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Workers watch their mobile phones as they rest in cots during a break inside a workshop in Kolkata
Reuters/Rupak De Chowdhuri
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Indians love watching videos on their phones—as long as it’s for free

By Ananya Bhattacharya

Indians are increasingly using their smartphones mainly for just one activity: watching videos

In April-June 2018, Indian smartphone users spent an average of 35.8 minutes per day on video-streaming apps, up 11% from 32.4 minutes a year ago, according to a recent report (pdf) by the Boston Consulting Group (BCG). In comparison, they spent lesser time on other activities like making calls or gaming. The time spent on browsing the web, for instance, fell to 17.3 minutes a day from 24.3 minutes.

For the research, BCG analysed data of 15,000 users in the country using Nielsen smartphone panel, a mobile app that unobtrusively collects data on user behaviour from devices for the purpose of market analysis.

The over-the-top (OTT) industry in India is estimated to grow to between $4.5 billion and $5 billion by 2023, clocking a cumulative average growth rate (CAGR) of 20% between 2017 and 2023, the BCG report said.

India’s digital video-content market has seen explosive growth lately with the entry of several new global and domestic players.

In 2017, the sector was flush with cash, mostly thanks to foreign players like Netflix and Amazon Prime Video, which committed over $70 million each to original programming for India. Homegrown platform Hotstar topped the list of spenders, but most of its investments went towards buying the rights to the Indian Premier League (IPL) cricket matches.

The four-letter F-word

While Indians love streaming videos, there is one kind that’s their favourite: those that are free.

A majority of the market still sticks to ad-based video-on-demand (AVOD) services like YouTube.

“Experimenters (are) using AVOD heavily—to watch on the go, create a ‘second screen’ in the household, and fulfilling specific watch occasion of ‘snacking in break times at work’/’while commuting,'” the report stated. Meanwhile, the adoption of paid services is driven by “a desire for popular or exclusive content as well as ease of user.”

By 2023, over 600 million users will watch videos on AVOD platforms but less than 50 million will opt for subscription-based video on-demand (SVOD), BCG estimates.

Today, a mere 10% of users actually commit to SVOD services, owing to low awareness around them. Among those who do test it out, most cite “not value-for-money” as the primary reason for discontinuing the use of such apps.

Winning in the competitive space will remain a tough task.

Most consumers (81%) have up to three video or OTT apps on their smartphones. And all platforms struggle with customer retention—on average, 50% of OTT apps installed are uninstalled within a week of installation.