With Reliance Jio Infocomm Limited’s (RJIL) entry in the Indian telecom industry in 2016, the revenues of all operators declined significantly. To survive this competition, operators are striving to offer the cheapest services to their customers, which have driven down the industry ARPUs, thus severely impacting operator profitability. In this scenario, operators have also been exploring new sources of revenue. Partnering with content providers and co-developing value-added services with them have emerged as preferred strategies for most operators.
Given the increase in the number of hours spent by an average mobile user browsing content on phones and tablets, mobile operators see significant opportunity in partnering with content service providers. In the past one year, there has been an upsurge in the number of tie-ups between leading telcos and over-the-top (OTT) players as well as content providers. According to IDC, telcos see immense potential in delivering rich content through offerings such as free subscriptions and unlimited video streaming, which are aimed at attracting a younger crowd that form the majority of the country’s population.
These partnerships between telcos and content service providers are based on a mutually profitable model. For OTT providers who want a readymade audience to promote their content, telcos provide a captive user base. These partnerships help content providers in creating awareness and reaching a much larger audience. Meanwhile, they provide telcos with unique and high-in-demand content, which they can use as a subscriber retention strategy. Also, they offer telcos the opportunity to gain an incremental wallet share from subscribers beyond the normal recharge or post-paid bills. According to IDC, a differentiation in content enables telcos to gain more new subscribers while the continued use by subscribers is more likely to ensure their retention.
An underlying strategy that almost all telcos seem to be following is the accumulation of all content in one place, making it more convenient for users. Operators are trying to reduce the number of apps and registrations required for the various services consumed by users on a daily basis.
A look at the partnership strategies adopted by the leading telecom operators in India…
The operator’s disruptive entry in 2016 can be attributed not only to its free voice and data services but also to its strong digital content. For RJIL, content has been a key strategy to acquire a significant share in the highly competitive Indian telecom market.
In January 2018, the operator renewed its platform integration partnership with Eros Now. As per the terms of this partnership, RJIL users will now be able to access Eros Now content on their phones. The content will include full-length movies, thematically curated playlists and functions such as multi-language subtitles for movies, music video playlists, regional language filters and video progression.
Earlier, in February 2018, RJIL partnered with Discovery Communications India and AltBalaji to offer their video content to its subscribers. AltBalaji has made available its original content on the telco’s digital platforms – Jio Cinema and Jio TV.
At present, Bharti Airtel is India’s leading telecom company by subscriber base. In order to effectively counter RJIL’s attractive offerings and retain its subscriber base, the telco is rapidly expanding its partnership with handset brands, OTT players and e-commerce companies.
In January 2018, Airtel signed a deal with Amazon that allows it to distribute Amazon’s content through the Airtel TV app. Airtel is offering 12 months of free subscription of Amazon Prime Video to customers who opt for the Airtel myPlan Infinity post-paid plans priced in the range of Rs 499-Rs 1,199. It has also partnered with other content providers such as FastFilmz. Further, as a part of its marketing strategy, the operator is working towards building a partnering ecosystem in order to curate and offer digital content from all leading platforms in one place. Currently, Airtel TV has partnerships with FastFilmz, Eros Now, SonyLIV and HOOQ, with plans to forge many more such partnerships with various other players. Airtel offers content in 15 languages through the application. In order to give a further boost to its content portfolio, Airtel recently acquired a strategic stake in Juggernaut Books. Airtel provided its entire content catalogue on Airtel TV on a free subscription basis to its post-paid and prepaid users till June 2018. It recently added over 300 TV channels, and 6,000 movies and popular shows to the platform.
Airtel is aggressively moving ahead in the digital ecosystem and plans to partner with various content providers to gain access to their movies, music and e-magazines under a mutually profitable model.
Just like Airtel, Vodafone India has also joined hands with Amazon to offer Amazon Prime service worth Rs 999 for free to its Red post-paid customers. The move is aimed at retaining its high-paying customers in an intensely competitive market. Under the offer, Vodafone Red customers will get access to Prime video, Prime music and unlimited fast shipping on Amazon items for free along with early and exclusive access to deals on Amazon.in. The annual Amazon Prime membership can be activated through the Vodafone Play app.
In addition to this, Vodafone offers video content from content providers like Discovery Communications India and AltBalaji for its platform, Vodafone Play. Vodafone also announced that along with its Red plans, customers would have access to 12 months of free Netflix, the latest movies and live TV using Vodafone Play and a free subscription to Magzter with over 100,000 issues of over 4,000 national and international magazines, in more than 60 languages to boost its subscriber base.
Prior to this, in September 2017, Vodafone had partnered with video on-demand service HOOQ to offer online streaming of entertainment content such as Hollywood, Bollywood and regional movies, and exclusive web series. This content will be available on Vodafone’s entertainment app Vodafone Play.
Idea Cellular has partnered with Ditto TV and Yupp TV, Eros and AltBalaji to provide video content to its customers. For music content, Idea Music has partnered with Sony Music, Zee Music, SaReGaMa, Universal, BPL and Aditya Music. In addition, Idea has collaborated with Magzter to provide customers access to digital magazines and news. All the content can be accessed by Idea users on the MyIdea app.
The way forward
In light of the recent trends, the role of telcos has transformed significantly. Upcoming trends such as e-sports and edutainment will open up new avenues for telcos in the entertainment sector. Going forward, a logical next step for operators would be to venture into content creation to increase consumer engagement on their platforms and apps. This will also increase their presence across the value chain – from content creation to distribution through the network. They can offer region-specific, language-specific, or even age group-specific content.
That said, only those telcos that develop a strong strategy in terms of choice of market, pricing and marketing will emerge as winners in the race to capture a bigger market share and generate the highest revenues.