curiosity of exploring new and
City: Bangalore you go to online, we get same time, one app popular content
subtitles on.. Amazon Prime” gets stuck”
Platform choice
TV OTT
A DAY IN HIS/HER LIFE
Genre choice
Any Specific
Context: After reaching Context: Late night
home from college binge watching sessions
Willingness to pay premium Content: Movies, shows Content: Movies and
and online clips web series
Platform: Netflix, Platform: Netflix,
Low High Amazon Prime, JioTV Amazon Prime, JioTV
Screen time: 1 hour Screen time: 4-5 hours

EXHIBIT 36 | ~ 40% Consumers Indicate Preference for Content in Regional Languages
Indicated Preference (%)
Religious/ Spiritual
Cookery shows
News
laughter and comedy shows
Talk shows/ Interviews
Travel Shows
Infotainment
Kids / Cartoons
Documentaries / Information based
Indian Serials/TV Shows
Reality shows / game shows
Music Videos
Original Shows
Indian Films / Movies/ Movie trailers
International Serials/TV Shows
International Films / Movies/ Movie trailers
Sports
Q: What is your preferred language to watch each of these genres on any platform?
40%
N= ~5000
azon Prime recently announced a content li- 4 percent user share. Meanwhile, the top
brary in Kannada, as the sixth regional 3-app combination has only a 9 percent user
language to have a dedicated content library. share, and the next 3-app combination has
only a 3 percent share (as shown in Exhibit
In summary, there is a high latent demand 37). The single app consumers are currently
for regional language content already in In- almost fully on YouTube.
dia—If players invest well in this space, it will
envelope many more consumers into the There are several implications for players:
OTT space who are perhaps consuming con-
tent today on the more traditional channels •• Breaking the clutter to create a differenti-
or standing at the fringe. ated proposition that can enable them to
be among the top 3 VOD app
App Combinations have a Long •• Chances for potential consolidation in the

Tail—Need to be in the Top 3 long tail as apps fight to be the top 3 on
Apps to Gain Scale consumers’ devices
The Indian OTT market is hyper competitive
and has attracted various players, from major This long tail of apps creates significant clutter,
broadcaster-backed apps to apps that only ca- making it difficult to differentiate between the
ter to specific regional content. content offerings of the various OTT players.
Consumers today are quick to move past the
Over 80 percent of users use 3 apps or less, apps they don’t like, and delete an unused app
and the share of users using 4+ apps is low within 7 days on average. These uninstalla-
and drops off. App-combinations are diverse tions are driven by the significant clutter.
and have a long tail. The top 2-app combina- Awareness of available propositions continues
tion only has a 13 percent share in users, to be a challenge, and the discovery of new
while the next 2-app combination only has a OTT apps and content will be clouded due to

EXHIBIT 37 | Most Consumers have 1-3 Video Apps on Their Smartphone…
SHARE OF
SEGMENT USERS (%) TOP 2-APP COMBOS TOP 3-APP COMBOS
Rank Reach (%) Rank Reach (%)
1 app 32%
YouTube + Hotstar +
YouTube + Hotstar 13% 9%
JioTV
2 apps 27%
3 apps 22%
YouTube + Hotstar +
YouTube + JioTV 4% 3%
AirtelTV
4 apps 11%
5 apps 4%
YouTube + Hotstar +
YouTube + Amazon Prime 2% 1%
SonyLIV
5+ apps 3%
… and app combinations have a long tail
Sources: BCG analysis, Nielsen Panel of ~15000 smartphones recorded from Q2 '16 to Q2 '18.
this clutter. In this landscape, OTT players will Bigg Boss. SonyLIV first saw a surge in con-
need to stand out to differentiate themselves. sumption with the start of the 2018 FIFA
In a space with an abundance of multi-content World Cup, and also saw a surge when the
OTT apps, players with ‘specialized’ content, 10th season of KBC began streaming (as
such as exclusively sports or exclusively kids shown in Exhibit 38). The introduction of the
content, will have an advantage and will be play-along feature allowed a higher engage-
more likely to stand out. Breaking this clutter ment of the audience for this show.
and emerging as a top 3 app will be the win-
ning agenda for OTT players. However, Hero-content cannot retain users
on these OTT apps post conclusion of the pre-
ferred show / content unless consumers get
“Hero” Content Can Get Consum- deeply engaged in other content on the plat-
ers on the Platform But Does Not form. The consumer survey indicated that 36
Retain All of Them percent of users who deleted SVOD apps cit-
Consumption on OTT apps spikes dramatical- ed that they stopped watching as a specific
ly with Hero-content such as the Indian Pre- show concluded as one of the key reasons,
mier League (IPL), Kaun Banega Crorepati and over 40 percent mentioned finding better
(KBC), etc. as Hero programs have a very high content as one of the key reasons. We arrive
demand among consumers. The usage of Hot- at a similar conclusion for app-wise analysis
star doubled in April ’18, while usage became (as shown in Exhibit 39). Indicates this phe-
5x for Airtel TV, due to the high demand and nomenon among each of the top 3 SVOD
popularity of IPL. Voot saw a consumption apps in India (Amazon Prime, Netflix and
spike with the release of the 11th season of Hotstar Premium).

