Can Indian billionaire Mukesh Ambani’s JioCinema take on global OTT bigwigs?

India has 57 streamers, including global service providers such as Amazon, Disney+ Hotstar and Netflix, and domestic operators

The streaming market in India is fast growing and has enormous potential, analysts say. Reuters

Billionaire Mukesh Ambani’s streaming service JioCinema is taking on global companies Netflix and Disney, as the rights to the world’s richest cricket tournament and some of the most popular American TV series are helping the platform to win over Indian viewers.

“With the acquisition of IPL and introduction of premium content from Hollywood and prestige TV, [JioCinema] certainly seems to be gearing up to both dominate and, later, consolidate the streaming landscape in India,” says Utkarsh Sinha, managing director at Bexley Advisors, a boutique investment bank based in Mumbai.

There is a lot at stake. The streaming market in India is fast growing and has enormous potential, analysts say.

In a country with a population of more than 1.4 billion, an expanding middle class and growing internet use, India offers a huge opportunity for platforms to reach massive numbers of viewers.

The Indian streaming and video-on-demand sector, also known as the over-the-top market, is projected to more than double to $5.3 billion by 2027, up from $2.35 billion last year, according to a report by global consultancy Deloitte.

In what has proved to be a game-changer for JioCinema as it tries to tap this market, Viacom18 — the Reliance Industries company that owns JioCinema — won the tournament's digital streaming rights for the glitzy and enormously popular Indian Premier League cricket tournament for 2023 to 2027 for 237.58 billion rupees ($2.88 billion).

This was a blow to Disney+ Hotstar, which previously held the rights to stream the matches.

Reliance Industries is controlled by India's richest man Mukesh Ambani.

JioCinema screened the IPL — the final of which was held on Monday — free of charge, leading to the platform attracting record numbers of viewers.

Last week, the number of viewers who tuned into an IPL match between Gujarat Titans and Mumbai Indians reached 25.7 million — the highest number of simultaneous viewers on the platform.

“JioCinema has made an aggressive start in the OTT space,” says Amar Butala, an Indian film producer and partner at Guilty By Association Media, a film and digital production house in Mumbai.

“The free IPL in the first year has meant a solid subscription base right from the start. It will be interesting to see how Jio shakes up the OTT space.”

To this end, beyond live sports content, JioCinema is focusing on a strategy that includes adding more licensed and original entertainment content to compete aggressively in a crowded market in which the major global players already have a foothold — and it is a tough market to crack.

The streaming sector in India is “very fragmented”, says Barnik Maitra, managing partner at consultancy Arthur D Little, India and South Asia.

“There are currently 57 operators, including global streaming service providers such as Amazon, Disney+ Hotstar and Netflix, which compete with domestic service providers including Zee5 and MX Player,” he says.But in a major coup, JioCinema took over the rights to HBO's content in India from this month.

Previously HBO's content had been screened on Disney+ Hotstar until Disney decided to end that deal on March 31.

But Warner Bros Discovery and Viacom18 a few weeks later entered into a multiyear agreement, which made JioCinema India’s new streaming home of HBO, Max Original and Warner Bros content from the beginning of this month.

HBO's content includes hit series such as House of The Dragon, The Last of Us, Succession and Game of Thrones.

In a statement announcing the partnership, Ferzad Palia, head of subscription video-on-demand and international business at Viacom18, said: “JioCinema has become the biggest platform for live sports. We are now on a mission to build the most magnetic destination for entertainment for all Indians.”

JioCinema's media and content business president Jyoti Deshpande says that the platform plans to add more than 100 films and TV series in languages including Hindi and Bengali, as well as releasing new and original film produced by Jio Studios.

In an interview with Bloomberg last month, Ms Deshpande said the Indian streaming market “is dominated by westernised content” and that “Jio Studios wants to become a catalyst for cross pollination of talent”.

“We want to get as Indian as it can,” she said.

The rise of JioCinema comes as companies including Netflix face global headwinds, losing subscribers as inflation set in globally and people's spending priorities shifted following the Covid-19 pandemic.

But Netflix has identified India as a key growth market. It unveiled a budget-friendly, mobile-only subscription option in India in 2019 to appeal to the millions of Indians who only have access to the internet via their smartphones.

As part of its efforts to attract more Indian viewers, the company has also increasingly focused on producing more local content.

Netflix has about six million subscribers in India, according to analysis from consultancy Arthur D Little India. The company has said that the time subscribers spend watching its content as well as its revenue in India have been growing.

Having lost out on the IPL to JioCinema, data shows that market leader Disney+ Hotstar's subscriber numbers have been declining.

The Walt Disney company's earnings report for the quarter to the end of April shows that Disney+ Hotstar's subscribers fell to 52.9 million from 57.5 million in the previous quarter.

The loss of HBO's programmes in India makes things even more challenging for the company, analysts say — and JioCinema stands to benefit.

Once JioCinema took over the rights to show HBO's content in India, it launched a premium paid subscription to gain access to these programmes, for which it charges 999 rupees a year.

Mr Sinha says he expects JioCinema to be “a significant disrupter”.

“JioCinema has certainly launched with a bang for both ends of the spectrum: the free offering with IPL and a plethora of content is compelling for the budget conscious streamer, while HBO [content] draws in the spending viewer,” he says.

But there is still the question of profitability.

“The concern I have is always economics,” says Mr Maitra. “Yes, it's a disrupter. Yes, they will get a lot of subscribers, but will they be profitable?”

He says that India is an extremely price-sensitive market, where many people are not prepared to or cannot afford to fork out much for subscriptions.

“It's very hard to be profitable unless you significantly increase the price — at which point part of the scale drops,” says Mr Maitra.

However, advertising sales are helping, he says. The IPL 2023 is projected to have generated $550 million in advertising revenue, of which JioCinema is expected to take 60 per cent, according to data from Media Partners Asia.

There are also expectations that JioCinema will merge with another Viacom18 video-on-demand and streaming platform, Voot.

Mr Maitra explains that this would be likely result in a larger user base and better user experience on both platforms, as well as bolster the offerings with more Bollywood and TV content.

He notes that the strategy of JioCinema “mirrors the disruption … where Jio revolutionised the telecom industry”.

Reliance's Jio shook up the telecoms sector in India when it launched in 2016, driving down prices and pushing some telecoms operators out of business and prompting others to merge.

“JioCinema, like most of Jio’s plays, will be one built on scale,” says Mr Sinha.

“They have displayed willingness to invest in customer acquisition at a loss. Jio has deep pockets so we can expect it to drive a hard bargain for content acquiring to build its repertoire, and to edge out other players.”