Digital video in India, a case for more freedom or regulation?

A man in Bijnor, Uttar Pradesh, India, viewing his mobile phone.

As viewers in India migrate towards more direct-to-consumer video platforms, such as Netflix, media companies are increasing investment. Image: Unsplash

Ritwija Darbari
Community Specialist, Business Engagement, India and South Asia, World Economic Forum
Stefan Brambilla Hall
Project Lead, Media, Entertainment and Sport, World Economic Forum Geneva
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  • India is one of the world's most dynamic entertainment markets with both digital platforms and linear TV growing
  • Key industry players are concerned after the recent move by government to bring digital streaming under its scope
  • Content providers fear regulations could hobble new developments and impact their autonomy

Last month, the Indian government issued a notification bringing digital news content, as well as films and audiovisual programmes made available by online content providers under the ambit of the Ministry of Information and Broadcasting. This development is likely to have a significant impact on digital streaming platforms such as Netflix and Amazon Prime Video, as well as Indian providers Hotstar, ZEE5, Voot and others.

While film and television have long been subject to certification and compliance with codes of ethics, digital video services operating in India have been largely unregulated in the absence of an applicable jurisdictional framework. In an effort to pre-emptively address this gap, digital video content providers – often referred to as over-the-top (OTT) platforms – have attempted to develop their own systems. As recently as September 2020, industry players signed up to a code of self-regulation, but this was turned down by the government due to lack of third-party monitoring options and absence of clarity around content prohibition. (The topic of self-regulation is one that the World Economic Forum has in the past proposed as an example of agile governance in the creative economy.)

Media consumption and distribution in India are changing rapidly

India is one of the world’s most dynamic entertainment markets. World Economic Forum research shows that both demand and willingness to pay for entertainment are on the rise. Interestingly, unlike most western markets, linear TV consumption in India is still growing. Between 2016 and 2018, TV-owning households increased by 7.5% and viewing time increased by 3%, with the rise attributed to growing incomes in semi-urban and rural areas.

At the same time, there is a trend towards digital formats, with the greatest growth occurring in the streaming sector. By 2014, Indians aged 15-24 were already watching 25% more online video each month than those aged 45+, and between 2016 and 2020, revenues in video platforms grew 35%, compared to only 9% for TV. In 2021, digital and D2C video in India is anticipated to grow 17%, while other sectors such as TV, film and animation are expected to shrink between 9% and 67%.

In 2021, video streaming in India is expected to grow 17%

As consumers’ time and money migrate towards digital video content, the largest media companies are increasing investment in the sector, by deepening their content libraries and adding more exclusives at competitive prices. This pivot is apparent in the strategies of major Hollywood studios to blend the traditional cinema release model with digital formats. Last week, Warner Bros. announced that all of its 2021 films will be released on HBO Max and in theatres at the same time.

Indeed, in the last decade, both the number of films shown in theatres – as well as the theatrical window for which they are available – have been reduced in order to prioritize releases directly to consumers via OTT video platforms. In recent years, there has been an acceleration towards this delivery model, with NBCUniversal, Disney and AT&T all launching new services.

India is no different, and with the COVID-19 pandemic forcing the closure of cinemas and theatres, the country has seen a surge in the number of Bollywood movies released via OTT, even if some in the industry dispute the value proposition these platforms offer.

“Theatrical distribution represents approximately half of worldwide revenues for major releases by Hollywood studios,” says Kamal Gianchandani, CEO of PVR Pictures. “Similarly, in India, domestic theatrical contributes 60% of the overall revenue for a major release; the overseas theatrical is an incremental 10%-15%. We believe that the OTT [D2C] segment will continue to invest in original films, but this won’t come at the cost of theatrical releases. Content suppliers will expand production capacity to meet increased demand.”

Foreign providers are increasing their footprint in India. In 2020, Amazon announced it would double its Indian investments in Amazon Prime Video, while Netflix said it was spending more than $400 million on Indian content between 2019 and 2020. The approach appears to be paying off: data from June of this year shows that Netflix and Amazon Prime Video each hold around 20% of market share, while Disney+ Hotstar, owned by the Walt Disney Company, takes 17%.

Chart showing market share of streaming platforms in India.
Foreign providers are increasing their footprint in India, such as Amazon, which announced it was doubling investment in its Prime Video in 2020. Image: Statista

As consumption globalizes, policymakers are watching

There is precedent for policymakers intervening in creative industries, but historically such steps have been taken to protect local economies. Since the advent of broadcasting, governments from Argentina to Vietnam have introduced laws and regulations covering content quotas, subsidies or tax incentives for local production and publicly funded broadcasters.

Many governments are also revising their legal frameworks to ensure that cultural values and creative economies remain protected and can thrive in today’s online environment. The European Commission, for instance, recently updated its Audiovisual Media Services Directive (AVMSD), reinforcing obligations to promote European films and TV shows in its countries’ on-demand services by having to feature at least 30% European content. In China, a quota of 25% exists for broadcasters to show foreign-produced content, which may also not be shown during peak hours (7-10pm). Guidelines were consolidated for digital and linear content earlier this year.

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What next for India?

With the massive growth in digital video content consumption in India, the government is likewise considering how to update its policies to better reflect digital habits and preferences. To date, the Ministry of Information and Broadcasting has been responsible for applying these rules to film and television and its regulations have been focused on concerns of national security and unity, restricting any content inciting violence or promoting anti-national attitudes.

Concerns have been raised among commentators that the move to digital video content providers under the same ministry as legacy broadcasting is an attempt to introduce government censorship to digital platforms. However, even leaving this argument aside, there remains a risk that the government applies rules designed for an old system – traditional broadcast media – to the video streaming landscape.

Digital consumption means that a model where broadcasters control the schedule and programming of content is becoming less relevant due to streaming’s personalized service options, such as parental controls that safeguard against harmful content.

Furthermore, this makes it difficult to determine exactly what qualifies as an OTT service – if anyone can stream and anyone can watch, where are the boundaries that define a broadcaster and an audience? Looking to the future, this suggests that further harmonization will be needed so that rules are applied consistently.

“Media platforms must have the autonomy to decide on the content and resolve consumer complaints on their own. Proposed regulations, if not executed well, could hobble new developments, even if some oversight was the need of the hour. We think the entertainment landscape will cope well with the regulations; however, a lot will depend on the implementation,” says Gianchandani.

While much remains to be seen about how the policies will be developed and eventually implemented, it is clear that the new approach will need to strike a delicate balance to be both effective in and reflective of our digital age.

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