Not so sure. If someone starts streaming content at 499/- per year unlimited (even in the US it is 99$ a year unlimited, so it may rise, but only to 2000/- per year or so), then how does a shemaroo make money? Why would I want to watch a youtube movie with ads when I can watch adfree content for a pittance? And while producers and studios will benefit if Amazon, Netflix and Eros start competing with the likes of Shemaroo for content, I can't see how Shemaroo benefits. After all, it still has to buy content. The same logic of nostalgia can be applied by other people too. If you check the Amazon content, there are lots of old movies on the catalog already. The same is true for Eros Now.
Correct me if I am wrong. The Shemaroo model is about buying older Bollywood content (10-15 years old) for 5-10 years, and monetizing this content by a) Selling DVDs (dead to dying business) and b) Streaming it, accompanied by Ads. This means they can make money either by a) Buying the content cheap, because there are few takers for old content or b) Monetizing it easily because there is lots of streaming going on.
I think both sides of the equation will suffer if Amazon offers ad free streaming for next to nothing, and also competes for content. In the short run, maybe Shemaroo benefits if Amazon would sign agreements for streaming for an upfront fee. But in the long run, this is disruptive.