EXHIBIT 38 | Consumption Spikes with Hero Content
FIFA WC: JUN '18-JUL '18 BIGG BOSS S11: OCT

IPL: APRIL '18 TO MAY '18 KBC S10: SEP '18 ONWARDS '17 TO JAN '18
Change in consumption (%) Change in consumption (%) Change in consumption (%)
500% 500% 500%
439%
400% 400% 400%
300% 300% 300%
179% 167% 186% 195% 186%

200% 200% 157% 200%
100% 100% 100%

125% 112%
0% 0% 0%
Apr’18
May’18
Apr’18
May’18
Jul’18
Oct’17
Feb’18
Feb’18
Dec’17
Sep’18
Sep’17
Aug’18
Aug’17
Dec’17
Nov’17
Jun’18
Mar’18
Jan’18
Mar’18
Jun’18
Jan’18
Airtel Hotstar Sony LIV Voot
Sources: BCG analysis, Nielsen Panel of ~15000 smartphones recorded from Q2 '16 to Q2 '18.
Notes: Change in consumption is measured by the change in reach of the app across months; Reach defined as % of app-installers who use the app
in the month; IPL - Indian Premier League, KBC - Kaun Banega Crorepati.
EXHIBIT 39 | Better Content Elsewhere Drives Consumers Away When Hero Content Finishes
OVERALL (%) APP 1 (%) APP 2 (%) APP 3 (%)
Better content on other

apps/sites
Same content on
TV/apps
Stopped watching once

Hero content was over

Q: What are your key reasons to uninstall the app?
N= 189 SVOD lapsers
Note: Apps considered are Amazon Prime, Hotstar Premium and Netflix

The smartphone panel data analysis also in- This indicates that SVOD penetration still re-
dicates a drop in total installed apps post con- quires a much higher marketing effort to
sumption of “hero”. There are a few illustra- build awareness and a differentiated proposi-
tive examples only, however, they do indicate tion in the mind of the consumer.
that the users who only used an app for a
particular program will tend to drop-off after The awareness of OTT apps is different for
the program concludes. OTT players will need various segments of population. Females, for
to ensure that content caters to specific con- example, have lower than average awareness
sumer preferences, to entice these consumers of various OTT apps, for both SVOD and
into continued usage of the OTT app, even AVOD (as shown in Exhibit 41 and 42). This
post the conclusion of the Hero-content by difference in awareness indicates that mar-
helping them discover similar content which keting strategies will need to be tailored to
is likely to keep them engaged on the plat- cater to the various population segments,
form for longer. and this will result in a significant jump in
awareness and a subsequent rise in the use
of OTT apps.
Marketing Challenge is High,
Awareness Low for OTTs The low awareness of apps among consumers
A key barrier for OTT players is the aware- poses a significant hurdle. The benefit of in-
ness of the apps among consumers. vesting in content for relevant markets will
not be realized if the content doesn’t reach
While the overall awareness for AVOD apps the consumer. There is a significant need to
among consumers is 80 percent, the aware- increase awareness of the OTT apps and con-
ness for SVOD apps is only 54 percent. How- tent offerings. Overcoming the awareness bar-
ever, the awareness to trail / purchase is simi- rier will be key in realizing the $5 billion op-
lar at 50 percent (as shown in Exhibit 40). portunity of the Indian OTT Market
EXHIBIT 40 | Lower Awareness is a Hurdle for SVOD Players
AVOD SVOD
100% universe 100% universe

(Total consumer base sampled (Total consumer base sampled
broad sample with N=~5000) broad sample with N=~5000)
80% awareness 54% awareness

(Have heard of at least two AVOD apps (Have heard of at least two SVOD apps
Aided recall) Aided recall)
48% trial / purchase 26% trial / purchase

(Have used atleast one AVOD (Have used atleast one SVOD
app in the last 6 months) app in the last 6 months)
35% 22%
(Are retained users (Are retained users
of an AVOD app) of an SVOD app)

N= ~5000
1AVOD apps considered for the analysis are Airtel/Vodafone TV, Hotstar, Jio Cinema/TV, SonyLIV and Voot

EXHIBIT 41 | Lower than Average Awareness and Uptake in Females
SVOD
MALES FEMALES


(Have heard of at least two SVOD apps (Have heard of at least two SVOD apps

(Have used atleast one SVOD (Have used atleast one SVOD
23% retention 19% retention

(Use an SVOD (Use an SVOD
app beyond app beyond
1 month) 1 month)

N= ~5000
EXHIBIT 42 | Lower than Average Awareness and Uptake in Females
AVOD
MALES FEMALES


(Have heard of at least two AVOD apps (Have heard of at least two AVOD apps

(Have used atleast one AVOD (Have used atleast one AVOD
36% retention 31% retention

(Use an AVOD (Use an AVOD
app beyond app beyond
1 month) 1 month)

N= ~5000
1AVOD apps considered for the analysis are Airtel/Vodafone TV, Hotstar, Jio Cinema/TV, SonyLIV and Voot

Music Has Traditionally Not been headway in this space (as shown in
a Large Opportunity, However, It Exhibit 45)
Does Attract Eyeballs
The music market in India is evolving. India •• >50 percent of Google users surveyed
has typically struggled with a device con- indicated that they are willing to pay for
straint—however, with every smartphone be- music; this is really over-indexed com-
ing used as music playing device this con- pared to all other forms of content (as
straint has been lifted. While the market size shown in Exhibit 46)
in revenue terms continues to be small, there
are ~100 million digital audio streaming users In India, like the case of video, regional content
in India already. There are 4 apps that have emerges as an important genre for music as
really gained prominence for music in addi- well—though English and Bollywood domi-
tion to YouTube which serves the purpose of nate. This indicates that it is possible to create
watch and listen (as shown in Exhibit 43). more niche offerings with music platforms (as
shown in Exhibit 47).
Accordingly, many players in the ecosystem
are investing in music (as shown in Exhibit
44). In general, music apps have been seeing
a growing trend among smartphone users in
India. There are a few distinct characteristics
I n summary, music can be an important
“layer on” opportunity for players. Digital
has already taken over from all physical re-
of music apps emerging: corded music, album downloads, and mobile
based personalization to emerge as the larg-
•• Most music apps are “self-discovered” as est segment. However, consumer awareness is
found in Google survey—this highlights a low and there is a need for innovation in
much higher need for awareness. Targeted marketing to really penetrate a newer set of
marketing by music focused players will consumers and bring into fold the “paying
allow these players to gain significant consumers”.
EXHIBIT 43 | Indian Music Industry—by the Numbers
Music
100 M 1.3
<$ 500 Mn Digital Streaming
avg. # of
Industry Revenues streaming apps
Users
installed per user
~35% 4
YoY Growth of
prominent digital
digital streaming
streaming apps1
services
Source: IFPI Global Music Report 2018, BCG analysis

Note: All figures above are for FY17
14 prominent apps: Gaana, JioMusic, WynkMusic and Saavn.

