India’s Telecom Operators Hunt For Content To Feed Data Addiction

For India’s telecom operators, fighting a bruising tariff war, cheap data is not enough to retain users. Having hooked Indians to online consumption, carriers now hunt for a steady stream of soaps to movies to feed the addiction.

Reliance Jio Infocomm Ltd., billionaire Mukesh Ambani’s upstart that upended data tariffs by undercutting rivals, provides more than 600 live channels to its mobile subscribers; Vodafone India offers 375 and Bharti Airtel Ltd. 370. And they are all tying up with streaming services like Netflix, VOOT, Hotstar and AltBalaji to provide original content.

Content is the key beyond tariffs to defend market share, CLSA said in its August report. That, according to the brokerage, has started paying off for Bharti Airtel. It not only boosted its mobile data usage and 3G/4G subscriber base but also helped lower subscriber churn to a multi-year low of 2 percent, CLSA said.

A third of more than 1.2-billion Indians now own smartphones in the world’s second-largest telecom market. Average mobile data usage in India surged more than ninefold to about 2-gigabytes since Ambani launched 4G-only Reliance—Jio first offering free services and then cheaper plans. His JioPhones have made content accessible for low-cost feature-phone users as well. But consumers want more.

Exclusive tie-ups are the way to go, Sameer Batra, chief executive officer, content and apps, at Bharti Airtel, said over the phone. “This is not another YouTube. One of the reasons people will come back is that they don’t find the content anywhere else.”

That’s why both Bharti Airtel and Vodafone offer free Netflix and Amazon Prime memberships, besides having Eros and AltBalaji on board. Even, state-owned Bharat Sanchar Nigam Ltd. has partnered Eros now.

“For the long term, you need to have a mix of partnered, exclusive and differentiated content either by partnerships or acquisitions,” Girish Menon, partner and head, media and entertainment, KPMG India, said.

Reliance Jio, on top of partnerships with the likes of Hotstar, bought about 25 percent stake in Balaji Telefilms Ltd. and Eros and acquired music streaming platform Saavn. Reliance Jio is locking in content owners to strengthen its offerings. Its video layer and editor app downloads on Google Play store jumped fivefold as of June 2018 to 142 million, according to App Annie.

Reliance Jio is leading in building the content ecosystem at this point with their mix of partnership and acquisition model, said Satish Meena, forecast analyst at New Delhi-based Forester Research. “When you have stake in companies, you have a better control over experience, pricing and content.”

For Bharti Airtel, Batra said, content tie-ups are the way to go forward.

But it’s still early for operators to expect revenue from online videos and music. Of 225 million video viewers in India, just 2-2.4 million are paid subscribers, KPMG said in its report.

Reliance Jio, which has driven smaller rivals out of business and forced two large peers in Vodafone India and Idea Cellular Ltd. to merge, bundles in several apps with its Prime membership for Rs 99. That leaves its peers with little room to start charging for content if they want to retain users.

“Propensity of customers to pay for content is limited,” admitted Batra. “The focus is to double down on growth and content at this point.”

That’s only adding pressure as revenues and profits of India’s telecom operators have fallen since Ambani launched his telecom operations in September 2016.

Hetal Gandhi, director at Crisil, is, however, hopeful that revenues will stabilise by the year ending March 2020. “This will be driven by continued increase in usage and price stabilisation.”

KPMG agreed. Content acts as both potential customer acquisition and retention on the telecom network, its report said, adding that increase in data traffic is likely to be a key component for monetisation and profitability for operators.