The OTT experience, in its heyday, was defined by two things: edgy content and ad-free viewing. But with subscription revenue on a decline, ad-supported streaming grew 21% in 2024 while the subscription video on demand degrew by 2%, as per Ormax — it seems the streaming business can no longer give the cold shoulder to advertisements.
In that sense, Amazon Prime Video’s decision to introduce advertisements across all paid tiers in India starting June 17 was a formal announcement of a shift that’s underway already — the return of advertising as a core pillar of revenue.
“Ad-supported tiers are increasingly becoming necessary to balance content investments with subscriber growth, especially in India, which is a price-sensitive market,” says Abhijeet Rajpurohit, COO & co-founder of CloudTV. “Hybrid models allow platforms to address different market segments. Pure subscription models are a challenge to scale.”
India has 547 million OTT users, with only a fifth paid subscribers. According to Saurabh Srivastava, COO, digital business at Shemaroo Entertainment, “AVOD significantly lowers the entry barrier, allowing platforms to scale quickly by reaching broader audiences, particularly in Tier 2 and Tier 3 markets.” He adds, “For OTT platforms to build long-term value, SVOD must grow and mature into a more robust revenue pillar.”
A hybrid model is becoming the dominant template. “Ad-supported models have become crucial, especially for regional or emerging platforms like ours,” says Kaushik Das, founder & CEO of AAO NXT. “We’re actively exploring this hybrid path because it’s the most inclusive and sustainable way to scale.”
Share of the pie
Advertising’s share in OTT revenue varies widely. While global platforms might see 30-40% of revenue from ads, in India, ad-supported models (AVOD) play a crucial role in driving growth and profitability, contributing approximately 69% of total revenue. For their part, subscription-based models (SVOD) account for 31%, according to Chandrashekhar Mantha, partner, media & entertainment sector leader, Deloitte India.
As of 2024, platforms like YouTube India and JioCinema generated over 80% of their revenue from advertising. For niche players, the share is far lower. “Advertisers are keen to tap into OTT’s data-driven targeting, making ad revenues a vital pillar of long-term sustainability,” says Yasin Hamidani, director, Media Care Brand Solutions.
One major reason ad-supported models work in India is the nature of the audience itself. “Indian viewers show higher tolerance for ads compared to Western markets when the value proposition is strong,” says CloudTV’s Rajpurohit. “Cultural expectations of free or subsidised content from the history of free broadcast television play a role.”
A 2024 MiQ report reinforces that: 82% of Indian audiences engage with TV ads, significantly higher than in the US or the UK. “Indian audiences are far more ad-tolerant, especially if the content is perceived as high-value or ‘free.’ The tolerance is even higher when ads are short, regional, and personalised,” says Ambika Sharma, founder & chief strategist, Pulp Strategy.
That tolerance, however, comes with boundaries. “Frequency capping of ads is important. Showing the same ad multiple times can cause fatigue,” Rajpurohit cautions. “Transparency about ad loads is increasingly important for maintaining trust.”
The threat extends to piracy and alternative viewing. If viewers are bombarded with irrelevant or excessive ads, trust will erode. That’s why tiered subscription models are becoming popular. The viewer gets a choice and as long as the value is clear, loyalty follows.
Srivastava of Shemaroo expects monetisation to evolve into an ecosystem where personalised and non-intrusive ad formats gain acceptance. “At the same time, we may witness the rise of aggregated OTT bundles where users pay a single fee for multiple platforms, either through telcos, smart TVs, or third-party aggregators.”
Platforms risk user churn if they get the mix wrong. “The perceived double charge — paying for a subscription and still having to watch ads — can trigger friction, especially among urban, premium users. Subscription fatigue is already here. Platforms that design the ad experience, not just insert it, will lead,” sums up Sharma.