Jio faces hurdles in generating revenue from content business

Reliance Jio, a 4G mobile operator in India, faces challenge in generating revenue from its entertainment apps  — especially after it migrates from free content to a freemium model in future, Strategy Analytics said.
Jio content businessReliance Jio is one of the most advanced mobile providers with respect to content, using its free entertainment apps to differentiate from competitors, build subscriber loyalty and create opportunities for future growth. Jio has more than 200 million 4G subscribers in India. But it generates less than $3 ARPU per month.

Willingness to pay for digital content remains low in India. Identifying content that users are willing to pay for combined with business models and a user experience that resonates with target customer segments will be critical for successful monetization.

Jio’s free entertainment apps have been an essential component of its strategy to go beyond low-cost voice and data pricing. Reliance Jio entered the Indian telecom market in September 2016 by offering free voice and data services. Jio continues to offer its free voice services, while it charges for data plans on its all-India 4G network.

“Jio is using content to differentiate its proposition to mobile subscribers, and to acquire and retain subscribers from competing operators. Jio’s competitors Bharti Airtel and Vodafone are being forced to react by beefing up their own content strategies,” Brice Longnos, analyst, Strategy Analytics Wireless Media Strategies, said.

Jio has recently merged its music service, Jio-Music, with competing digital music provider Saavn, integrated with Eros International’s video platform, and signed a multi-year deal with Roy Kapur Films to develop content for Jio branded apps. Jio has tied up with Star to stream Indian team’s cricket matches.

Jio is also able to lean on the media business of its parent company, Reliance, which has its own over-the-top (OTT) video service called BIGFLIX and stakes in TV networks in addition to TV and film production houses.

Post Jio, key social media platforms like Facebook, Youtube and others have seen enhanced user base in India. India has become most active market for Google and Facebook, estimated 70 million additions in the first year of Jio’s commencement of operations.

Over the two years Jio or its parent company, Reliance Industries, has acquired the music portal Saavn, announced deals with Eros and ALT Balaji, bought digital rights for Winter Olympics, Nidahas Trophy among others.

Jio’s own apps gained immense popularity with 200 mn downloads for MyJio and more than 100 mn for Jio TV.

Ever since the launch of Jio, mobile data consumption in India has gone up from 20 crore GB per month to nearly 370 crore GB per month. Jio customers alone are consuming nearly 240 crore GB of that data.

“Whether it is a freemium or ad-supported business model, content distributors, including Jio, need to assess demand and willingness-to-pay for different types of content in order to transition from free to freemium business models,” Nitesh Patel, director Wireless Media, said.

Strategy Analytics says telcos need to do a better job in leveraging their subscriber data in order to monetize through digital advertising.

The worldwide number of paying SVOD subscriptions will increase by 409 million between 2017 and 2023 to total 777 million. Eleven countries will have more than 10 million SVOD subscriptions by 2023, ResearchAndMarkets.com said.

China and the US will together account for more than half the world’s SVOD subscriptions by 2023. China will have the most SVOD subs from 2019 – despite multiple subscriptions being commonplace in the US. China will have 235 million SVOD subscribers by 2023 – up from 97 million in 2017.

Baburajan K