With Saavn, EROS, ALTBalaji and 160 Mn subscribers, Jio tends to outsmart Amazon and Netflix

After e-commerce and digital payment, content has turned out to be the next frontier of war for Internet and telecom giants. Besides local peers, global behemoths including Amazon, Hotstar, Netflix, Facebook and Alibaba (slated to launch) have been eyeing to grab a major slice of the $340 million worth current Indian video market.

The present market worth is slated to touch $1.6 billion in 2022, and several deep-pocketed juggernauts including Amazon, Netflix, Hotstar and local telecom major Reliance Jio have lofty goals in the streaming space.

The ambition of making the mark in the fledgling Internet market with a strong video and audio streaming portfolio has been triggering RIL to acquire significant holdings in new age content and entertainment companies.

In the past 6-8 months, RIL has acquired stakes in local over-the-top video (OTT) content platform ALTBalaji, Eros and most recently music streaming major Saavn. These investments are indeed a part of group’s long-term strategy of building dominance in the local market as Verizon and AT&T did in the US market.

Why RIL has a sharp focus on content?

With cheap 4G data provided by Jio and other telcos, consumption of online entertainment (majorly video and audio streaming) has been witnessing hockey stick growth curve for the past 18-20 months. According to a Hotstar report, consumption of video streaming has jumped five folds in 2017 over the previous year.

Jio revolution has given wings to video and audio streaming companies in India. Besides original content creators including Amazon Prime and Netflix, platforms including VOOT, Hotstar, Bigo Live have also been experiencing a spate of viewership.

Notably, Indians consume the largest amount of data globally with the highest viewership of video content (12.3 hours per week) in all of Asia Pacific. The preceding data points are enough for Ambani’s to become bullish about the business proposition that is complementary to their largest bet - Jio.

Meanwhile, subscription-based premium content offerings such as Amazon Prime and Netflix are gradually gaining a stable ground amongst Indian audience who are unlikely to pay for content.

According to some rough industry estimates -- Amazon Prime Video had signed up 9.5 million active subscribers since its launch in December 2016 in India. They also hint that Netflix has around 6 million subscribers base.

Leveraging Jio ecosystem: Streaming business is an obvious path

With cheap cellular service bundled with an experience changing - 4G data connectivity, Reliance Jio has been bringing a major chunk of India’s 1 .4 billion population on the Internet for the very first time (majorly young, between the age bracket 15-30).

Importantly, the over $30 billion bet on Jio, RIL has been able to crack the hard part- paid subscription. It has over 160 million paid users base. Testing the layers across the ecosystem, it launched JioTV to tap growing video streaming market.

Likes of Netflix, Hotstar, Sony as well as ALT Balaji amongst others yet have to figure out the subscription part. India is one of the heavens for pirated platforms including Torrent and songs.pk. Users are here inherently unlikely to pay a premium for entertainment and knowledge. They always have several options available to circumvent regulations and weak copyright enaction.

General consensus often tends to favour Amazon Prime as a winner in subscription-based services including content. However, RIL with a strong adoption of umbrella products such as JioTV. It reportedly has about 40 per cent marketshare in the online streaming segment while Amazon share stands near 12 per cent.   

Undoubtedly, Amazon Prime has an edge with a slew of additional services like next day shipping (offered by Amazon.in), subscription-led music streaming service and an exclusive invite to members only discounted events over competitors including Jio. However, with ALTBalaji, EROS, and Saavn, RIL seems to have a better grip on local content consumption data, pattern, and behaviour.

With Saavn, JioMusic has a more balanced streaming play

According to a KPMG report, music streaming applications had 50-60 million monthly active users in 2016. Audio streaming services such as Gaana, Saavn, Hungama, Airtel’s Wynk Music and VOOT amongst others are on the rise since Jio launch.

With Jio effect, streaming services have found a new lease of life. Apart from in-house music streaming product JioMusic, Airtel’s OTT music product Wynk and TIL-owned Gaana had reportedly saw over 125 and 45 per cent growth respectively in 2017.

Similarly, Hungama and Saavn also had reaped benefits of the low cost 4G cellular service. Jio also triggered an uptake in above platforms including Gaana and Wynk’s paid offerings priced under three digits figure. Google also had silently launched its music streaming service - My Music late last year while Apple and Amazon also have launched their music streaming products in India.

The road ahead for video streaming, Jio, and competition

Given the fast penetration of 4G as well as 3G Internet connectivities, video, as well as audio streaming, are slated to increase. While paid subscription model is very early in India, it’s expected to grow with an uplift in the lifestyle of the young population. Frenzy around web series including Game of Thrones (broadcasted on Hotstar), Silicon Valley, TVF Pitchers and AIB are the testimonials to an increasing acceptance of premium digital offerings.

Over the years, YouTube has been milking money from video consumption in India via advertising, however, the real battle for content streaming seems to have begun in India with global giants are up in arms with Jio and RIL’s broader segment.

Nevertheless, with over 160 million cellular subscriber base, and a mix of investments and in-house products in content space through EROS, Jio Music plus Saavn, ALTBalaji and JioTV, Reliance appears to have an upper hand against its competitors.

Going forward, it would be exciting to watch how Reliance Jio and other global, as well as local counterparts, fare in the subscription-based digital content race.

We have updated the headline with Jio subscriber base.