Reliance Jio's entry into the cable TV and OTT space will lead to heightened competition for TV distributors like MSOs and DTH operators. Since Jio has obtained a cable MSO licence and will have to strike deals with LCOs, the competition will be more direct for MSOs vis-à-vis DTH operators. Despite the changing dynamics of the industry, broadcasters remain the best placed to capitalise on Jio’s launch. Jio's entry is likely to accelerate the conversion of analog cable subscribers to digital, thereby improving the monetisation of broadcasters like ZEE. Jio’s OTT platform, Jio Play, offers another avenue for the broadcasters to earn subscription revenue.
We would like to highlight that if the last 2 phases of digitisation are completed without much delay and monetization happens on time (which is highly unlikely in our view), incremental revenue for ZEE due to Jio would be restricted to the revenue from Jio Play. However, we believe that a delay in implementation of Phase 3 and 4 is very much on the cards and Jio’s entry could hasten the progress of digitisation in India, which is beneficial for broadcasters. Since the incremental subscription revenue from Jio will come at no significant cost, the entire benefit would directly add to ZEE’s bottom-line.
Our channel checks suggest that major broadcasters have already provided sample content for the pilot testing of Jio’s app, Reliance Jio Play. Similar to ZEE’s Ditto TV and STAR India’s Hotstar, Jio Play will enable the viewer to view live as well as dated content. However, content deals with broadcasters are yet to be signed. Broadcasters are known to play hardball with any new distributor especially with a limited subscriber base. In order to get sweetened content deals with broadcasters, Jio will have to garner a sizeable subscriber base within a short period of time. In addition, Jio striking content and carriage deals with broadcasters can be a long and tedious process.
Tuesday, October 27, 2015
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