Days before the Indian Premier League (IPL) is scheduled to begin, the cable TV industry could witness another setback owing to Reliance Jio’s new bundled offering of fixed broadband, OTT and live TV channels at reduced rates.
The pay-TV industry, which is already witnessing ‘cord cutting’ with subscribers disconnecting cable connections and moving to OTT platforms, could see the trend accelerating with the latest disruptive tariff packages by Jio, which aim at convergence between wireless telecom services, fixed broadband and broadcasting services.
Till now, the fear among cable TV as well as DTH operators was largely related to the free streaming of IPL on JioCinema. However, the only thing they were positive about was the higher cost of data which the users will have to factor in before shifting to JioCinema for watching IPL free on a 4K resolution. Now, Jio’s entry-level broadband plan, at a price as low as `198 per month with top internet speed of 10 Mbps, could cause big trouble for cable TV operators as well as IPL broadcaster Disney Star, industry analysts said.
Lately, Reliance Industries-owned multi-system operators such as Hathway, Den Networks and GTPL, which have a subscriber base of 20 million, removed Star channels (including Star Sports) from their base plans, making cable TV subscriptions 15-20% costly for subscribers just before IPL.
“We believe the new plan is targeted at the cable user who has seen a significant rise in cable bills and a drop in the number of channels. The new plan by RJio will offer more content (OTT + live TV) and fixed broadband data at largely pay TV price (bundled plans offered by local cable operators),” said Sanjesh Jain and Akash Kumar, research analysts at ICICI Securities.
Apart from the Rs 198 per month broadband back-up plan, Jio on Monday also launched 10 Mbps broadband plans for Rs 298 a month, offering six OTT apps, and a Rs 398 per month plan which offers 14 OTT apps. The company has also introduced certain entertainment upgrade plans for `100 a month and `200 a month, with an offer of a free set-top box only for new connections.
In a recent letter to minister of information and broadcasting Anurag Thakur, local cable TV operators (LCOs) said they have lost nearly 15,000 customers each in the last three years largely due to the increase in competition with the OTT applications and Free Dish as well as higher rates.
“The number of LCOs has also reduced significantly in the last three-four years from 1.2 million to nearly 700,000 now, wherein many of our peers have migrated to other businesses and left the cable TV business,” the letter said.
“We are yet to analyse the impact of the same. However, a 10 Mbps speed is very less when it comes to streaming IPL and if a user goes for a 7-day speed upgrade plan, lets say, the cost would be similar to what they currently pay for pay TV,” a representative of a cable TV operator said.
On an average, a TV channel bouquet bill is currently priced around `400 per month for a consumer. In comparison, Jio’s entry-level bundled offering at `298 offers 10 Mbps internet, six OTT apps and 400 live TV channels.
“We note this offer (by Jio) could also be attractive for a pay TV user who pays Rs 300-400 per month for normal traditional TV pack in urban areas,” said Sachin Salgaonkar, research analyst at BofA Securities.
“We see this (Jio’s new plan) as another sign of price aggression focused on acquisition and TAM (total addressable market) expansion for its fibre business with a focus on premium subscribers,” JP Morgan said.
Apart from increasing its OTT subscriber base, Jio also has a target to reach 50 million FTTH (fibre to the home) connections. The company had 7.7 million home broadband subscribers as of December end.
While analysts do not see peer Airtel getting affected by Jio’s move because of its premium subscribers base, they do see a fall in the average revenue per user (Arpu) in case Airtel also comes up with certain bundled offerings for broadband, OTT and DTH.