Telecom Tariff Hikes May Threaten OTT Players |

Telecom Tariff Hikes May Threaten OTT Players

The government’s retrospective taxation of mobile telephony and its impact in the form of higher telecom costs for users could stymie the OTT players in the short-term


The cost of watching a video or a movie using one’s smartphone has gone up in recent times, thanks to all three major players in the business hiking both call and internet charges in the wake of government’s decision on the recovering license fees and the looming threat of insolvency were it to go ahead with the demand of thousands of crores.

That such a move comes at a time when the youth of the country had decidedly moved from satellite and cable to the freedom of OTT streaming platforms to a point where independent research was suggesting that the industry could be valued at a whopping Rs.12,000 crore within the next three to four years.

Yes! You read it right. PriceWaterhouseCoopers (PwC) had indicated in its Global Entertainment & Media Outlook report that India’s video steaming industry would grow exponentially with the advent of more than 30 streaming platforms and the local programs that several of these global players were generating to hook the youth in the country.

However, with the three mobile operators hiking data tariff by as much as 40 percent and above, it is quite obvious that binge watching that had become a weekend routine in cities and towns alike may not quite look the same any more. Customers with a smaller purse would be forced to curtail their video watching online in the weeks and months ahead.

A survey by Vidooly suggested that the OTT platforms were dominated by an audience that was in the age group of 24-34 with the split almost equal between students and employed individuals. The maximum share of the audience came from the metro cities though respondents from non-metro cities made up for a decent number.

Just when things were getting to look up comes the bummer in terms of the tariff hike, experts say while pointing out that cheap broadband, a movie watching culture and a large English-speaking population is what brought the established OTT players such as Netflix and Amazon Prime into the market.

How the increase in tariff and the broader slowdown in the economy would impact the binge-watching habits of India is something we would have to wait to figure out. However, there is no way that Netflix could get anywhere near the 100 million subscribers that it was targeting in India during 2020. In fact, even a reduced mobile-only monthly cost of Rs.199 may not actually get users to flock to the OTT platform.

A report by Bloomberg News quoted Utkarsh Sinha, managing director of Bexley Advisors to suggest that the challenge of higher tariff would definitely impact use of OTT platforms, which haven’t exactly kicked-off on the home viewing front where users with broadband connections watch shows or movies in the living rooms.

To offset the higher telecom tariff, many of India’s streaming services including Apple TV+, Amazon Prime and Walt Disney have followed suit and offered discounts this year with rates well below those prevailing in other markets. The Bloomberg report said Apple’s TV+ service sells in India at about $1.40 a month compared to $5 in Japan.

Which means that in the near future, the companies in the streaming business could be waging a price war just as the mobile telephone companies did in the early stages, which some would say, brought them to the current impasse where profitability is still a questionable factor.

Already there have been casualties. Hong Kong-based Viu decided to call it quits because it possibly lacked the big purse that others have. There could soon be others from among the 30 operators that could follow in their footsteps.

TAGS: OTT, OTT streaming, Amazon Prime, Amazon Prime Video, Netflix, Apple TV, Disney+