Indian OTT video streaming platform JioCinema, owned by Viacom18, is offering premium content for free, causing concern for rival services and media analysts.
India’s over-the-top (OTT) video streaming world is getting jittery. With only the international English language content behind a paywall on its platform for now, Viacom18-owned JioCinema is offering more and more premium content free-to-view, making both rival services and media analysts anxious. They’re concerned as Indians are inherently averse to paying for content -- entertainment or news -- and want it very cheap. And now the availability of quality content free of cost may rid them of whatever slight habit they had formed to pay for content.
HT Image
First came the cricket Indian Premier League (IPL) at no cost for JioCinema viewers. Now the company is dropping new feature films and web shows in Hindi and regional languages, all free. On the cards are new films like Sonam Kapoor starrer crime thriller Blind and Genelia D’Souza and Manav Kaul’s Trial Period. It has already showcased Shahid Kapoor’s Bloody Daddy and has plans to release Vicky Kaushal and Sara Ali Khan’s Zara Hatke Zara Bach Ke.
Such moves may adversely impact the industry, experts said. Karan Taurani, analyst with Elara Capital, first raised concerns on this trend in January when Viacom18 announced streaming IPL free on JioCinema, and again, last month, when Disney Star announced streaming the upcoming Asia Cup and the World Cup free for mobile users on the Disney+Hotstar app. In his report on June 9, Taurani said that no large OTT platform has been able to undertake price hikes in the past six months, due to the disruption caused by JioCinema which offers movies, originals, and cricket content free. With the Disney+Hotstar offer “a section of the audience will watch premium cricket content free, and it may take time for other OTT platforms to undertake price hikes,” he noted.
Speaking to HT on JioCinema’s strategy, Taurani said the Reliance-backed platform has deep pockets. “It can actually offer premium content free of cost probably not just for three months but for the next two years. If that happens, it will be a big spoilsport for the market,” he said. It’s a dampener for the industry for several reasons. One, it may have an undesirable impact on consumer habits since they are already reluctant to pay for content. “In view of the free offers, they will take time to come back to the pay-based mechanism,” he said, eroding the painstakingly built subscription-based video-on-demand (SVoD) eco system in the country.
Two, it will slow down SVoD revenue growth rate which Taurani said was expected to climb by 30-35% a year. The two SVoD growth drivers --- the average revenue per user (ARPU) and the increase in total number of paid subscribers – will decline, he said.
“If your ARPUs are low and a platform offers premium content free of cost, it’s a big challenge as you are not able to raise prices. This will hamper the overall growth of the OTT industry,” he added. The bigger impact will be on the smaller regional OTT platforms which draw very low average revenue per user. “Free content will lead to higher losses for OTT platforms and lead to consolidation wherein smaller firms may be unable to survive,” he said.
Market research firm Ipsos India’s group service line leader Jyoti Malladi said offering content free will definitely hurt the platforms. Quality original content and premium sports content are a big draw and come at a huge cost. “This makes the AVoD (advertising-led video-on-demand which makes money from ads instead of asking consumers to pay) only model unsustainable,” said Malladi.
Although a report by Dentsu India and e4m said digital media spends will touch ₹39,315 in 2023, Malladi pointed out that ad rates on digital are still low and there is stiff competition from search, social media platforms and e-marketplaces. “This makes it challenging for the streaming platforms to sustain as a free service despite ad revenues,” she said.
Taurani said that if the OTT industry in India has to scale, all revenue streams need to fire -- subscriber additions, advertising and increase in ARPUs. “In this race to get users by offering free content, the path to profitability for these platforms will get longer,” he said.
Uday Sodhi, senior partner at Kurate Digital Consulting, however, said the streaming sector is set to boom with JioCinema acquiring users. “Yes, there will be a temporary problem of making money. And anyone who cannot fund growth will keep dropping out of the race. But in the long run, the dust will settle down.”
E-Paper