EXHIBIT 44 | Strategic Investments have been made by Telcos and Internet Focused Companies in Music
Streaming Services
Invests in
Airtel Wynk Music TigerGlobal, Invests in saavn JioMusic Invests in saavn
Airtel launches Wynk Music, with Bertelsmann
a FUP of 100 free songs, and two Funding: $1B
subscription plans Funding: $100M Type: Merger
Type: Series C Pre-Money Valuation: $177M
Rationale Pre-Money Valuation: $300M Effective Stake: 81.7%
• Plug likely-to-decline
revenues from caller tunes Rationale Rationale
• Increasing consumer • Product development(including • Growth and expansion of JioMusic
propensity for utilizing 3G advertising technology) • Access to Saavn’s original
data • Customer acquisition programming expertise
2014 2016 2015 2016 2018

September April July February March
MI Invests in Hungama Tencent Invests in gaana.com

Intel Capital TIMESINTERNET
Funding: $25M Funding: $115 M
Other Investors: Intel Capital, Bessemer Venture Partners
Rationale Expected to be Deployed in

• Integrate Hungama’s VoD services with Mi platform • Product development, including AI
• Access to 700+ content creator partnerships, and engine for personalized features
8,000+ movies in 12 languages including Hindi, Tamil, • Paid service customer acquisition
and Telugu
Source: Crunchbase, Press Search, BCG analysis.

Note: VoD = Video on Demand, FUP = Free Usage Policy
EXHIBIT 45 | Self-discovery Emerges as Top Reason Behind the Adoption of Music Apps / Sites
Distinct Need for Enhancing Awareness, Digital Marketing, Reaching Consumers
Percentage of users
36%
22%
14%
12%
9%
I discovered it myself I got to know from I don’t use any app I saw an ad for I saw an ad for the app
while on internet my friends/ family the app online offline e.gTV/ radio
Sources: Google Consumer Survey, BCG analysis.

Q: How did you start using the app/site you use for listening to music?
N= 706
Note: 17% answered None of the Above

EXHIBIT 46 | Higher Propensity to Pay Among Music Consumers Already
Percentage of users
43%
20%
18%
10% 9%
6%
I like to be able to I like ad free I like exclusive I like It has a lot of I will not pay
download music experience content- like their music music in my for music
originals recommendations language
Respondents already paying or willing to pay for music

Q: Do you pay or intend to pay for music subscription? If so, what are the reasons for paying?
N= 706
Note: 19% answered None of the Above
EXHIBIT 47 | Music is Dominated by English and Bollywood
Percentage of users
57%
48%
20%
17%
English Songs Hindi- Bollywood Pop music/ ghazals/ Other regional languages-
cover versions Tamil/ Telugu etc.
Source: Online survey of Google users.

Q: What kind of music do you mostly listen to?
N= 706

THE INTERNATIONAL
OPPORTUNITY FOR
INDIAN CONTENT
SERVING THE INDIAN DIASPORA
T he international markets hold a

significant opportunity for players in India.
The innate demand for consuming Indian
UK, Malaysia and the US to understand the
demand for Indian content and consumer
preferences. The demand for Indian content in
content on apps is already high as there is a 30 international markets is clear as the survey
million+ Indian diaspora which is already indicated that over 50 percent of international
consuming Indian content and is more watchers pay for Indian content in some form
attuned to OTT usage and paying for content. or the other, with ~15 percent paying over $20
We conducted a survey among Google con- monthly to access Indian content (as shown in
sumers (n=~2000) with viewers across UAE, Exhibit 48).
EXHIBIT 48 | ~50% of Respondents on an Average Already Paying for Indian Content
Respondents who watch Indian content (%)
39% 44% 42%
64%
14%
11% 17%
19% 13%
7% 12%
8%
8% 10%
12%
11%
24%
15% 18 %
11%
UAE UK Malaysia US
None - I watch only free Indian content $5-$10 More than $20
$1-$5 $10-$20

Q: How much money do you spend a month on average on watching Indian content?
N= ~100 from UAE ~200 from UK ~100 from Malaysia ~300 from US

The survey revealed a few stark facts: primarily through global OTT apps such as
YouTube and Netflix (as shown in Exhibit 50).
•• Low awareness of Indian OTT apps Users in international markets watch more on
these OTT platforms than on TV. There is a
•• Consumption of Indian content is sizeable opportunity at stake here for OTT
primarily through Global OTT players players to tap into the international markets—
leveraging on the content libraries that are
•• Contrary to popular belief, cricket is being built for viewers in India.
important but it is not the primary source
of consumption
Cricket is Important but not the
Primary Source of Consumption
Low Awareness of Indian OTT Apps Contrary to popular belief, Indian content
Users are largely unaware about Indian OTT watching in international markets is not
players that are available internationally. dominated by cricket (as shown in Exhibit
Fewer than 20 percent of respondents 51). Our survey indicates that Bollywood con-
reported that they have heard of top Indian tent (both music and movies) is the most pre-
OTT apps (as shown in Exhibit 49). This ferred genre of Indian content watched in in-
indicates that a strong content library solely ternational markets, with 40+ percent
isn’t enough to tap into the international respondents indicating Bollywood music and
markets. There is a need to fill this awareness movies as one of their preferred genres of In-
gap to tap into this opportunity. dian content.
There are several reasons why consumers

Consumption of Indian Content is would prefer Indian content on apps, with
Primarily through Global OTT the above few emerging as the top reasons. In
Players most markets, watching Indian content on
The advantage of high awareness of OTT apps OTT apps is cheaper than watching on TV.
is demonstrated by high share of global OTT The ability to watch on-the-go and to access
players, as consumption of Indian content is latest content on demand, drives the demand
EXHIBIT 49 | Less than 20% of Respondents Reported Hearing of Top Indian OTT Apps
36% 37%
32%
26%
23% 23%
21% 21% 20% 20% 21%
18 % 17% 17%
14% 12% 17%
15% 14%
13%
11% 12% 12% 12%
10% 9%
8%
4%
UAE UK Malaysia US
Hotstar International Voot International Dish TV None of the above

Zee5 International Sling TV/ Willow TV Dailymotion/ Daily Tashan/ Veoh

Q: Which of the following Indian content apps/sites have you heard of?

