JioCinema has announced its new subscription offering, ‘JioCinema Premium’. The new plans starting at a market-defining Rs.29 per month that will offer an ad-free experience and a ‘Family’ plan at Rs.89 per month which offers the additional benefit of 4 simultaneous screens access. JioCinema has claimed the move as market defining. Analyst Karan Taurani from Elara Capital stated that the development is a potential blow for peers in OTT such as Prime Video and Netflix.
As per the announcement, JioCinema has cut prices for its premium content, including Hollywood movies and TV shows, with subscription plans starting at Rs 29 a month.
The new subscription offering, ‘JioCinema Premium’, will offer an ad-free experience delivered in up to 4K quality and offline viewing options. Members can access exclusive series, movies, Hollywood content, kids’ shows, and TV entertainment on any device, including Connected TVs.
The platform also has a “family plan” at Rs 89 a month, with an additional benefit of four simultaneous screen access. Existing JioCinema premium members can avail additional benefits of the “family plan” at no extra cost.
Sports content, including the ongoing Indian Premier League (IPL) and thousands of hours of entertainment content, will continue to be available for free as part of the platform’s ad-supported offering.
Karan Taurani has listed his observations as following:
The above implies a sharp price cut towards INR 29 per month vs Jio Cinema Premium’s earlier pricing of INR 80 per month.
Sports content will remain free, which 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 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 Jio Cinema; as per our assessment, catch up TV forms a sizeable viewership share of Jio Cinema’s non-sports content.
On an average, pricing for broadcaster-based OTT’s in India is INR 103 per month (Zee5, Sony Liv, Disney plus premium plan), whereas global giant OTT’s average pricing is INR 358 (Netflix premium plan, Amazon video), which implies that Jio Cinema Premium pricing is at a steep discount of 86% vs average price of peers; however, Jio Cinema’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 Jio Cinema Premium’s disruptive pricing, which will limit SVOD revenue growth prospects; broadcaster based platforms have a freemium offering to their advantage (ad and subs revenue based), 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. Broadcaster based OTT platforms may also report lower revenue growth, as subscription revenue is approx. 40%-50% of their OTT revenue, which may not see a sharp jump in APRU’s
Further, we believe Jio Cinema may have cut pricing for its premium offering, as 1) they may not have seen a big offtake for only exclusive Hollywood content and hence added more content for an ad free experience, 2) they have an advantage vs peers, as they don’t need to tie up with partners (MG deals compress ARPU’s) due to a strong distribution mechanism in house via Jio (mobile, fibre), 3) 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 4) gain competitive advantage vs global OTT platforms
User experience of Jio Cinema remains to be the only monitorable, as global OTT giants have been much ahead of peers in that aspect
