Streaming brands set to gain from Reliance Jio’s broadband plans
Reliance Jio GigaFiber will have huge implications for cable, DTH, TV broadcasting, OTT services
Imagine a home with connected devices, with gadgets and appliances such as mobiles, refrigerators, televisions, geysers and air conditioners talking to each other. A smart home will soon be a possibility with the help of a single service provider Jio GigaFiber, the high-speed fixed line broadband from Reliance Jio Infocomm. The announcement of the service was made by Reliance Industries chairman and managing director Mukesh Ambani on 5 July at the company’s 41st annual general meeting.
The service will include ultra high definition entertainment on TV, virtual reality, gaming, smart home solutions and e-commerce. The company will offer a router, set-top box and a fixed line phone, among other things. The fibre connectivity to 1,100 towns and cities will target 50 million broadband users.
Reliance’s entry in this segment is expected to be hugely disruptive for the media and entertainment industry as it will have far-reaching implications for cable, direct-to-home (DTH), television broadcasting as well as over-the-top (OTT) video streaming brands such as Amazon Prime, Netflix and Hotstar, among others.
The biggest beneficiary of the Jio GigaFiber would be OTT services, says Ashish Pherwani, partner (media and entertainment) at consulting firm EY. “The more there is wired infrastructure in place, the more houses that have fibre, the better it is for OTT platforms. It will give a leg-up to subscription-led OTT because OTT content will now be seen on TV. In fibre-to-home, the quality of broadband is much better,” he says.
For some sections of the media and entertainment business, Jio GigaFiber may pose a challenge. For instance, on the day of the announcement of the service, shares of broadband and cable TV operators like Hathway Cable & Datacom, Den Networks and Siti Networks tanked as both cable and internet service providers (ISPs) business may face stiff competition from GigaFiber. “What if it (Jio) offers 250 TV channels and 50GB data for ₹500 a month? Nobody can compete with that,” says a media executive. However, Ashok Mansukhani, a cable industry veteran as well as CEO and managing director of Hinduja Ventures Ltd, the holding company of Hinduja Group’s media firms, does not agree. He says cable has several unique strengths such as local content, convenience of service and low pricing. Also, cable can provide broadband. Besides, cable (especially Hinduja’s HITS platform) is servicing remote rural areas and has access to difficult hinterlands. “While any new technology and service impacts the industry, we feel cable will innovatively move ahead with the strengths it has in understanding customers for the last 20 years or more.”
Media industry experts expect an impact on DTH as well since DTH is not a two-way technology and the world is moving towards a model where content is reaching the consumer directly. Mihir Shah, vice-president at research firm Media Partners Asia (MPA), says that vanilla linear channel offerings will not be adequate to attain meaningful average revenue per user growth in the pay-TV sector. “Product innovation will be vital for the DTH industry. Already operators like Airtel and Videocon D2H have rolled out connected STBs (set-top boxes) allowing consumers to stream online content, though the deployments have not yet attained any meaningful scale.”
Besides, Jio will also have better negotiating power with broadcasters as it will become the largest multi-system operator and television distributor in the country. Experts say that broadcasters may lose their pricing power for content as Jio can flaunt the number of homes that it hooks.
To be sure, the consumer stands to gain. Right now, every home has multiple service providers—one each for landline, TV and broadband. With Jio, it will be the first time that one company will offer all three services. And although its pricing strategy is not known, Jio may offer these at very low prices to capture the market.
But the question is, will the consumer switch? It may not be easy. Experts say the conversion may be slower than what it was for its mobile service. In the case of SIM cards, the situation was different. Many people tried Jio phones while keeping their existing connections. In this case, whether a consumer replaces his existing service providers remains to be seen.
But given its earlier record, Jio will go all out to woo the consumer. Says MPA’s Shah: “In comparison to the mobility segment, the subscriber uptake in the fixed broadband segment will be slow. However, the quality of subscriber growth going forward will be superior, with many upgrading to next-gen broadband technologies.”
Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.