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Jio FTH launch to Negatively impact DTH providers – Not to affect Cinemas

by Editorial
August 13, 2019
in Exclusive, Featured
3 min read
Jio FTH launch to Negatively impact DTH providers - Not to affect Cinemas
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Reliance Jio Chairman Mukesh Ambani announced the launch of Reliance JioGigaFiber service in 1,600 cities across India starting from 5th September 2019,

Launch of Jio’s mobile few years ago, had a big positive impact on the mobile Internet penetration which has breached 90% in line with global averages; the broadband penetration until now in India has been 10%, launch of Jio FTH will lead to surge in the number of users which will enable this penetration to multiply over medium term in line with emerging nations.

The additional features such as 4K Hybrid STB that will support digital cable TV as well as online streaming platforms with 1GB data speed is likely to disrupt the home entertainment experience among Indians.

Like the way Reliance Jio has impacted the revenues of Telcos resulting in many bleeding to death, Jio FTH is likely to impact hugely on the existing broadcast distribution set-up in the country with Cable and DTH operators coming directly under the collision path of technology that is much more advanced than that of what they have in store.

The following analysis on Jio FTH launch Impact on various industry gives us a glance on what will be the future of various players:

On DTH/MSO’s – FTH launch

Launch of Jio FTH will have a negative impact the DTH and MSO growth prospects in medium term  due to better content partnerships(Eros, balaji, Jio Cinema, Jio TV) which the latter cannot offer. Further, the pricing has been kept in line with incumbents like Hathway (INR 700 ARPU) which is unlike Jio mobile where in the plans were at a steep discount vs incumbents. Airtel too has plans to launch a hybrid set top box which can offer IPTV services; but we believe absence of content partnerships won’t help scalability for them. We believe the  TV distributor market will get heavily consolidated just as the telco market was post launch of Jio

On broadcasters

TV penetration in India is almost 68% today, however the smart tv penetration is much lower as consumers have recently started the transition towards smart tv due to cheaper prices. We believe Jio’s plans to provide free smart tv’s in the Forever plan will be a game changer for increased smart tv penetration. This will further push content consumption online from traditional mediums. Most of the large broadcasting groups today already have existing deals with Jio to showcase their channels on JioTv; however the viewership is blocked on TV screens and is limited to mobile viewing only; in case this moves to TV screens, broadcasters will have a negative impact on their own viewership on TV and their OTT platforms

On ad spends:

It is believed that Jio mobile had spent large sums of money during its launch; Launch if Jio FTH too will lead to surge In ad spends over the next 12-15 months which may have some minor positive impact on ad growth prospects which has been muted now across the TV segment

On cinemas and multiplexes:

Jio has also announced plans to offer movie on a first day first show basis; this we believe won’t have a big negative impact for the multiplexes as release of a movie in cinema is very important in order to get deals on digital and satellite. Further, there are about 400 films released every year across genres and hence release of a few films directly on Jio won’t impact footfall. Cinema going is considered a family outing in India and we don’t see large budget films going for direct release on Jio, it will be limited to smaller films going directly on digital, as the economics of a big film don’t work for the same

On OTT platforms:

While R Jio has boosted the OTT content consumption in smartphones, Jio FTH is likely to boost the OTT consumption by multiple folds on SmartTVs. The same will reduce the gap between Broadcasters and OTT platforms thus creating better opportunity for the consumer to choose their best choice of content in a click of a button. The 4K STB will further enhance the viewing experience of the consumer.

Commenting on its effect on the OTT space, Karan Bedi – CEO, MX Player said, “India’s appetite for premium on-demand entertainment will continue to rise with more affordable high-speed broadband, which in turn will boost engagement for OTT players. As the only Indian online entertainment platform that offers viewers premium content to binge for free, MX Player users stand to benefit significantly from the announcements made by Jio today.”

Overall, the execution of the FTH launch remains to be a key factor for its success. Unlike the mobile, where customers switched to Jio at a rapid pace due to extremely cheaper prices vs incumbents, the transition many not be so rapid as FTH continues to face last mile challenges (LCO support and customer willingness to switch). However, there will be a slow and steady movement towards Jio FTH based on customer service and feedbacks.

Tags: Jio FTHReliance Jio Chairman Mukesh AmbaniReliance JioGigaFiber service

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