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JioCinema’s High Stakes Game

Analysts expect JioCinema to offer various subscription models for the IPL 2024 and other content in the latter half of the year

There was a sense of deja vu as far as sports fans in India are concerned. As in November last year, JioCinema gave up on millions of users when it mattered most, on the opening day of IPL 2023.

The same kind of hiccups were seen during the opening stages of the FIFA World Cup last year, when JioCinema was a new kid on the block. But now five months later and with the high-profile IPL rights in its kitty, one might have hoped for a better start.

What might work in JioCinema’s favour however is the fact that it remains free for the time being, so these issues will be forgotten before long. But there’s a lot to unpack when it comes to Mukesh Ambani-owned streaming platform and its potential impact on the Indian market.

Before we see why, here’s a look at some of the best work from our newsroom this week:

  • Inside Ashneer Grover’s Mind & Plans: Our no-holds-barred Q&A with the outspoken entrepreneur on CrickPe, the future for Third Unicorn and his various legal battles
  • Is PW Just Another BYJU’S Or Unacademy?: Alakh Pandey’s PhysicsWallah finds itself at a crossroad in edtech’s mad dash for profits and market share
  • GoMechanic Investors Left Empty Handed: GoMechanic’s acquisition by Lifelong Group saw write-offs by all equity investors who made no returns on their investment

Jio’s Free IPL Bait

Now, let’s get one thing straight. The IPL and streaming platforms have a long history — even way back in 2010, the second season, the IPL was streamed for free on YouTube. It was the first sporting event to get free streaming on YouTube, and Hotstar only came into the picture in 2015.

Even in its first two years on Hotstar (much before the Disney+ addition), the IPL was a free offering, and Hotstar only started charging users in 2019 for the marquee cricket tournament.

So Jio is not breaking new ground with free IPL streaming. What does make its bet more audacious is just how much the parent company Viacom paid for the streaming rights.

In the debut season of 2008, Sony Pictures Network won the broadcasting rights till 2017 for INR 8,200 Cr. Then In 2017, Star India bagged five-year rights for INR 16,347.5 Cr. And last year, Reliance-owned Viacom paid a whopping INR 23,758 Cr for digital broadcasting rights till 2027.

Streaming Disrupted

“Even accounting for inflation, the growing appetite for streaming and the major IPL coup, that is a bold bet,” says Karan Taurani, SVP at Elara Capital.

He believes that it would be difficult for Jio to cover even half of the rights cost through ad-supported free models. The cost might be recovered in the next two-three years. But Jio’s entry will make a big dent on the ARPUs of other OTT platforms. Just like it did for telecom in 2016 and 2017.

The reactions are coming in from the competition. Netflix is looking to lower its cost of operations and focus on more popular content instead of its typical edgy originals. Besides this, the platform is seeing slower growth than Hotstar and Amazon Prime.

Disney+ Hotstar has also lost a lot of its charm besides the rights to IPL. It has had to give up on marquee content properties such as Formula 1, HBO content such as Game Of Thrones in recent months and going forward, it will largely depend on its major global entertainment properties to retain users.

Making Of An OTT Giant 

As per a report by Media Partners Asia, JioCinema is expected to grab 60% of the total IPL 2023 ad revenue. MPA reckons digital ad revenue will surpass TV ad revenue for the first time, and JioCinema’s ad GMV could touch $330 Mn – $350 Mn.

Star will struggle to withstand Jio’s onslaught as well as a challenging macroeconomic environment, the firm said, adding that Reliance is likely to use JioCinema and its IPL moment as a major marketing platform for the wider Jio and Reliance business.

Jio has roped in 500 advertisers for the 2023 IPL, but it also has a huge inventory of its own to sell on JioCinema. “Budgets from RIL-owned companies (i.e. retail, FMCG) will clearly move towards Jio Cinema, which is the platform that will stream the IPL. Sectors such as auto have moved over a large chunk of ad dollars to Jio Cinema while new economy categories (i.e. gaming) have moved over entire budgets,” the report stated.

Overall, JioCinema expects IPL 2023’s digital viewership to go north of 500 Mn with over 100 Mn concurrency expected at the peak of the tournament. That number would put JioCinema on par with YouTube, which has over 560 Mn monthly users in India.

The other streaming platforms can only dream of such a large funnel that can be converted into paid subscribers with simple nudges over the next few months.

JioCinema’s Next Phase

Well, teething issues aside, JioCinema has certainly changed the colour of the Indian streaming market. And to be fair, the platform also earned a lot of praise after fixing those early bugs for its feature-laden experience.

The app has already added multiple camera angles and other new features for IPL on JioCinema and with 5G penetration growing, the next few years could see some interesting experiments with augmented/extended reality and metaverse. Jio has leaned heavily on these features in its ads for IPL, hoping this would get users to stick around for what’s coming in the future.

While the IPL remains free for 2023, the situation could easily change in one year as Jio would look to recoup a lot of the costs related to infrastructure and marketing, besides the rights acquisition.

Analysts expect JioCinema to offer various subscription models for the IPL 2024 and other content in the latter half of the year, using annual passes, bundling with Jio telecom plans, usage-based/use-based pricing and other models.

Jio is also building a long-tail international content library thanks to partnerships with Paramount+ and other potential deals with Warner Bros. Discovery, HBO (which has recently left Disney+ Hotstar), and NBC that are likely to come before the end of the year, according to analysts.

On the local and regional content side, JioCinema is likely to bring Voot under its fold, along with its approximately 6 Mn subscribers. This merger can be expected in the second half of the year, according to MPA.

In all likelihood, by the end of this year, JioCinema might look completely unrecognisable from its current avatar. At the moment, the platform barely has any other attractions, but that’s about to change after the IPL.

JioCinema’s long term play would be to cover the cost of acquiring IPL rights and then break even through a massive streaming subscriber base within its walled garden of internet services. The INR 23K Cr+ might feel like a bargain in three years, but there’s a lot of distance to cover between now and that.

Can JioCinema do to its streaming rivals what Jio did to the telecom incumbents?

Sunday Roundup: Startup Funding, Tech Stocks & More

  • Q1 Closes On A Low: WIth just $2.9 Bn raised in the first three months of the year, funding for the year has fallen to 2019 levels. This past week saw just $102 Mn raised by Indian startups
  • Digit’s Second Go: Go Digit General Insurance has refiled its DRHP with the SEBI hoping to float a $440 Mn IPO after its earlier attempt was sent back by the regulator

  • PPI-UPI Charges Explained: With a ton of confusion around the NPCI’s interchange fees for PPI-based UPI transactions, here’s a handy explainer on what it means
  • Regulating Tech: Will the Digital India Bill create a safe and open internet for Indians, while also limiting the dominance of big tech cos?
  • Bad Influence: Funding festivals have turned the spotlight on ‘fake news’ and misleading content by influencers in the startup ecosystem that has a real impact on young founders and impressionable minds

We’ll be back next Sunday with more insights and a roundup of the top stories from the world of Indian startups. Of course, you can follow us on Instagram, Twitter and LinkedIn for the latest news as it happens.

Till next time!

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