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'The platform will move to a model wherein the premium content will offer advertisements in a very low key manner without impacting overall customer experience. Taurani thinks Netflix will air ads on high-cost properties. 'One of the bets behind this (AVOD) strategy is a freemium model, where AVOD-based subscribers create a wider funnel for conversion to paid subscribers,' said Sinha. 'If they go AVOD their numbers will explode in terms of Monthly Active Users (MAUs) and Daily Active Users (DAUs) and if they can get higher subscriptions then the advertising allocation can be higher,' he said.Įven so, experts don't think Netflix will go the YouTube way when it comes to exploring the ad-supported model. Taurani noted that while digital advertising is growing at an annual clip of 25 percent, the AVOD market is expanding faster at 30-35 percent in India. I don't think that will be a challenge,' Menon said. So, there is enough space for Netflix to get a piece of the ad pie. 'Digital advertising is growing in double digits and OTT is a big part of digital advertising.

Menon said that while there is competition in the video advertising space, the AVOD market is experiencing strong growth. Last year, Disney+Hotstar was the largest broadcast group by advertising revenue in the video streaming space with estimated ad sales of $120 million, followed by SonyLIV, ZEE5, and VOOT, according to Omdia data. Taurani estimates a negative impact on broadcaster OTTs like Zee Entertainment's ZEE5 and Voot because of Netflix's proposed entry into the AVOD space. That is how they (Netflix) may position themselves (in the ad space),' he said. “The AVOD market can be driven by aggregators, sports-led platforms and then platforms like Netflix which offer loyal customers who have high spending power. “While Netflix is neither an aggregator nor has sports, the platform has quality eyeballs which will benefit Netflix because lot of internet companies look for a high premium paying audience,” he added. 'YouTube commands a 30-40 percent AVOD market share, followed by Disney+Hotstar which is around 20 percent and MX Player, which is around 8-9 percent,” Taurani said. The AVOD market size in India is around $1.2 billion, of which almost 60 percent is contributed by aggregators like YouTube, MX Player and sports-based over-the-top platforms like Disney+Hotstar, said Karan Taurani, senior vice-president of Elara Capital. Last year, the percentage of paying subscribers to total OTT consumers remained less than 10 percent in the video streaming market, according to a 2022 report by consultant EY and the Federation of Indian Chambers of Commerce and Industry, or FICCI. Also, after price cuts and introducing a mobile-only plan in India, advertising is the bazooka in their arsenal and they will fire it now,' said Nitin Menon of NV Capital. They will experiment in India because it is a growth market. 'They will have to introduce AVOD because subscriptions have plateaued and India will take its own sweet time in terms of showing growth in subscriptions. Disney+ Hotstar had a 50 percent market share, followed by Amazon Prime Video at 9 percent and Netflix at 8 percent. In 2021, Disney+ Hotstar, Amazon Prime Video and Netflix were the top three players with a collective market share of almost 70 percent.

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