Telcos readying for the next battle — on content

Rashmi Pratap Mumbai | Updated on August 03, 2018

The next leg of the country’s telecom war will be fought on the content battlefield. With voice and value-added services having been commoditised, telcos are turning semi-media companies, crafting exclusive content strategies to rope in and retain customers.

While Reliance Jio is aggressive in acquisitions, Airtel is taking the content aggregator route. Idea and Vodafone have been lagging behind due to their imminent merger.

“The standalone business case for voice is long over because of tariff attrition and advancing technology. Secondly, because of the ongoing price war, data tariff differential among the incumbent telcos tends to quickly narrow. In such a scenario, exceptional content, including curated stuff delivered through over-the-top, or OTT platforms becomes the ultimate differentiator” Hetal Gandhi, Director, Crisil Research, told Business Line.

Data is the key

Data rates in the country, at ₹10 per GB, are among the lowest in the world. With fixed broadband penetration being less than 4 per cent, data will continue to be consumed on mobiles going forward. Already, 37 per cent of Indian wireless subscribers are using internet on mobile.

“We are seeing a strong correlation between content and customer stickiness. If you are able to engage people deeply with more digital services from the same brand, the customer will not leave us,” Airtel chief executive for content and apps Sameer Batra said.

So, Airtel has adopted the partnership route, where it has tie-ups with both audio and video content providers — national as well as regional — to offer a comprehensive bouquet of content for users. Jio, in contrast, has added acquisitions along with partnerships to its strategy list. It has stake in Balaji Telefilms (25 per cent) and Eros besides Saavn. Jio spent over ₹700 crore for stakes in Eros and Balaji, Gandhi pointed out.

Its Jio Cinema, Jio TV and Jio Music apps have already seen downloads upwards of 50 million each. Airtel TV and Wynk are its biggest competitors while Vodafone Play, Idea Music and Idea TV are yet to make a big impact on content consumers.

Hybrid is the way to go

Jayanth Kolla, founder and partner at tech research firm  Convergence Catalyst said with content gaining traction, telecom operators now need to think like media companies. “Creating own content involves high costs but also gives high returns. Partnerships are the easy route but fraught with risks as there is no exclusivity in content. And acquisitions alone will not be enough as operators need a wide repertoire of content. So only a hybrid strategy will work,” Kolla said.

Globally, the hybrid model is the most popular. “Telcos have adopted diverse content strategies, ranging from plain content partnerships and buying exclusive sports rights to full-fledged acquisition of media or content companies like AT&T buying Time Warner,” Gandhi said.

Globally, operators offer free subscription to Netflix and HBO, which is also happening in India now, with Airtel and Vodafone offering free subscription to Amazon Prime.

As far as exclusivity of content is concerned, broadcasters in India can’t discriminate between distributors for content. “It will always be easier for an operator to survive cut throat competition if content is strong and diversified. Content is no more a choice but a necessity,” Kolla added.

Published on August 01, 2018

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