MUMBAI: The national e-commerce policy draft appears to have created quite a stir in India's OTT business. In its current form, the proposed policy is bound to pose a regulatory hurdle to international streaming giants, some say. Despite the clear distinction in the dynamics of OTT and e-commerce sector, the policy appears to bring the former under its ambit. That has given rise to speculation over the future of popular OTT platforms like Netflix, Amazon Prime Video and Hotstar.
At the heart of the problem is the way e-commerce has been defined in the ‘Draft National e-Commerce Policy’ by the Department for Promotion of Industry and Internal Trade (DPIIT). The draft says, e-commerce is “buying, selling, marketing or distribution of goods, including digital products and services; through electronic network". Notably, it also refers to the FDI policy in e-commerce which restricts platforms with foreign direct investment to “exercise ownership or control over the inventory sold” on it. This poses a threat to Netflix Originals, Amazon Prime Video Originals and Hotstar Specials, argue some.
The situation, however, isn't as dire as it is being made out to be.
Given the obvious dissimilarities between the two services, there is a need to craft a separate policy for OTT platforms, if at all. Content consumption and buying products online doesn't make for a fair comparison. When it comes to OTT apps, there is no fixed delivery period unlike an e-commerce platform. OTT platforms cannot swap the inventory model of business with an instant delivery model.
While subscription based video-on-demand services carry out transactions, they don’t provide an option for permanent download of digital goods that could be regarded as a replacement of physical goods. Unlike e-commerce companies, OTT apps also don’t connect companies while providing content to subscribers.
Policies of this nature don’t get finalised without struggle in the Indian regulatory system. The authority itself will go through multiple layers of discussions before sending off the final draft. In addition to that, stakeholders also have a fair chance to argue against what they'd like to believe are the flaws in the draft. The upcoming Lok Sabha election will also offer a breather to stakeholders when it comes to any potential forward movement on the bill. Industry sources Indiantelevision.com spoke to claim there is a good chance we may not see a final policy even before 2020.
According to legal experts, the intent of the policy is good for small retailers in the country. But bringing digital services and data storage issues along with e-commerce platforms will cause more ambiguities for the entire digital economy. Moreover, lack of clarity on how the implementation will happen is being highlighted as a major problem of this draft. They have also pointed out the need for open house discussions to address some of these issues.
However, it is certain that if the draft in current form becomes the law of the land, international OTT players will be left with no option than to adopt a marketplace model. That, however, would make little sense, as it would force them to showcase their content on other OTT platforms, as per the definition of what constitutes e-commerce. The micromanagement of ownership and control over content will only harm the industry, which is still at a nascent stage of growth.
While there is a perspective that the proposed policy will help homegrown OTT players, there is also a danger that a less competitive market may lead to fall in quality content. Along with the emergence of homegrown players, the localisation strategy of international OTT players has driven the growth of demand for original conten. Depriving Indian viewers of international shows and original programming may also reduce their enthusiasm for streaming platforms overall.