EXHIBIT 50 | Most Viewers Used Global Apps as the Top Apps to Watch Indian Content
22%
20%
27%
16%
26%
44%
26%
12% 43%
6% 8% 6%
7% 6%
13%
11% 11% 12%
3%
30% 15%
28% 32%
16%
15% 19% 13%
12%
UAE UK Malaysia US
Cable/ TV e.g. Comcast, Sling TV, Dish TV Apps such Sling TV/ YuppTv None of the above
YouTube Website e.g. Dailymotion, Desi Tashan, Veoh
Other Indian content apps - Hotstar Intl. Netflix/ Prime Video
Q: Where do you usually watch Indian entertainment content? [Multiple choice question]
EXHIBIT 51 | Bollywood Dominates Viewership of Indian Content Followed by Cricket
8% 12%
20% 23%
41% 33%
28% 23%
17% 17%
19% 19%
10% 10%
8% 11%
13% 14%
14% 13%
13% 15%
9% 10%
UAE UK Malaysia US
Cricket and other sports Bollywood Music Regional language TV/Movies

Bollywood Movies Indian TV Shows Other Indian content

Q: Do you watch/ consume Indian content? If yes, which?

for consuming Indian content on OTT (as OTT subscription prices to the respective
shown in Exhibit 52). countries and estimate a market size of USD
1 billion+ by 2023 (as shown in Exhibit 53),
There is potentially a sizeable international assuming average penetrations of respective
opportunity for Indian OTT players which is Indian population in the key diaspora
currently untapped. We have benchmarked countries.
EXHIBIT 52 | Value for Money, Ad-free Experience and Ability to Watch Anytime Emerge as Top Reasons for
Watching on OTT
17% 19%
10% 9%
21% 9%
26% 9% 25% 12%
12%
11% 18% 16% 13%
16% 19%
26% 18%
17% 9%
22%
23% 15%
43%
26% 27% 32%
UAE UK Malaysia US
Cheaper than TV packages/ Value for money Huge catalog of movies/serials/regional lang None of the above
Exclusive content that I can’t find anywhere Ad free experience
Ability to watch anytime and on the go Access to latest Indian movies

Q: What are the reasons you might subscribe to Indian content OTT apps rather than TV? [Multiple choice question]
EXHIBIT 53 | Significant International Market Opportunity of ~$1 bn by 2023

Player actions will determine how much of the potential is tapped
$M 2023
1,500
480-580 ~1000
1,000
120-150 650-700
60-80
380-460 30-40 15-25
500
0
US Saudi UAE Malaysia UK Top 5 Others Total
markets
Population (M) ~5.5 ~5.0 ~4.5 ~4.0 ~2.0 ~21 ~22 ~43
Penetration assumed
85% 35% 20% 70% 80% 65%
by Market (%)
Sources: BCG analysis, Min of External Affairs, Revenue estimated based on Indian diaspora & current OTT avg price in each market.
Notes: 2 apps per HH assumed
HH Size: US 2.6, Saudi 5.6, Malaysia 4.6, UK 2.3, UAE 5.9 (Source: UN report)
Subs of Indian OTT players in int'l market as a % of total Indian diaspora population
Current SVOD prices assumed to grow in line with respective markets

REALISING THE
OPPORTUNITY
SIX-POINT AGENDA FOR THE INDUSTRY
F or India and Indian players to realise

this opportunity, all the key stakeholders
will need to play their part. There is a
•• There are a number of app combinations
installed on viewers devices with a signifi-
cant long-tail
significant agenda ahead for the industry.
There are real implications for marketers of
OTT apps (as shown in Exhibit 54)
Six-Point Agenda for the Industry
Breaking the clutter: a strong mar- •• Building broad awareness for platforms—
keting challenge recall but also a differentiated position to
The consumer of today, and even more so of communicate, “what does the platform
tomorrow, is spoilt for choice. There are over stand for”—to break the clutter
30 OTT options available and these are most-
ly homogenous in the mind of the consumer. •• Marketing to target consumers—being
The trap is to believe that consumers will focused and tight about who the platform
find their way on their own. In other words, will appeal to and engaging the right
there is a need to actively guide consumers to tools—identify consumers’ innate and
different choices, their specific propositions latent demand
and the role that the platform can play in the
consumer’s entertainment bouquet. •• Driving engagement when the consumer
is on the platform to enable the consumer
All our consumer research shows: to go beyond “hero content”—help
discover the full power of the platform
•• Low awareness for SVOD platforms
For instance, creating the right level of aware-
•• Significant churn across platforms—50 ness requires being present across all import-
percent of consumers’ churn within 7 days ant ATL and BTL options—especially the dig-
of installing an OTT app ital options. For instance, Game of Thrones,
an HBO show is exclusively available on Hot-
•• Undifferentiated subscription proposi- star and Star network in India. However, the
tions—churning consumers not convinced current search for the show online suggests
of “value for money” limited linkage to the original source of the
content (as shown in Exhibit 55).
•• Consumers come to the platform for
“hero” content; difficult to retain thereafter To drive higher trials, it is imperative to create

EXHIBIT 54 | Implications for Marketers Across the Consumer Funnel
SVOD FUNNEL
100% universe
54% awareness • Enhance overall awareness for individual platforms (aided and
(Have heard of at least two SVOD apps unaided recall)
Aided recall) • Create a differentiated positioning in the market
26% trial / purchase • Improve conversion from awareness to trial - establish value
(Have used atleast one SVOD proposition in the mind of the target consumer
app in the last 6 months) • Induce trial with "hero content" and superior marketing
• Create engagement on the platform beyond "hero content" during

