India’s richest man, Mukesh Ambani, is disrupting not just the wireless services market, but also cable television service providers with Jio that offer data at throwaway prices.
Nearly half of the customers of telecom upstart Reliance Jio Infocomm Ltd said they use their mobile internet connection “primarily” to watch live television, according to a report by Bank of America Merrill Lynch.
“Telecom aggregation apps like JioTV and JioCinema are turning into one-stop destinations for consumers to view all content, as they do not have to download individual over-the-top streaming apps.”
Bank of America Merrill Lynch’s survey also revealed that JioTV – the live television streaming app – was the most used among the bouquet of services that Jio offers. A similar trend was visible for India’s largest telecom operator Bharti Airtel Ltd as well. The Airtel TV app has over 10 million downloads “despite Bharti being relatively late to the game,” the report said.
Data usage in India has skyrocketed since Jio started its operations in September 2016. An average Indian telecom user now consumes 2GB of data every month, compared to 0.23GB before Jio’s launch, according to the quarterly data from the Telecom Regulatory Authority of India. This number is expected to go up to 18GB a month in the next five years, according to consultancy firm EY.
This surge is fuelled by Jio's free services for the first six months, followed by cheaper data tariffs and its 4G-enabled smartphones launched recently. Customers who were used to shelling out roughly Rs 300 for 1GB of data, now get it for about Rs 15.
Cheap and abundant mobile data mean more video viewing.
More than three-fourths of the 1,000 Jio users surveyed by Bank of America Merrill Lynch said that they use data to stream videos online. About 68 percent of them download videos on their mobile handsets and only 23 percent said that their data usage habits have not changed because of Jio’s entry.
YouTube is the go-to destination for a majority of those who consume content on their phones, the survey revealed. The second most popular was Hotstar, followed by other services like Zee5 and Eros.
“We consider this as a new emerging theme in India and expect content companies to be beneficiaries of the telecom price wars,” the report said. “However, given the nascent stage of the market, we don’t see a clear winner in the OTT space.”
What Are They Watching?
Most Jio users consume content on YouTube or Hotstar.
This could put cable television providers in a spot, as millennials have started mulling whether they should cut the cord. An overwhelming 62 percent of those surveyed are willing to remove their cable TV connection if Internet speeds improve and prices of online streaming platforms decline.
It’s not an immediate threat though. “As the average monthly cable bill in India – around Rs 200-400 – is very low compared to a good broadband connection (Rs 500+), cord-cutting has not been considered a major risk,” the survey inferred.
Cutting The Cord?
What it would take for users to give up their cable TV connections.
(This story was originally published on BloombergQuint)
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