Why Audio OTT Apps are Growing in India

Back in the 1990s, MTV introduced to India not just the best of international music and music videos, but also a channel that played music non-stop. Soon, there were other players in this arena and by the 2000s, there were quite a few Indian households that had got into the habit of keeping their TVs tuned to a music channel for long hours, with music playing in the background. The advent of the iPod and later mobile phones led to people travelling with an unlimited supply of tunes, and often listening to music, non-stop, while going about their daily schedule.

Cut to present times and nearly 200 million people streamed music each month in 2021, says a recent Ficci-EY report on the media and entertainment (M&E) industry. The Indian Music Industry’s (IMI) Digital Music Study Report 2021 adds that last year, Indians spent 21.9 hours a week listening to music, higher than the global average of 18.4 hours. That’s music to the ears of the music industry as streaming revenues of Rs 1,134 crore accounted for 85.1 per cent of its overall revenues of Rs 1,332 crore in 2020, says the IMI report.

“Digital has emerged as a significant contributor to the growth of the music industry in India, buoyed by increased internet penetration, affordable mobile data, and the growing popularity of music as an on-demand entertainment option for consumers. Technology and new business models have completely changed the established distribution channels that have long served the music industry. This transformation provides opportunities that will be larger and more rewarding to the artists and the industry,” says Pawan Agarwal, Director of Music Partnerships (India & South Asia) at YouTube.

How are people bingeing on music? They are doing it on audio OTT apps—India currently has around 15 players in the space. According to the Ficci-EY report, Airtel’s Wynk Music, JioSaavn and Gaana together saw more than 100 million downloads in 2021; the number of people streaming music was expected to cross 390 million by 2024. “The audio OTT market is currently under-penetrated and will see a correction in the next few years,” says Shashwat Goswami, Head of Marketing at Gaana, a Times Internet company. “With millions of growing internet users, and an expected smartphone penetration rate of 42 per cent, India has one of the biggest pools of potential music listeners globally.” IMI estimates that the number of audio OTT users could grow to around 900 million by 2030.

The roll out of 5G could also provide a fillip. “With the introduction of 5G in the next couple of years, we will see the infrastructure and the environment for audio OTT improving,” says Jehil Thakkar, Partner and Media and Entertainment Sector Leader at Deloitte India. “The audio OTT segment is expected to benefit immensely from the 5G roll-out, as there will be the possibility of 10 times faster internet and a latency reduction of up to 50 per cent,” adds Goswami. This will also help more apps stream high-quality music.

The biggest driver for the audio OTT industry, going forward, would be the rise of regional content. “Regional content is the big thing already. It’s the fastest growing sub-segment, recording over 70 per cent growth in streams for Wynk,” says Adarsh Nair, CEO of Airtel Digital. “The consumer, after solving for access and quality, has started opting for local language and regional artists.”

Akshat Harbola, Head of Strategy & Operations at Spotify India, says that the OTT player has seen a surge in demand for regional content, as a result of which there are “7x more locally curated playlists on Spotify today, compared to three years ago”.

YouTube’s Agarwal says access to diverse and wide audiences is generating huge successes from non-film, regional and non-Hindi artists. “Week on week, multiple songs from regional languages like Bhojpuri, Haryanvi, Punjabi, Tamil, Telugu, Kannada, etc. are making their way into the YouTube charts—indicating robust demand from users for music in their native language. As an example, 52 Gaj ka Daman by Renuka Panwar, a song in Haryanvi, topped YouTube’s global charts for 13 weeks, and currently has over 1 billion views.” Thakkar adds that there is a “real renaissance” of regional content underway. And that, “at least for the next decade or two, it will drive a lot of content consumption in India”.

Growth, too, is expected to be driven by non-metro cities. The Ficci-EY report says that some platforms claimed that 50-75 per cent of their audiences came from non-metros in 2021 and were growing faster than metro audiences. The non-metro markets taken together constitute a much bigger chunk than the traditional urban metro market, says Thakkar. “As that market has grown in importance, the amount of investment, both from the platforms, as well as from the creative community, in terms of the attention they’re paying to these markets, has gone up.”

Money Matters

While audio OTT apps may be growing in India at a fast clip, are they making any money? These apps usually have three sources of revenue: advertising-driven, subscription-driven and embedded apps, which are bundled with a subscription or service. According to the Ficci-EY report, streaming platform revenues (including YouTube) increased almost 22 per cent in 2021 to Rs 1,200 crore, over 80 per cent of which was advertising-driven. That’s understandable, given that India had only around 3 million paid music streaming subscriptions in 2021, and it was projected to cross 7 million by 2024. A leading cause for this is the free availability of content.

Thakkar believes the audio OTT players will invest in other formats and exclusive content to differentiate themselves from competition and attract new users. “We are in a phase where people continue to spend to attract users, because the growth in users is what drives valuation, which ultimately will drive consolidation.” And it is consolidation that will lead to a pivot towards subscription revenues, thereby leading to profitability. Agrees Kumar S. Taurani, Chairman and MD of content major Tips Industries. “Once the subscription-based model becomes more popular, it will be another turning point for the space,” he says. For Thakkar, consolidation “will happen in the next three years or so”. He points out that the players will see profitability “in the medium term”.

Music streaming is the dominant segment among audio OTTs, but the space also includes formats such as podcasts, audio books, etc. Prashant Panday, MD & CEO of Entertainment Network (India) Ltd (which operates the Mirchi brand) says non-music OTTs such as his are helping generate fresh opportunities for many content creators. “I would imagine the non-music audio OTT market would be less than 50 million users monthly,” he says, adding that globally, this is a big market and offers immense growth opportunities, which Mirchi hopes to exploit with its recently launched Mirchi Plus app. When it comes to quality non-music audio content, the regional languages have very little to offer at present, he says. “We will tap into this opportunity, especially given our presence in so many regional markets.”

“India is one of the fastest-growing marketplaces for Audible,” says Shailesh Sawlani, VP and Country GM of Audible India. “The pandemic aided discoverability and added to the growth of audio content consumption. We believe this growth is here to stay. The flexibility of audio as a medium and its ability to provide relief in a screen-dominated lifestyle makes it an indispensable medium for consumers.”

For audio streaming apps in India, the symphony has just begun.

@abhik_sen