22% first month of the consumer using the platform and trial period
(Are retained users • Appeal to the consumer with tight recommendations, targeted
of an SVOD app) pricing and focused segment of one marketing

N= ~5000
EXHIBIT 55 | Online Search Trends Showed Limited Linkage to the Original Source of the Content
ONLINE SEARCH TRENDS SHOWED LIMITED LINKAGE … HOWEVER, ASSOCIATION BECOMES HIGH
TO THE ORIGINAL SOURCE OF THE CONTENT DURING LAUNCH PERIOD DRIVEN BY
MARKETING EFFORT
Got has higher number of search queries in conjunction with
Netflix than with original source—Hotstar and star network
40 100
80
30
60
20
40
10
20
0 0
11/5/2017 5/6/2018 11/4/2018 5/1/2013 3/1/2016 1/1/2019
Game of thrones Netflix: (India) Game of thrones Netflix: (India)

Game of thrones Hotstar: (India) Game of thrones Hotstar: (India)
Sources: Google trend.

a frictionless experience for the consumers China”, a hip-pop talent show asked users to
and get them across the line at the “right” vote for their favorite rappers via Qixiu and
time. For instance, AltBalaji (similar to the fans to enter lucky draws held in Paopao, the
Chinese OTT players) allowed for the first set online fans community of iQIYI, for tickets to
of its tent pole show—Bose / Test Case to be the finals of the program or meet their favor-
viewed for free to pull users in and capture ite rappers at off-line gatherings.
their interest; while to continue watching—
us¬ers had to pay for access.
Differentiated Content is King
Similarly, it will be wise for companies to con- Content differentiation in this space is key.
sider all potential options to ease the overall There are several competing platforms vying
payment experience for the users. While for the same consumer eyeballs with so far
credit cards, net banking and debit cards are minimal differentiation except “hero” and
commonly available across different plat- sports content. In this environment, plat-
forms—some of the more commonly used forms need to establish a distinct identity.
methods such as mobile wallets, payment
banks and UPI would also add more comfort There are several “niches” in India where
to the overall payment process for the users. there is consumer demand but lack of credi-
ble options on content so far; these include
To drive retention, it is important for consum-
ers to feel that there is still enough “value” in Music: requirements from music platforms in
continuing with the platform post the con- India indicate desire to “view” along with
sumption of the hero property. Hence, it is “listen”; demand for related Bollywood con-
truly important to understand the consumer tent such as trailers etc. is also high. Current-
and put forward the right set of next recom- ly, this need is met primarily by YouTube,
mendations to drive users to the next right however, there could be space to build other
show / property to keep them hooked to the offerings specifically addressing needs of In-
platform. Globally, Netflix has been one of dian consumers in different music genres
the pioneers in building the content recom-
mendation engine which has become a key With the likely entry of global streaming gi-
competitive differentiator. ant Spotify in the near future, the space will
possibly gather more steam in the future.
To be successful, it’s important for companies Over the last year, with Jio Music and Saavn
to think like a technology company first, le- combining and launch of Amazon Music—
veraging not just the consumer data and be- the market has already started heating up
havior astutely—but also marrying it with with all the players competing for consumers.
great understanding of their own content and
meta-tags. Similar for Video SVOD, the key would be driv-
ing user stickiness on the platform which tends
Equally important is to communicate to the to be high with content availability, getting
users on the value proposition of the plat- playlists created by users and driving social as-
form, especially closer to the point-of-deci- pect of listening to music and sharing with us-
sion (which is, at the end of the monthly cy- ers. Such user generated content, created by us-
cle). Only when users feel that there is ers, becomes one of the key factors behind
“enough” on the platform to continue for one user’s ability to cancel subscription at any time.
more month, does the decision to continue
become intuitive. Ad-supported music platforms are also likely
to continue with limited features like number
One more aspect worth exploring would be of skips allowed, ability to listen to music of-
providing intangible gains to being a paid fline, etc. to get users to try the platform.
subscriber over other users—which either al-
lows “bragging rights” or creates a social as- Kids: our qualitative research indicates that
pect around the entire viewership experience. there is a strong need for kids-specific content
For instance, iQiyi for their show “The Rap of and platforms. There are two types of distinct

preferences: willingness to install apps that •• Regional content: there is a strong prefer-
offer rich content for kids and investing in in- ence among consumers for regional
dividual devices, such as tablets, for kids to language and culturally specific content as
watch content. There could be a unique and noted above in this report. This need for
significant opportunity here. regional content, however, goes beyond
films and GEC and extends even to niches
ǟǟ Latent demand not fulfilled as of such as news, religious / spiritual content,
now—Youtube currently the preferred cookery, and comedy. While broadcaster
mode of viewership led OTTs are starting to make forays in
this space, there is also space for relevant
ǟǟ Kids as consumers show higher engage- focused regional plays in different parts of
ment—higher than average watch the country.
times, international libraries used
•• Rural forays: as noted earlier, there is
ǟǟ It is possible to tap into this opportuni- potential for rural households in India to
ty using not just the content but also skip the C&S step and progress directly to
the platform route e.g. user interface / OTT on their smartphones. Rural smart-
controls / learning interface phone penetration is already significantly
higher than C&S and is growing. However,
In case of kid’s content, there are multiple in order to build a business that is target-
factors which come into play which will be ed at rural India, there is a need to rethink
important for players to address. Some of the the overall business model.
aspects (non-exhaustive) to consider would
include: ǟǟ What kind of content does rural India
need (storylines, characters, cultural
•• Kids learning—becoming “smarter” by context) etc. to truly capture their
using latest technology / smartphone / imagination and drive rural viewership
internet and apps
ǟǟ Ad supported vs. subscription models:
•• Variety and options—not just entertain- build an approach to monetize the
ment, but also associated learning rural eyeballs which is quite challeng-
ing in today’s context
•• Parental control—ability to control what /
how much kids consume, to safeguard ǟǟ Pricing strategy: particularly to replace
them from non-suitable content the “C&S” connection
•• Perceived detrimental effects—impact on ǟǟ Marketing / branding / distribution:

