Where does SVOD stand in India?

The Indian streaming landscape, a vibrant, often chaotic bazaar of content and platforms, just witnessed a significant plot twist. Amazon Prime Video, long a premium, ad-free sanctuary for binge-watchers, has decided to roll out the advertising carpet. This isn't just another Tuesday announcement; it's a move that sends ripples across the entire Over-The-Top (OTT) ecosystem, forcing competitors, advertisers, and even subscribers to sit up and take notice. Is this the new normal, a strategic masterstroke, or a high-stakes gamble in a market notorious for its price sensitivity and burgeoning content appetite? Let's dive in.

For years, the promise of uninterrupted entertainment was a core tenet of the SVOD (Subscription Video on Demand) model. But the winds of change, carrying whispers of "subscription fatigue" and the undeniable allure of ad revenue, are blowing strong. Amazon's decision to introduce ads to its existing Prime Video tier (unless users opt to pay more for an ad-free experience) isn't happening in a vacuum. It’s a global strategy now tailored for the unique contours of the Indian market.

The inevitable pivot 

The big question on everyone's lips: why now? Is Amazon bowing to an inevitable market reality, or is it astutely recalibrating to a more mature Indian consumer? The consensus among experts leans towards a blend, with a hefty dose of strategic imperative.

"I see it as both," states Neelesh Pednekar, Co-Founder & Head of Digital Media at Social Pill. "On one hand, it’s a clear strategic necessity - OTT platforms globally are under pressure to diversify revenue beyond subscriptions. On the other hand, it also reflects India’s maturing digital audience." He argues that this isn't a "desperate move" but a "thoughtful recalibration, acknowledging that not all viewers want to pay, but brands certainly will."

Shrirang Nargund, Independent M&E Consultant, frames it more starkly as "more of a strategic necessity." He points out, "APV has already rolled out an ad-supported tier in 2024 in 10+ countries. It was expected to roll out in India too... India was never meant to be a pure SVoD model. It is a pressing matter for all platforms to balance rising content costs without raising the subscription charges via a hybrid model." Indeed, with giants like Netflix and JioHotstar (alongside Zee5 and SonyLIV) already embracing ad-supported or bundled models, Amazon risked being left out of a significant revenue stream.

An anonymous industry expert concurs, suggesting, "Pure subscription models have hit a ceiling, squeezed by some of the world’s lowest fees and rising content costs. The ad-tier move is less about experimentation and more about survival."

However, Sanjay Mehta, Serial Entrepreneur and Strategy Consultant (former Co-Founder and Director of Mirum India), offers a slightly different emphasis. "I would believe that it is more of a strategic necessity at this stage, and has less to do with the evolving consumer. All said and done, the average Indian user is not going to like ad interruptions, and this is done, in spite of that risk," he notes. He highlights the crowded market and revenue growth challenges as key drivers.

The takeaway? While Indian viewers are certainly more accustomed to various content delivery formats, the primary thrust behind Amazon's move seems to be the global and local economic realities of the streaming business. The "free lunch"—or in this case, the ad-free lunch at a relatively low subscription cost—was always going to have an expiry date.

Value dilution or democratic choice?

Introducing ads into a previously ad-free experience without an initial price drop is a delicate play. For existing subscribers, it can feel like a bait-and-switch. Amazon’s counter is the option to pay a premium for the ad-free experience they once had. Does this dilute the original value proposition, or does it, in fact, democratise the offering?

"It depends on how you frame it," says Pednekar. "Amazon’s approach of letting users choose between staying at the same price with ads or paying more for ad-free is actually smart. It’s not about dilution, it’s about creating a tiered ecosystem that reflects user preferences." He adds, "In that sense, I’d say it makes the platform more democratic." However, he cautions, "Amazon will need to make sure the ad experience isn’t too intrusive - because if it feels like a downgrade, churn will follow."

Nargund sees the ad-free tier at an extra cost as the new "value proposition." He also makes a crucial point: "Important to note that APV already has Prime Lite service in India that is ad-supported. It's kept unchanged." He further contextualises Amazon's journey: "APV has come a long way to the hybrid model. First it was IMDBTv, FreeDive later known as FreeVee... In India, it was known as MiniTV. After Mxplayer M&A, it became part of the Amazon ad-supported tier." The question then arises: if MiniTV and a potential MX Player integration serve the ad-supported segment, why introduce ads into the premium Prime Video content? Nargund posits, "The reason could be the brand Amazon. To generate ad-revenue on the Amazon brand."

