Bharti Airtel and Jio are gearing up to decide the turf war for digital space in Indian telecom sphere on sports pitch. The respective bid by the market leader Bharti Airtel and challenger Jio are a strong indicator on content acquisition strategies of the two big players in digital game.
Bharati Airtel made an aggressive INR 3,280 crore ($510 million) bid to take on Jio, which too had shown its serious intent for the IPL content with an INR 3,075.72 crore ($478 million) commitment. Both were far behind the figure of INR 3,900 crore ($607 million) put on by Facebook.
Even as Star India’s master stroke to sweep the table pushed all the digital players out of the game, the bidding trend for India’s premier cricket broadcast property is an indicator to top market players approach for content on the digital space front.
Economic Times has taken a stock of the situation with inputs from leading market experts. The business daily has quoted Bank of America’s Merrill Lynch as saying that “Bharti (Airtel’s) bid was surprising and shows its approach towards accessing content has changed post Jio’s launch.”
Big Telcos will be more serious about content is the opinion of HSBC director and Telecom Analyst Rajiv Sharma, who observed that in around a year’s time when 4G penetration would exceed the 40% barrier big telcos will become more serious about content. He also foresees Airtel benefiting its strategy to match Jio in content acquisition.
Airtel’s IPL bid is a major switch from company’s pointed approach to hitherto strengthen its music streaming app Wynk. Airtel is clearly looking to monetise content in addition to access services to emerge as a full-fledged digital services provider, especially in response to Jio’s aggressive approach towards acquiring content, ET has quoted an industry expert as saying. “Revenue growth from access services, typically, tends to plateau and eventually drops after a particular level of penetration, which is why telcos the world over are increasingly looking at content and digital services to prise open new revenue streams,” the expert has said.
Airtel is also reportedly under pressure to strengthen its content to take on the challenge from Jio’s content – a major selling point for the low-cost 4G VoLTE feature phone launched by Reliance Industries.
The strategy also involves some major risks for Airtel. Bank of America’s Merrill Lynch suggests Bharti’s aggressive approach towards content acquisition could “add incremental risks of higher content payments in future, which could pressurise its balance sheet”.
An analyst at a foreign brokerage, which ET had talked to, said Airtel’s IPL bid could be a one-off as this property was about exclusivity and could be easier to monetise compared with generic digital content, which is difficult to make money off in a market like India. The analyst, who declined to be named, said there is no established business model in India for monetising digital content, which is seldom exclusive, and rampant piracy only made matters more challenging.