eyesight, kids being addicted to content and addressing the need to have a clear
disregarding outdoor / physical activity positioning with the rural consumer,
building brand—and positioning as a
This indicates a space and need for different credible alternative to traditional TV
business models that extend beyond GEC and
sports as means to get deeper into India, ex- •• International business models: the Indian
pand eyeballs available—and create a specif- diaspora presents a significant market
ic positioning to allow the platform to be one opportunity particularly in the top 5
of the top 3 apps for the consumer. countries. However, the marketing
challenge is quite steep with overall low
recall and awareness of Indian OTT
Build a Geographically Focused players / apps. This will require a concert-
strategy… from Rural to Regional ed effort through digital marketing, on
to International ground presence in top markets, leverag-
There are several imperatives emerging for ing social media etc. to really build the
OTT businesses to scale—and there are con- business. It is important to prioritise, pick
scious choices to be made. priority markets and invest wisely.

It is also critical for players to really pick audiences to advertisers that enables
their focus geographies and languages to re- higher monetization
ally make a dent and not be a “me too”
player. •• Customer acquisition and prioritizing
different marketing channels
Consumer Data, Consumer Considering the vast amount of data created

Insight, Big Data and Analytics and tracked on OTT, it is imperative for play-
It is a well-known fact that data is exploding. ers to use it to best understand their consum-
The use of this data can create true competi- ers—where they come from, what they watch
tive differentiation for businesses that adapt and use it to best predict their likely evolu-
well. There is a need to think of consumer tion and interests going forward and service
data and analytics around two important them in the most cost effective and efficient
business dimensions. manner.
•• Understanding consumers, deep consumer In future, it won’t be too far-fetched to as-

insight and segmentation sume that content viewership and user be-
havior on OTT platforms can be used to influ-
•• Using analytics to drive monetization of ence the overall content, even on the more
OTT businesses traditional media. Considering the size of the
audience, and the ability to understand the
Traditionally, consumer demographic infor- exact triggers at a much more granular lev-
mation has driven segmentation. While this el—it can really drive the overall content cre-
captures basic consumer understanding—it ation / optimization to the next level.
misses several important motivators that real-
ly drive purchase around demand spaces (oc-
casion’s e.g. short break at work vs. family Establishing a New Currency for
viewing in the evening), functional and emo- the OTT Industry for
tional needs (e.g. fandom), and attitudes (e.g. Measurement
price sensitivity) etc. The exhibit below cap- There is a need for the OTT industry to estab-
tures the difference between traditional con- lish a “currency” that can help measure and
sumer insight and segmentation vs. what is understand the impact of advertising for dif-
possible today with new sources of consumer ferent types of advertisers and price in line
insight (as shown in Exhibit 56). with value created. This is essential for the
long term growth of AVOD models in the
There are several sources for monetizing deep country. A new currency can help represent
consumer insight that can not only help plat- value more holistically and capture the audi-
forms differentiate their proposition to con- ence delivered (quantum, quality, segments)
sumers but also partners such as advertisers. more sharply and holistically by
•• Product design: e.g. recommendation •• Moving towards an industry common

engine, reducing the time taken to arrive understanding e.g. BARC has established
at the content of choice, minimizing time an industry standard understanding for
between videos / shows TV
•• Pricing: e.g. arriving at price recommenda- •• Triangulate across sources

tion matrix for different consumer
segments, differentiated pricing •• Capture quality of audience
•• Content acquisition: e.g. acquisition spend Most importantly, a common currency will
analytics (content green-lighting in line bring a larger degree of acceptance among
with expected consumer revenue the overall marketing machine across the key
ad buyers and allow the overall potential of
•• Targeted advertising: e.g. selling specific the OTT watchers to be unlocked.

EXHIBIT 56 | Consumer Insight and Segmentation
HISTORICALLY, CONSUMERS SEGMENTED USING ... HOWEVER THIS DOESN'T ADDRESS OTHER
TRADITIONAL DEMOGRAPHIC MARKERS… DRIVERS OF CONSUMER BEHAVIOUR
Age Gender
The occasion The choice

(Where, when, (brand/product
who-with, etc.) consumed)
Household The functional &

size emotional needs
City / town of Employment
residence size
The player perceptions The attitude
(Own & competitor (Own consumption patterns
brands/products, and demand drivers)
against functional and
emotional needs)
Income
classification Ethnicity
Source: BCG Case Experience.
Invest in the Right Tech, Create a build critical mass. Such critical mass will al-
User Friendly, Economically low platforms to invest in improving the over-
Viable Product all consumer experience across the different
Consumer demand from platforms is on the devices of choice (mobile, tablet, smart TV
rise. Consumers are influenced by different and streaming media adapters enabled TVs).
types of online touchpoints (e.g. ecommerce,
search) and define their expectations from
those platforms basis those touchpoints. Plat-
forms that are not sharp in addressing con-
sumer expectation on quality of technology
C ONCLUSION: The online video opportu-
nity is for real, and it is here and now. For
players, who are successful in riding this wave
and interface will struggle to scale up. to gain scale in eyeballs and area able to
monetize this opportunity, it will result in sig-
Our consumer research also indicates that nificant gains, adding directly to their busi-
quality of touch point is one of the key crite- nesses and bottom line. However, the compe-
ria by which consumers decide their OTT tition for space on consumer’s smartphone is
platforms. going to be an intense one and only a few
shall emerge victorious.
Hence, it is important that every platform as-
piring to gain scale reviews the technology
and interface implications of having their
own platform. Given the tech requirement,
and the fact that typically consumers will
have up to 3 OTT apps on their smartphones,
hence there is a likelihood of consolidation.
Every independent platform will require sig-
nificant investment in technology and mar-
keting / branding to really have the ability to

