We will provide world-class digital entertainment across the spectrum; we will cater to every consumer’s tastes,” declared Mukesh Ambani at Reliance Industries Limited’s annual general meeting (AGM) in August, talking about the group’s media and entertainment business and the newly formed partnership with Disney.
He also dwelt on the game-changing potential for the company’s digital services under the RIL subsidiary Jio Platforms. “Jio has transformed India from 5G-dark to 5G-bright, creating one of the world’s most advanced 5G networks,” he said.
RIL may have been a late entrant into the telecom, digital services, and media segments, but it has quickly overtaken industry stalwarts to assume a leadership position, whether as the largest telecom services provider, or with its top-grossing channels in the media and entertainment sector.
It has banked on disruptive pricing, as well as imaginatively and strategically tailored services to hook customers’ attention and retain it.
Digital, media play
In FY24, RIL’s media business topped ₹10,000 crore in revenue. The news business, TV18 Broadcast and E18, has been merged with Network18, and the merger of Viacom18 with Disney is ongoing. The next phase will likely be the merger of Jio Cinema with the Disney-Hotstar platform.
The $10-billion behemoth Disney-Hotstar — created through Ambani’s acquisition of Disney’s Indian entertainment asset Star India — is just another step in RIL’s relentless push into the media segment, which started in 2011 with its acquisition of a majority stake in Network18 and the takeover of regional network ETV.
The company’s business currently spans online content, television, and digital media (including streaming services or OTT assets). Once Disney-Hotstar is merged with Jio Cinema, it will create greater efficiencies under a single digital media conglomerate. The company is making significant investments in sports and digital segments, stating it would invest ₹11,000 crore in the joint venture to aid its growth.
With the Disney joint venture, Reliance offers content by HBO, while Jio Cinema has tied up with Paramount and Warner Brothers.
RIL has an edge over its competitors in the telecom segment, Airtel and Vodafone Idea, because its OTT platforms produce original content while also offering third-party content and producing movies. For instance, in FY24 it had 11 theatrical releases, 35 direct-to-digital releases and eight original web series. Its films garnered revenue of ₹700 crore at the box office last year.
A lot of content on Jio Cinema is available free even to non-subscribers. For premium content, fees are as cheap as ₹29 per month. Paid subscriptions crossed 16 million in September. Disney-Hotstar is available at plans below ₹100 per month.
Compare that with Airtel Xtreme Play, which offers over 20 OTT platforms, including Lionsgate Play, with plans starting at ₹150 per month. With Disney-Hotstar in its portfolio, RIL can offer subscribers a wider selection of international and local content.
However, analysts do not foresee any big change in content post the planned merger with Jio Cinema. Karan Taurani, Senior Vice-President and Research Analyst (Media, Consumer Discretionary and Internet), Elara Capital, points out that Disney-Hotstar and Jio Cinema had, between them, the widest variety of content — whether sports, web series, or local and international channels. Only India-based web series and films are likely to be launched on a consolidated basis.
Taurani expects Jio Cinema’s free content, especially sports, to continue for a year or so. The platform continues to air IPL matches for free. However, post merger, analysts expect a hike in pricing because Disney and Hotstar have a lot of premium global content. On a standalone basis, Hotstar has an average revenue per user (ARPU) of ₹1,000 annually.
Currently, RJio mobile subscribers get Jio Cinema’s premium subscription and a host of OTT content for free, depending on the plan selected. Jio’s pricing is better, when compared with Airtel, for lower-priced plans, though at the top-end both are more or less on par.
Telecom, media synergies
Reliance has brought in synergies in its telecom and media properties, one feeding off the other seamlessly.
On OTT platforms, 65-70 per cent of subscription revenue comes from telecom partners through last-mile partnerships.
For platforms such as Zee5, SonyLiv and others that have Reliance Jio and Jio Cinema as partners, a huge advantage is the instant access to a large number of customers. Reliance Jio has a subscriber base of over 480 million and Jio Cinema has an average monthly reach of around 225 million. Taurani says that with this kind of reach, Reliance is in a position to better manage its ARPUs
When Jio Cinema offered free access to the IPL cricket extravaganza last year, it broke records; this year, too, on the opening day of the tournament the platform saw 590 million video views. Sports will continue to be a key driver for the digital segment.
While AI is the next frontier that RIL intends to conquer, Taurani points out that the AI ecosystem is not ready yet for a comprehensive rollout. There are not enough AI devices, but once the ecosystem is fully developed then there will be a huge rollout, he says.