The anonymous spokesperson believes, "Indian viewers are already comfortable with ad-supported formats. By offering both ad-supported and premium ad-free options, Amazon meets the market where it stands: diverse, price-sensitive, and ready for choice."

Mehta, however, expresses concern about the immediate user reaction. "For the user, though, it will seem like a bit of a betrayal as this has come without much of a notice. Moreover, if we have to judge by the initial few days now, the ads are coming too frequently, which is a definite cause for consumers to switch!"

Ultimately, the "democratic" label will stick only if the ad load is perceived as reasonable and the upcharge for ad-free feels justified. It's a tightrope walk between maximising ad inventory and retaining subscribers who valued the uninterrupted experience.

The advertiser's El Dorado 

This is where the plot thickens, especially for the advertising and marketing fraternity. Amazon isn't just another OTT platform serving ads; it's an e-commerce behemoth with an unparalleled treasure trove of consumer data.

"This is where it gets really exciting," enthuses Pednekar. "Amazon is uniquely positioned because it doesn’t just know what you watch - it knows what you buy, browse, and wishlist. That’s a goldmine for advertisers. We’re talking about commerce + content coming together in a way that no other OTT platform can match right now." He envisions a future of "performance marketing on steroids," where ads are "directly linked to measurable actions."

Nargund highlights the competitive landscape, noting that "Alphabet, Meta & Amazon are the three ad-giants holding more than 60% of global digital ads." He also points to JioCinema (now JioHotstar), which has e-commerce backing via JioMart (though not yet fully integrated), as a key competitor. "Amazon will try to take the lead with its AI-driven ad engine that could provide advertisers with intense reach across the territories, now with premium content," Nargund predicts. His evocative phrase, "You need an attractive shelf to display your premium products," perfectly encapsulates the opportunity for high-end brands on Prime Video. This is an "invite to 'premium brands in premium content'."

The anonymous expert echoes this sentiment: "Amazon’s blend of commerce and streaming unlocks a new level of precision for advertisers... Shoppable video ads and seamless live shopping experiences connect media spend directly to sales, setting a new bar for targeting and measurement."

While the potential is immense, Mehta offers a pragmatic perspective. "While advertising and commerce might seem like the perfect fits... the two may, in fact, be distinct goals here." He argues that advertisers primarily seek audience quantity and quality, which Prime Video offers, while those focused purely on commerce can already advertise on Amazon's e-commerce platform. "So, that the two would combine here, is not a particularly strong RTB [Reason to Believe], according to me." However, he concedes, "if Amazon builds out some special products to advertisers who also sell on Amazon, and provide interesting value while doing so, that could make a difference."

The consensus is clear: Amazon's deep first-party data on shopping behaviour, layered with viewing habits, could indeed reshape OTT advertising. The ability to close the loop from an ad view to make a purchase within the same ecosystem is a powerful proposition. However, success will hinge on Amazon's ability to craft compelling, integrated ad products that genuinely leverage this unique advantage, rather than simply retrofitting standard video ads.

Monetisation models in a maturing market

So, what does this seismic shift portend for the future of OTT monetisation in India? Is the hybrid model—a cocktail of subscriptions and ads—the inevitable destiny for all?

"I think we’re heading toward a hybrid-by-default world," declares Pednekar. "Subscription fatigue is real, and there are only so many platforms users will pay for... The big shift I see is that OTT platforms will no longer see ads vs. subscriptions as an either/or. They’ll build strategies that let them monetise across the board - audiences, attention, and actions."

The anonymous spokesperson agrees, stating, "Hybrid monetisation is poised to become the industry norm. Urban users may lean toward bundled or premium experiences, while mass-market audiences gravitate to ad-supported plans."

Mehta, while acknowledging Amazon's "bold move," sounds a note of caution rooted in content. "Introducing interruption in viewing video content is for consumers, a case of disturbance... If they are able to offer exclusive and compelling content - which will finally be the key - then consumers will still tolerate and accept the ad interruptions. But without such content, this move may see Amazon Prime risk losing their subscriber base."

The Indian OTT saga is clearly entering a new chapter. Amazon’s decision is less an isolated event and more a reflection of a global industry grappling with the economics of streaming. For advertisers, this opens up tantalising possibilities, particularly with Amazon’s commerce-backed data. For consumers, it means more choice, but potentially more ads unless they're willing to pay a premium.

The ad-supported Prime Video isn't just about Amazon shoring up its revenues; it's a clear signal that the Indian OTT market is maturing, segmenting, and looking for sustainable growth models beyond pure-play subscriptions.