APPENDIX
Data Sources for Consumer Research
1. Consumer survey of ~5000 consumers from 24 cities:
Profiles of survey respondents, is shown in Exhibit 57 and 58 below
EXHIBIT 57 | Sampling Description of Quantitiative Survey
• North 20% • Metro 58%

Metro,
• South 30% T1, T2 • Tier 1 25%
Geographic
zones • East 19% towns2 • Tier 2 17%
• West 31%
• TV 72% • 15 to 20 yrs 15%

• Smart TV 12% • 21 to 25 40%
• Smartphone 99% Age
Device • 26 to 30 25%
Moradabad Coverage
Coverage • Tablet 7% Delhi Lucknow • 31 to 35 10%
• Desktop 11% Jaipur Kanpur
• 36 to 40 5%
Gwalior Patna
Allahabad
• Laptop 31% • 40 + 5%
Ahmedabad Kolkata
Ranchi
• Other1 ICT 2% Bhavnagar
Surat
Bhubaneswar
• Airtel 47% Mumbai Pune
Hyderabad • <5 Lakhs (L) 1%
• Jio 50% Kolhapur Vijayawada
• Vodafone 29% • 6-10 L 88%
Mobile Bangalore Income
Operator • Idea 21% Mysore Chennai Coverage • 11 to 15 L 10%
Coimbatore
• BSNL/MTNL 3% Madurai • 16 to 20 L 1%
• Aircel 1%
• 20 L + 0%
• Reliance 1%
Source: Conducted by Nielsen.

1Includes Chromecast, Firestick, etc.; 2City segmentation on the basis of population: Metros – over 4 mn; Tier 1 – between 1 and 4 mn; Tier 2 –
between 0.5 and 1 mn; Survey covered 8 metro cities, 14 T1 cities, and 2 T2 cities

SECTION HEADER
EXHIBIT 58 | Research Methodlogy for Quantative Survey
TWO LINES
RESEARCH METHODOLOGY
SUBTITLE
TWO LINES
Interview method - Purposive Sampling Length of the interview

Face to Face CAPI1 : 30-45 min
Study
Source: Conducted by Nielsen.

1Computer-Assisted Personal Interviews
2. Passive Data from Nielsen’s Smartphone Panel of 15000 Smartphones from Q2 ’16 to Q2 ’18
Profiles of users on panel, is shown Exhibit 59 and 60 below
EXHIBIT 59 | Passive Data of Smartphone Panel of ~15 K Consumers of Smartphones
• Female 20% • 15 - 17 10%

Gender
• Male 80% • 18 - 24 40%
Age • 25 - 30 25%
Coverage • 31 - 35 10%
• Metro 45% • 36 - 40 5%
Metro,
• Mini Metro 20% • Above 40 10%
T1, T2
towns • Tier 1 10%
• Tier 2 25%
• Very Low 3-8K 23%

• Airtel 31%
• Low 8-10K 20%
• Jio 29%
Handset • Medium 10-15K 38%
Mobile • Vodafone 16%
Price
Operator • Idea • Expensive 15-
15% 15%
25K
• BSNL 5%
• Very expensive
4%
• Others 4% >25K
Source: Nielsen and data recorded from Q2 16 to Q2 18.

EXHIBIT 60 | Research Methodology for Smart Phone Panel Analysis
RESEARCH METHODOLOGY
PASSIVE DATA USAGE

MOBILE PANEL CAPTURE CLASSIFICATION ANALYSIS REPORTING
NEWS
Opt-in Panelist Analytics Server Tagging Engine Outputs
Pan India Urban Usage data Each activity is Analyzed as per Syndicated and
smartphone panel transferred daily to tagged into relevant business customized reports
our secure server buckets requirement
Source: Analysis conducted by Nielsen.
3. In-depth qualitative research to form and validate hypothesis, is shown Exhibit 61 below
EXHIBIT 61 | Research Methodology and Target Group for Qualitative Research
RESEARCH METHODOLOGY AND TARGET GROUP
IN DEPTH INTERVIEW MINI GROUP DISCUSSIONS
One on one discussions OF 1-1.5 hours carried out with Group discussions of 1.5-2 hrs conducted at a central venue-
respondents, at a place of his/her convenience, using resulting in a wealth of information pertaining to the topic of
structured discussion guide. discussion.
18-40
67 USERS INTERVIEWED FROM 4 CITIES ACROSS 3 AGE GROUPS

33 Males Bangalore 18-22
34 Females Bhubaneshwar 23-32
Delhi 32-40
Surat
Source: Analysis conducted by Nielsen.

4. Consumer survey among Google users
Sample: International users—700 consumers across US, UK, Mayalsia and UAE
Music: ~700 consumers in India
Methodology
Google Surveys offers two panels of respondents: (1) internet users reading content on a net-
work of web publisher sites using Google Opinion Rewards for Publishers, and (2) smartphone
users who have downloaded and signed up to use an app called Google Opinion Rewards. The
publisher network uses inferred demographics, while the mobile app asks users to self-report
their age, gender and zip code.
We evaluate the representativeness of a survey by balancing its sample demographics to

match the demographics of the target population: adult (18 or older) internet users. We match
based on three demographic dimensions: age, gender, and geography. In the US, we use esti-
mates for the national internet population from the US Census Bureau’s 2015 Current Popula-
tion Survey (CPS) Computer and Internet Use Supplement. In other countries, we rely on a
combination of government data and internal Google data sources.
Google Surveys uses a two-step process to ensure each survey’s representativeness. First, we
use stratified sampling to dynamically target respondents with the goal of matching the demo-
graphics of the target internet population. Next, we apply post-stratification weighting to more
closely match those same demographics of the target internet population.

