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As JioCinema unveiled its new subscription offering, ‘JioCinema Premium,’ priced at Rs 29 per month, industry leaders highlighted that this move is poised to disrupt India’s SVOD market with one of the industry’s lowest pricing plans for premium content. Now, it remains to be seen if this move by JioCinema will have a notable impact on other OTT platforms.
JioCinema’s new subscription plan offers subscribers an ad-free viewing experience in up to 4K resolution and includes the option for offline viewing. Moreover with a focus on multi-segment consumption across Indian households, a ‘Family’ plan was also announced at Rs 89 per month which offers the additional benefit of four simultaneous screens access.
With this subscription plan, members can access exclusive series, movies, Hollywood content, kids and TV entertainment, on any device, including connected TVs (CTV).
Industry leaders have varying views on the effects of JioCinema’s recent move on other OTT players. Some see the introduction of an ad-free pack by JioCinema as a positive step that won’t impact competitors. However, others point out that JioCinema’s competitive pricing might make it difficult for other platforms to increase prices, potentially limiting revenue growth for subscription-based services.
Uday Sodhi, Senior Partner and Co-founder, Kurate Digital Consulting, mentioned that the introduction of an ad-free pack by JioCinema is a positive development. Importantly, this move is unlikely to affect any other OTT platform. Instead, it will likely provide JioCinema consumers with an extra choice to enjoy content without advertisements.
On the other hand, Karan Taurani, Senior Vice President – Research Analyst (Media, Consumer Discretionary & Internet) at Elara Capital, said that this move implies a sharp price cut towards Rs 29 per month versuss JioCinema Premium’s earlier pricing of Rs 80 per month.
He said that on an average, pricing for broadcaster-based OTTs in India is Rs 103 per month (Zee5, Sony Liv, Disney plus premium plan), whereas global giant OTTs average pricing is Rs 358 (Netflix premium plan, Amazon Video), which implies that JioCinema Premium pricing is at a steep discount of 86% versus average price of peers. However, JioCinema’s depth of offerings in originals/global content remains much lower compared to global peers.
“Thus, we believe that other OTT platforms may not be able to raise pricing, due to JioCinema Premium’s disruptive pricing, which will limit SVOD revenue growth prospects. Broadcaster- based platforms have a freemium offering to their advantage, however global OTT giants may need to add an ad tier pricing or explore innovative means (curb password sharing, etc) to drive SVOD revenue, as pure ARPU-led hike may be a challenge,” Taurani said.
Broadcaster-based OTT platforms may also report lower revenue growth, as subscription revenue is approximately 40%-50% of their OTT revenue, which may not see a sharp jump in APRUs, he said.
“Further, we believe that JioCinema may have cut pricing for its premium offering, as they may not have seen a big offtake for only exclusive Hollywood content and hence added more content for an ad free experience. They have an advantage as compared to their peers, as they don’t need to tie up with partners due to a strong distribution mechanism in house via Jio (mobile, fibre),” Taurani added.
Meanwhile, Sodhi highlighted, “We should see more details of the packs once they are out. Most Indian consumers have two OTT subscriptions today, so will JioCinema become part of that pack, we need to see. With Ad free packs they are not reducing pricing but adding a pricing layer for watching free content.”
As the sports content including the ongoing Indian Premier League (IPL) and thousands of hours of entertainment content will continue to be available for free on JioCinema as part of its ad-supported offering, Taurani stated that this implies that they will continue to rely on advertising to drive sports, this will continue to have a mild negative impact for sports adex on TV. However, post Reliance Industries (RIL)-Disney merger, subject to regulatory approvals, sports on TV/digital could be sold as a bundle and drive overall ad revenue scale.
“Sports has the potential to drive a larger share of the digital advertising market, due to its free offering (currently mere 6-8% of India’s digital ad spends). Catch up TV content too will remain free with ads on JioCinema. As per our assessment, catch up TV forms a sizable viewership share of JioCinema’s non sports content,” Taurani said.
This will potentially help them drive scale in their pay based revenue, by tapping the premium customer who wants to watch content ad free and is willing to pay for the same, and gain competitive advantage vs global OTT platforms. Moreover, user experience of JioCinema remains to be the only monitorable, as global OTT giants have been much ahead of peers in that aspect.
Sodhi highlighted that the sports adex is expected to see a boost following the completion of the Disney Star and Reliance merger.
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