How India's new data protection rules may impact OTT platforms
What's the story
The draft Digital Personal Data Protection Rules, 2025 are likely to have a major effect on the functioning of OTT platforms in India. These platforms will now have to comply with stricter rules for processing children's data. This includes verifying parental consent, restricting behavioral tracking and targeted advertising, and strong security measures like encryption and access controls.
Financial impact
Operational costs for platforms to go up
The DPDP Rules, which the government introduced on January 3, will increase the operational costs of these digital platforms. Gaurav Sahay from Fox Mandal & Associates LLP, said these rules would require significant changes in compliance and policies, particularly with respect to children's data. Platforms will have to implement robust age-verification mechanisms and obtain verifiable parental consent before processing data of users below 18 years.
System overhaul
Compliance with new rules may require system updates
Compliance with the DPDP Rules may force OTT platforms to revamp their user onboarding processes, privacy policies, and backend systems. These changes could increase operational costs as platforms will have to bolster security measures, restrict certain practices like targeted advertising for children, and develop age-appropriate content categorization. Global platforms operating in India could also face further challenges due to data localization requirements and restrictions on cross-border data transfers.
User impact
New rules may impact user engagement and monetization strategies
The new rules could potentially disrupt user engagement, as added friction in the onboarding process might deter teens and parents from accessing these platforms. Monetization strategies reliant on behavioral tracking and targeted advertising would be affected, forcing platforms to explore alternatives like subscriptions. This could alienate price-sensitive users while smaller platforms may struggle with compliance costs.
Personalization challenge
Data collection restrictions could affect personalized experiences
The new rules could force platforms to restrict the collection of personal data from children, including tracking their online activities, preferences, and behavior. This could negatively impact their ability to provide personalized experiences, which is a key part of their business model. Restrictions on data collection could result in less personalized experiences, affecting user engagement.
Strategy shift
Platforms may need to re-evaluate content strategies
To ensure compliance with the rules, platforms may have to re-evaluate their content strategies. This could involve creating more child-friendly content or implementing stricter content moderation policies. Anupam Shukla from Pioneer Legal suggested business models heavily reliant on targeted advertising to children may need adjustment.