Consumers may love binging on free content, but the move may significantly lower revenue growth rates for subscription-based video-on-demand (SVOD) services this year, market experts said.
Reliance-backed JioCinema on Wednesday said that it has bagged the digital rights of the upcoming India-West Indies bilateral series, and would stream the tournament for free in seven languages on its platform. This is the second cricket tournament after the Indian Premier League (IPL) and the third major sporting event after the FIFA World Cup that will not go behind a paywall on JioCinema.
More importantly, JioCinema’s announcement comes within days of Disney+ Hotstar’s move to free-stream the upcoming Asia Cup and ODI World Cup on its platform.
According to Karan Taurani, senior vice president, research at Elara Capital, a Mumbai-based brokerage, the CY19-CY22 revenue compounded annual growth rate (CAGR) of SVOD players such as Hotstar was around 33%. This, however, could halve to about 15-16% this year, some experts say, as the free streaming war intensifies in the OTT market.
“The pricing plans of OTTs in India are already among the lowest in the world. On top of that, if key sporting events are not behind a paywall, the pressure on subscription revenues will only grow,” says Sajal Gupta, chief executive officer of Gurugram-based Kiaos Marketing.
To put things in perspective, the subscription plans of OTT players in India are almost 70-90% lower than those in the US, according to a recent report by the Confederation of Indian Industry and Boston Consulting Group. Notably, premium players such as Netflix have cut prices of their subscription plans over the last two years to ensure viewership in a cut-throat market such as India, experts said.
While players such as JioCinema and Disney+ Hotstar are counting on a spurt in viewership and advertising with the move to go free, Gupta argues that it could be short term in nature.
“Eventually, the debate may begin about the quality of viewership and whether users who are logging in to watch tournaments for free are willing to migrate to a paid model at all,” Gupta said.
For instance, JioCinema began charging for its premium English content last month, launching an annual plan for Rs 999, the lowest in the Rs 1,000-2,000 price band of premium annual plans by rivals such as Netflix, Amazon Prime and Disney+ Hotstar.
Yet, experts said that it would not result in a significant shift in viewers from free to pay, owing to the limited content that was part of the JioCinema subscription plan.
Since the announcement, JioCinema has beefed up its English premium content, tying up not only with Warner Bros. Discovery, but also signing a deal with NBCUniversal recently. It is expected to do more such tie-ups in English as well as other languages as the pressure to provide the best content at the lowest price grows.