FOR FURTHER READING
The Boston Consulting Group The Digital Revolution Is For more on Google surveys,
publishes reports on related topics Disrupting the TV Industry please visit
that may be of interest to senior An article by The Boston Consulting Google marketing platform: https://
executives. Recent examples Group, March 2016 marketingplatform.google.com/about/
include: resources/
The Future of Television: The
Impact of OTT on Video
Production Around the World
An article by The Boston Consulting
Group, September 2016
The New Indian: The Many

Facets of a Changing Consumer
Group, March 2017
Digital Consumer Spending: A

$100 Bn Opportunity
A report by The Boston Consulting
Group, February 2018
Television’s $30 Billion

Battlefield
Group, August 2018
Convergence: The New

Multiplier for India Media &
Entertainment’s @100 Billion
Vision
An Report by The Boston Consulting
Group, October 2016
Media & Entertainment: The

Nucleus of India’s Creative
Economy
An Report by The Boston Consulting
Group, December 2017

NOTE TO THE READER
About the Authors Nitin Chandalia Acknowledgments

Kanchan Samtani is a Partner & Partner & Director The authors would like to thank
Director in the Mumbai office of the BCG New Delhi Google India for partnership and
Boston Consulting Group +91 124 459 7120 sharing insights which contributed
chandalia.nitin@bcg.com to making of this report
Gaurav Jindal is a Principal in the
Mumbai office of the Boston Vipin Gupta The authors also thank and
Consulting Group Partner & Director acknowledge the support provided
BCG New Delhi by Bharat Singhal, Akshay Cyril,
For Further Contact +91 124 457 5607 Mallikarjun Vaddi and Tashmita
If you would like to discuss the gupta.vipin@bcg.com Arora in preparing this report. A
themes and content of this report, special thanks to Jasmin Pithawala
please contact: Gaurav Jindal for managing the marketing
Principal process and Jamshed Daruwalla,
Kanchan Samtani BCG Mumbai Pradeep Hire, Abbasali Asmadi and
Partner & Director +91 22 6749 7540 Pavithran NS for their contribution
BCG Mumbai jindal.gaurav@bcg.com towards design and production of
+91 22 6749 7074 this report.
Samtani.Kanchan@bcg.com Mandeep Kohli
Principal
Karishma Bhalla BCG New Delhi
Partner & Director +91 124 459 7435
BCG Mumbai kohli.mandeep@bcg.com
+91 22 6749 7135
bhalla.karishma@bcg.com
Nimisha Jain
Partner & Director
BCG New Delhi
+91 124 459 7210
jain.nimisha@bcg.com
Vikash Jain
Partner & Director
BCG New Delhi
+91 124 459 7431
jain.vikash@bcg.com
Sumit Sarawgi
Partner & Director
BCG New Delhi
+91 124 459 7233
sarawgi.sumit@bcg.com

© The Boston Consulting Group, Inc. 2018. All rights reserved.
For information or permission to reprint, please contact BCG at permissions@bcg.com.
To find the latest BCG content and register to receive e-alerts on this topic or others, please visit bcg.com.

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Entertainment

November 2018 | The Boston Consulting Group

2 0 INDIAN CONSUMER GOING ONLINE FOR ENTERTAINMENT

3 9 THE INTERNATIONAL OPPORTUNITY FOR INDIAN CONTENT

4 3 REALISING THE OPPORTUNITY

5 3 FOR FURTHER READING

5 4 NOTE TO THE READER

2 | Entertainment Goes Online—a $5 Billion opportunity

T he past decade has seen a global transformation in how

Powered by a first-of-its-kind consumer survey, this report seeks to ad-

The Boston Consulting Group | 3

G lobally, OTT has become the key

4 | Entertainment Goes Online—a $5 Billion opportunity

<Devices Services >

Source: Press Runs, BCG analysis.

The Boston Consulting Group | 5

27% GROWTH IN OTT MARKET, APAC ROUGHLY 30% THE

TVOD SVOD AVOD Other Europe APAC NAMR

Sources: Ampere analysis, Magna Global, BCG analysis.

6 | Entertainment Goes Online—a $5 Billion opportunity

NORTH AMERICA EUROPE ASIA PACIFIC

SVOD AVOD TVOD

DIGITAL MEDIA CONSUMPTION BY COUNTRIES INDIAN YOUTH IS AT 25%

16% 11% 15%

Digital media Traditional media

The Boston Consulting Group | 7

EXHIBIT 5 | Digital has been Additive to Overall Media Consumption in India

Non-internet users Internet users Non-internet users Internet users

8 | Entertainment Goes Online—a $5 Billion opportunity

Broadcaster OTTs Telecom OTTs

Hotstar Zee5 Voot Airtel Jio Vodafone

Sun NXT SONY LIV

Global OTTs Social Media

Netflix YouTube Facebook Twitter

Amazon Prime video HOOQ

Distributor OTTs Others

Tata Sky DishTV EROSNOW Viu ALT Balaji

Hathway(Ditto TV) Sun NXT

Source: BCG analysis.

The Boston Consulting Group | 9

"UPGRADE TO TV" "RETELL CLASSICS" "TENT POLE"

Source: Balaji Investor Presentation, BCG analysis.

10 | Entertainment Goes Online—a $5 Billion opportunity

Netflix, OTT PLAYERS ARE Amazon

EXHIBIT 10 | Competition for User Share is Intense

Segment Share of users (%)

YouTube 1 app 32% OTT App 2 62% 4

OTT App 3 61% 4

4 apps 11% OTT App 6 49% 8

OTT App 7 47% 9

5+ apps 3% OTT App 9 43% 5

Avg. time before uninstallation = ~6 Days

The Boston Consulting Group | 11

Intense Competition: Race to be The Chinese SVOD model enabled by a

12 | Entertainment Goes Online—a $5 Billion opportunity

TV RIGHTS PURCHASE CURRENT # OF PROFITABILITY/BENEFIT FOR FUTURE

> $5M • 30% shows profitable

< $1.5M 10 series

> $5M • Can bring in millions of paid users

< $1.5M • Dual income from paid and ad sales

Source: Press Runs, BCG analysis.

The Boston Consulting Group | 13

Sohu Youku iQiyi Tencent