Will Reliance Jio launch boost India's OTT segment?
With the promise of free voice calling, free national roaming, better bandwidth and data at fraction of the cost of incumbents, Reliance Jio made headlines in the telecom network.
The recent launch of Reliance 4G network created a stir in the telecom market by introducing plans that include free voice calling, free national roaming and data at fraction of the cost of incumbents. At the Reliance Industries AGM held in the first week of September chairman Mukesh Ambani announced Reliance Jio would not be charging for voice at all, and laid out a number of reasonable data plans. Anyone with a 4G capable phone can buy a Jio SIM, and it'll be free to use till December 31, 2016 as a one-time 'welcome offer.' It promises a base rate of Rs 50 per GB with greater the usage lower the rate it will be. So the question here is will this strategy bring a positive impact on India’s nascent OTT segment?
Gaurav Gandhi, COO - Viacom18 Digital Venture is extremely optimistic about the launch boosting up the consumption of long format content. He explains, “Jio's launch will change the ecosystem for video services forever and the biggest beneficiary will be the consumer. Today over 70% of video streaming (across OTT players) happens on WiFi. Users are apprehensive about using data, especially video and even if they do, it’s mostly short form. They bookmark stuff to watch later or opt for offline viewing. OTT video market will explode (which anyways is already growing aggressively) with this big change.”
Uday Sodhi, Executive Vice President & Head-Digital, Sony Pictures Networks India, shares the same thought with an added mention of competition heating up, “With Jio coming in and competitive environment on data heating up, consumers are going to get better quality bandwidth, bigger packs at affordable rate, better WiFi access and hotspot. Entertainment sector will gain with this development. Long format is going to get a big boost. Movies, catch-up TV, the entire space of digital video is going to benefit primarily because accessing content will become much easier and cost effective.”
Siddhartha Roy, CEO of Hungama.com reiterates the point, “Currently the Indian market is at a nascent stage. The biggest thing Jio brings to the market is bring better connected data. Consumer will consume data across board. We are the beneficiaries of that consumption. Entertainment will be one large contributor of that and video as a format is going to be a leader in the consumption value.”
Reliance Jio’s recent strategy of launching its own 4G handset LYF at the most affordable price of Rs 2,999 implies widespread access to cheap 4G handsets with competitive tariffs leading to more data consumption. Sodhi adds, “Also the whole effort to provide 4G phones at reasonable price will help increase the total number of devices in the market. So the broadband devices are increasing. 4G bandwidth is going to be better and cheaper. So whether it’s Jio, Airtel and Vodafone, all of them are going to be better pricing and larger packs.”
And, the competition is indeed building up. Bharti Airtel has recently come up with a new plan of delivering 1GB of 3G/4G data valid for up 28 days in just Rs. 29. Several reports show that the telecom company has slashed up to 80 percent for the prepaid users and nearly 150 for the corporate ones. Vodafone has recently revised its old plans and now offers 2GB data plan for 30 days at just Rs 199. It claims to have increased its 4G data quote by almost 67 percent at the same data pack cost. Idea is providing 1GB 3G data plan for 28 days at just Rs. 249. To counter Jio’s plan BSNL has launched a broadband plan under which if customers use the plan continuously in a month, they can download upto 300 GB data by paying Rs 249.
When it comes to content Gandhi feels Jio launch is good news for content creators as well alongside the OTT sector and consumer. “It will surely benefit all premium/scale content creators even more. Great stories / with scale production are sometimes difficult to tell in short formats. Also, consumers will now be able to stream HD quality content on not only phones, but larger screens – again benefiting quality content creators (more than UGC).”
Let’s not forget Reliance Jio is an OTT player itself and Cyber Media Research believes it’s expected to become the largest one in India as mentioned in media reports. It is already a number of app-based services, including JioPlay, Jio Beats, Jio VoD, and Jio Security among others to its customers in India. Jio Play will have over 300 TV channels, including 30+ HD channels across 15+ languages and 10+ genres. The market research firm also mentions that Jio will have more than 125 million potential 4G subscribers available to acquire by December 31. That will provide an interesting twist in this segment with other players working up their game in content, reach and marketing areas.
Boost to digital advertising
How will this launch impact advertising, especially digital advertising? As it is known, digital advertising in India is making great progress. According to Madison Media’s revised Pitch Madison Advertising Report 2016 it grew by 37% in the first six months as against its original estimate of 30%. With that pace, OTT players are confident that Reliance Jio launch will encourage it by bringing more advertisers to the platform. “Year-on-year more money is shifting to digital advertising as more and more consumers consume digital content. With more traffic being created, brands looking to explore digital advertising are on a rise. We are all aware that brings in better advertising and better measurement of ROI,” Roy comments.
On a similar note, Gandhi adds, “OTT video advertising market is expected to be a US$ 1 billion by 2020. With this big launch, the overall eyeballs on video will multiply which will bring in ad volumes. Every big TV advertisers will now be putting significant money on digital video.”
Sodhi echoes the same thought, “Increasing number of consumers are consuming content on different platforms which will bring in advertisers on board.”
The positivity is felt among the media experts as well. Shashi Sinha CEO of IPG Mediabrands India, comments, “It’s a great offer. If they get their infrastructure right it will benefit everyone. As broadband increases, speed will improve digital video system will take off. Having said that, it’s still early days. Overall as digital improves in the country there will be space for everyone.”
PM Balakrishna CEO, Allied Media Network, “Jio is a game changer for the telecom industry and a lot of analysts are watching it and if it is successful, we will see a lot of carriers giving away voice and charge only for data platform. Jio is using VoLTE which is supposed to be faster, quicker and lower costs for data. This coupled with free calling including roaming make it top of the wish list for users including consumers and enterprise alike. It will create a spike in consumption of data in the form of content and services and hence will give that fillip to the OTT as that is the next frontier given the rapid pace in which the mobile is outstripping conventional screens. To the other networks which are sadly stuck in older technology platforms this is bound to be a huge challenge in the short and medium term.”
On the other hand, Shekhar Banerjee, COO, Madison Media Infinity has a different take on it. In fact he doubts that Jio’s launch will bring in growth in this sector immediately, given the current data usage pattern in the country. According to him the content needs to get the first priority in order to propel growth. He says, “It’s unlikely that in short term, OTT growth will be fuelled by Jio launch. Existing players already have data and there are certain existing users of data who might opt for Jio’s cheap data. Then there are mass who use only voice and will opt for a cheaper voice, but when they see the value of digital in their life they may start using data consistently. So all of a sudden there will be a more digitally connected India that will be a big unlock for India overall. The question to be asked over here is: are all digitally connected consumers using OTT today? How many of them are using Hotstar Vs Youtube? OTT’s success will be in their ability to serve good content, only then they will be consumed. Their game is not just access to data, but the need to crack the content piece first, I think.”For more updates, be socially connected with us on
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