Last year, India had nearly 250 million users online – more than half of the total US population. This too, with an overall penetration barely touching 20 per cent, while penetration in the developed world is 80 per cent+.  With increased data usage and broadband penetration, the world’s largest democracy is a ripe market for online video consumption.

According to IAMAI, the overall number of Internet users is estimated to grow to 354 million by June 2015, while mobile internet users are expected to reach 213 million by the middle of this year on the back of growing smartphone penetration.

Last year, 70 per cent of the Indian audience consumed online video content. If the same consumption is maintained, we will have 250 million users consuming video content – the same number as overall Internet users for last year!

Eyeballs that earlier used to be captivated by TV, print and other traditional media are now moving to online channels. Availability of affordable smartphones and tablets has fuelled the ‘second screen’ phenomenon that cannot be ignored by content creators, curators and advertisers alike.  Indeed, in India, the smartphone is sometimes the first and only screen. In a single TV household country, the smartphone provides greater individual choice.

Users are now spending anywhere between 3 and 5 hours online, versus 2 hours of watching television – already slightly above par in terms of time spent. Females 25+, which constitute roughly 25 per cent of the online audience, spend 25+ mins/day watching video content!

The next wave of growth in Internet penetration will be driven by the adoption of Internet in the rural areas, whose first experience with the Internet will probably be through mobile phones. It is already seen as an almost equal distribution between Tier I and Tier II cities in terms of content consumption.

There are some very interesting use cases emerging. A number of video on demand app users are office goers with fairly long commutes. Some of them seem to download content from these apps at night and watch it on the way to work. Some others use them primarily to catch up on their favourite TV shows over the weekend, while others are keen to watch any new movies in the Premieres section.

In 2014, the music sector saw over 50 per cent profits from music through digital channels, and a drop in physical sales in the range of 30 to 35 per cent year on year. Netflix and other providers have already shown online video can be a successful business.

About the author: Rajiv Vaidya is the CEO of the online video streaming service Spuul's India operations. Prior to joining Spuul, Vaidya served as the Head of Business Development – Asia Pacific region of Hughes Network.  Vaidya also has a vast agency experience, having worked in DDB Mudra and led Triton BDDP in India.

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