Is freemium becoming the new norm for OTT in India?

In a rapidly evolving digital landscape, global video streaming services have disrupted traditional television media, prompting Indian over-the-top (OTT) platforms to embrace a new norm - the freemium model. 

As per the report published by Ormax Media, India’s OTT userbase has recorded a 20 per cent increase with over 424 million users, however, out of which only 110 million are active paid subscribers. 

With the proliferation of smartphones and affordable internet access, India has witnessed a significant surge in OTT consumption. This demand rose dramatically during the first lockdown when Indian OTT shows scored unforeseen watch hours, exposing the great potential for online media consumption in India. 

In the space where Netflix and Amazon Prime were enjoying almost all of the paid subscription market share, Indian streaming platforms have recognised the importance of offering a range of content accessibility options, including free ad-supported viewing experiences.

This emerging trend offers free content alongside premium subscription options, aiming to attract and retain a larger user base while monetizing their services effectively. 

What is the freemium OTT model and why are companies offering it?

The freemium model offers a strategic approach by providing a taste of the platform's content library to users at no cost, enticing them to upgrade to premium subscriptions for a more extensive and ad-free experience. 

OTT platforms are gaining immense popularity among Indian users | Image credit: Pixabay

This strategy capitalises on the large population of price-sensitive viewers in India who may be hesitant to commit to a paid subscription without first exploring the available content offerings.

Several Indian OTT platforms have successfully adopted the freemium model including Amazon launching its in-app Amazon Mini TV. They provide a diverse mix of free content, including movies, TV shows, web series, and original productions, enticing viewers to engage with their platforms. By doing so, they not only expand their user base but also generate revenue through targeted advertisements strategically placed during free content viewing.

Freemium subscriptions: A win-win for Indian OTT platforms

The freemium model also allows OTT platforms to gather valuable user data, including viewing habits and preferences, which can be leveraged to improve content recommendations and personalised offerings. This data-driven approach enables platforms to enhance user engagement and provide tailored experiences, thus fostering long-term customer loyalty.

Indian OTT platforms are focusing on the huge mobile audience of India | Image credit: Pixabay

This data can again be used to market products based on personalised choices using in-app advertisements. This adds a new revenue stream for OTT platforms and if exercised with expertise, it can make the freemium content sustainable on its own. Freemium subscriptions no longer need to be a customer-wooing marketing strategy to convert the audience to paid users as now even the free but loyal userbase can be significantly monetized. 

While the freemium model has gained traction in India, OTT platforms need to strike a balance between free and premium content. By offering high-quality free content and a compelling value proposition for premium subscriptions, these platforms can cultivate sustainable revenue streams while catering to the diverse needs and budgets of Indian viewers.

As the competition intensifies in the Indian OTT market, the freemium model has emerged as a crucial strategy for platforms to differentiate themselves and capture a larger market share. By adapting to the changing media landscape and offering a combination of free and premium content, Indian OTT platforms are well-positioned to meet the evolving demands of viewers while driving growth and innovation in the industry.