Mumbai: The ground is shaking big time in the sports broadcast landscape. JioCinema will air cricket’s biggest property, the Indian Premier League, for free. With this move, it is looking to build on the momentum it had gained by airing the Fifa World Cup for free last month. Arpus for the OTT industry could drop further in a market where subscription video on demand (SVoD) is already facing an uphill battle. At the same time, this move could help JioCinema compete strongly with tech giants like Google and Meta for ad revenue. On the broadcast front, this is bad news for Disney-Star, both in terms of subscriptions and ad revenue. JioCinema's free move may have a negative impact on TV advertising and TV medium consumption. This is on top of the economic slowdown, which would anyway make it difficult to go for a rate hike. Experts have various views on how things will move.
An industry expert speaking to Indiantelevision.com said that this is the way to go. "India is not an SVoD market. You have to look at AVoD (advertising-based video on demand). My expectation is that in the coming five years, the possible goal of JioCinema will be to take one-third of the ad revenue share of Google, one-third of the ad revenue share of Meta, and one-third of broadcast ad revenue. For me this news is not a surprise."
The battle is well and truly on for customers between broadcast and digital, the expert added. "Disney-Star is going to take a bad hit on its pay-TV revenues. PayTV as we know it may very well get destroyed. JioCinema is also going to leverage connected TV."
When asked whether other OTT platforms will take the plunge and go AVoD when it comes to cricket the expert replied in the negative. "Nobody has the guts to do what Jio is doing. The other platforms will rely on the digital rights of cricket to grow their subscriber base. So the upside will be limited. Ideally even Netflix should look at AVoD big time."
"Pay-TV subscriptions in India have contracted and have remained under pressure. With the 2023 edition of IPL made available for free on Jio Cinema, paid subscriptions both on television and digital will find it even more challenging to grow. However, Jio's splash in the advertising arena will expand the AVoD market, which otherwise is facing macroeconomic headwinds," said Media Partners Asia VP Mihir Shah.
Another expert feels that this is a direct battle between Disney-Star and JioCinema for ad revenues. "If you assume that the IPL will earn Rs 4,000 crore, the aim will be to corner a bigger share. They are targeting TV revenue. Yes, JioCinema will also look to shift monies from Google and Meta, but that will apply only to male-focused brands on those platforms. The TV ad money is easier to try and corner, as that has already been committed. Basically, JioCinema is trying to destroy TV so that money can be shifted. JioCinema will try to corner 50 per cent of the ad revenue that goes to the IPL over time. Last season, digital got around 20 per cent of the IPL's ad revenue."
As far as shifting ad monies from tech giants, "why will a female-focused beauty brand shift to IPL just because it is on for free? Meta and Google are two different ballgames. Advertising is brand-specific. The IPL will finally deliver a sports audience. But if a brand does not have sports in its strategy, then why will it shift?" He also feels that pay-TV revenues for Star Sports will get hit. There will be reluctance on the part of the consumer to pay when it is available for free. He also feels that depending on the success of JioCinema’s move, other OTT platforms might tweak their strategy when it comes to cricket. "If ad revenue booms, then the platforms may look at selectively offering cricket content for free. It has to make business sense at the end of the day. Others have their own business models. Those could get re-oriented though. Subscription pricing might come down as long as the ad revenue is there," the expert said.
Offering a contrary view, an expert noted that it could be about growing telecom subscriptions. "My understanding is that they are looking to grow the telco business. If they go pure AVoD for five years, it will be difficult to make money. It could be that it is free for one year. After that, it may only be free for Jio subscribers. Everyone else starts paying for the app. But whatever the strategy may be, it is scary for Disney-Star. You have a situation where someone is offering the same content as you for free. And on top of that is charging less for ads compared to the previous season, according to reports."
Elara Capital’s Karan Taurani noted that the move has a lot of risks attached to it. While ROI may not be easily recovered, the strategic initiative to scale up Jio subscribers and JioCinema subscribers may be an advantage. At the same time, he pointed out that the only possible risk was a poor user experience on the app. The move he noted can help JioCinema cross-sell its other content offerings. He agrees that the movie can help JioCinema compete with social media offerings like Instagram and YouTube.
This move, he explains, is bad news for Disney-Star. "We believe the Indian Premier League moving away from paid content is a potential threat for TV advertising in the medium term. It would be difficult for Viacom 18-Jio Cinema to recover even 50 per cent of its content acquisition costs via digital if content is free, at least in the short term; however, in the medium to long term, changes in consumption habits and increasing smart TV penetration would lead to digital ad revenue approaching TV advertising if IPL content remains free."
He noted that the IPL had last year sold its digital media rights to Viacom18-Jio Cinema for Rs 234.9 billion (for a period of five years), including the 18-match cluster. India’s digital video advertising market size is Rs 130 billion (30 per cent of the country’s digital ad pie), and it is dominated by social media and aggregators (YouTube), leaving a mere 15 per cent for broadcast and other OTT platforms.
"Providing IPL content for free could have a negative impact on TV advertising and on TV medium consumption, given that 1) digital is a better platform for this content as it is available free vs. TV, where it is subscription-based, and 2) it will attract a larger audience vs. Hotstar in the past, which charged a subscription fee for its platform. On the other hand, advantages of the TV medium remain: 1) its mass viewership and reach; 2) a cheaper cable average revenue per user (ARPU) as 95 per cent of the market uses bundles and does not subscribe a la carte; 3) large scale advertisers, such as FMCG, autos, and telecom, which allocate sizeable budgets for mass campaigning on TV; and 4) sports are viewed in large groups on TV, which too augurs well. The Smart TV proposition may be a threat for linear TV only in the medium term, as penetration of the former is low at 10 per cent; this can scale up with the rise in broadband penetration."
He believes that it will be difficult for Viacom18-Jio Cinema to recover even 30–40 per cent of its content acquisition costs via the digital route if the content is free, at least in the short term (over the next two years); however, in the medium- to long-term, due to 1) changes in digital media consumption habits and 2) growing smart TV penetration, there is the possibility of their digital ad revenue scaling up, though it may still be much lower as compared to TV medium ad revenue (IPL).
"Providing free IPL would also have a negative impact on India's over-the-top (OTT) market, as ARPU may fall further or remain stable in a market where most OTT platforms are already available at low prices compared to global averages (for example, Netflix and Amazon have the lowest pricing in India). The domestic OTT market was already having a tough time, given fragmentation and high content costs. Lower visibility on ARPU would add to its concerns. Further, from Jio’s standpoint, this would push Jio Cinema’s subscriber base toward new records, as they may start to compete with the likes of YouTube India, which has a monthly average user (MAU) base of 520 million, the largest in India. It would further help Jio Cinema to cross-sell its other content offerings and assist with mobile subscriber retention. This, in turn, can help Jio Cinema compete with social media platforms, such as Facebook and Instagram, as well as YouTube, which has an 80 per cent share of India’s video advertising segment, apart from mere broadcaster OTT platforms, which have a smaller share. The surge in advertising video on demand (AVoD) user base also augurs well for programmatic advertisers, such as Affle India, as there is a potential for higher conversions on homegrown OTT apps with a larger user base, rather than YouTube and social media apps owned by global giants," he concluded.
