Over the past three years, Spotify has become a consumer favourite, offering a great product experience and becoming a strong brand. As a Swedish music streaming platform, it has successfully established itself as the market leader, capturing 26 percent of streams in FY23
Digital has emerged as a significant contributor to the growth of the music industry in India and with that people are turning to OTT Audio services such as Spotify, Gaana, Jio Saavan, Resso, Wynk, YouTube Music, Apple Music, and Amazon Music to stream and listen to music.
Increased internet penetration, affordable mobile data, and the growing popularity of music as an on-demand entertainment option for consumers have pushed the popularity of OTTA against the traditional music industry.
Further, the continuous growth in OTTA streams is led by both user and engagement. According to a report by tech and data-driven consultancy firm, Redseer Strategy Consultants, over the past three years, the industry has witnessed a surge of about 1.6X in daily streams to reach 460 million in FY23.
“The COVID pandemic witnessed during FY21 and FY22, accelerated the growth of OTTA, adding more than 50 million music listeners, not only from the young age group but also among the people with more than 40 years of age.”, said Ujjwal Chaudhry, Partner, Redseer Strategy Consultants.
International music streams have also grown by 11 percent and the report suggests that the rising users are between 18 to 30 years of age from metro cities, some also being first-time internet users.
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While more than 60 percent of streams still come from metro cities (top 8), Tier 2+ has seen growing contribution.
Vernacular music mania
Going vernacular is the new music buzz in town and with the recent win of Natu Natu's song at the Golden Globe Award and Oscar, the trend is just getting started. Speaking of the OTTA market, vernacular streams have grown the fastest in three years with digital maturity growth in smaller cities and more regional label partnerships. In the last four years, vernacular music has experienced the most rapid growth and accounted for 34 percent of music streams in FY23.
Within vernacular, the South Indian market has witnessed a surge in both user base and engagement in the last two years attributed to the growing number of blockbuster movie releases and high growth in players like Spotify.
While South Indian languages have grown, Punjabi remains the lead contributor in the vernacular with a 39 percent share.
Being a leader in ‘entertainment’ genre songs, Punjabi is the highest contributor in OTTA with non-film genre music. In the last four years, songs of artists like AP Dhillon, and Diljit Dosanjh, have been played not just in the north, but across all states.
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The subscription game
On the subscription revenue front, there has been significant growth compared to ads revenue. In FY23, about five percent of monthly active users were paid with average revenue per user (ARPU) per month has ranged from Rs 60 to Rs 70. In the last two to three years, diversity in the subscription packs has increased (student plans, one-day and one-week packs, and others) which has led to more subscriptions, mostly coming from the top 10 to 12 cities of India. The growth rate of subscription revenue has outpaced that of advertising revenue in the last four years
Spotify holds the top ranking for music streaming platforms
Over the past three years, Spotify has become a consumer favourite, offering a great product experience and becoming a strong brand. As a Swedish music streaming platform, it has successfully established itself as the market leader, capturing 26 percent of streams in FY23 and has been a key driver for adding first-time OTTA users between the ages of 15 to 30 years, especially in metro cities.
One of the key strategies that have enabled Spotify to expand its user base is its focus on penetration in Hindi and vernacular languages, beyond just international music. In fact, the platform boasts one of the largest music libraries of Hindi and Vernacular content, and with the strong brand it has built, Spotify was able to get more users across different age groups and user cohorts, pan India. This has undoubtedly contributed to Spotify's continued growth and success.
Overall, the OTT Audio market has revolutionised and promises significant growth in the coming years.
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