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Jio Fiber impact on multiplex business to be limited, will boost OTT

Theatre-going is a communal experience in India.

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MUMBAI: After revolutionising the mobile data use in the country, telecom giant Jio is now ready to turn around the fortune for the broadband sector in India. Jio Fiber is not only merely providing high-speed internet connection but it is bundling a number of offers and features like access to premium OTT services and the concurrent release of movies. The high-speed home broadband will definitely boost the over-the-top ecosystem but experts have mixed views on how it will impact theatres and multiplexes.

At the 42nd annual general meeting of Reliance Industries Ltd (RIL), CMD Mukesh Ambani revealed 5 September as the date for the commercial launch of the much-awaited service. “Jio Fiber Services to be launched on commercial basis on 5 September 2019 - on the third anniversary of Jio’s launch. (We) plan to reach 20 million residences and 15 million business establishments in 1,600 towns,” the business tycoon announced.

Industry veteran Paritosh Joshi pointed out that watching cinema is much more than just a question of consuming a few hours of content as it is an immersive experience. He also compared the arrival of the multiplex revolution in India about 15-20 years back which signalled a departure from basic movie experience. He added that multiplexes are trying to make experiences rich and interesting.

“So in my opinion, theatrical exhibition business will not disappear merely because of cinema being released concurrently on digital media. Watching a film at home is different than in a
cinema theatre where you get completely emerged in the movie experience. At some level it might even help the theatrical release because people who would not have had a chance otherwise to experience that film may sample it on their personal devices at home and then still want to really experience what the full thing is by going to the theatre,” Joshi added. Moreover, he also added that international studios operating in India may not agree for a concurrent window with Jio Fiber.

Another veteran media analyst also agreed that multiplexes won’t be affected by Jio. He added that Indian audiences still like to go to the theatre for community viewing.

PwC - Risk Assurance (Media, Entertainment & Sports) Managing Director Anand Punmiya said, “Getting movies at home on the day of release will be a boon for many, however going to multiplex & watching is considered "friends & family time" and there will still be takers for that as well. In fact, in recent past we experience reverse migration, wherein selective Cricket World Cup matches were exhibited in multiplexes, since multiplexes offers an enhanced viewing experience.”

PVR Ltd also said in a statement that cinemas continue bringing people together to share a communal experience. This irreplaceable element, which is at the core of theatrical experience, continues to deliver a robust box office performance not just in a growing market such as India but also in the more matured markets such as the US, China, Europe, etc. where cinemas have regularly competed with many similar initiatives such as Netflix Original Movies.

The company also added that for decades, theatrical release window has been a valuable model for exhibitors and producers alike. In India and globally, producers have respected the release windows and kept a sacrosanct gap between the theatrical release date and the date of release on all other platforms, i.e. DVD, DTH, TV, OTT, etc.

"We would also like to point out that producers, distributors and multiplex owners in India have mutually agreed to an exclusive theatrical window of 8 weeks, between the theatrical release of a movie, and release on any other platform. This exclusive theatrical window is a model that is followed internationally, in order to ensure the robust financial viability of all the segments of the sector, and has been replicated in India," Inox said in a press release.

Elara Capital vice president research Karan Taurani said that the Jio deal won’t have a big negative impact for multiplexes as the release of a movie in cinema is very important in order to get deals on digital and satellite. He also added that there are about 400 films released every year across genres and hence release of a few films directly on Jio won’t impact footfall.

“Cinema-going is considered a family outing in India and we don’t see large budget films going for direct release on Jio. It will be limited to smaller films going directly on digital, as the economics of a big film doesn’t work for the same,” Taurani added.

Keeping the mixed economy structure of Indian internet users, Jio Fiber’s plans have been fixed from 100 mbps speed to all the way up to 1 Gbps. The pricing will range between Rs 700 per month to Rs 10,000 per month. “Premium JioFiber customers will be able to watch movies in their living rooms the same day these movies are released in theatres,” Ambani said while revealing all the offers. Jio Fiber also comes bundled with a free subscription to premium OTT services.

“Vodafone, Airtel, Jio are already bundling content from over-the-top platforms. It’s the sheer scale on which Jio operates and subscribers they may have that makes it more interesting for streaming service operators to deliver the product to broadband and mobile customers. One thing became clear last year - the telecom play is substantially data play and data play is all about entertainment content. The main use of data is consuming audio-visual entertainment content,” Joshi commented on Jio Fiber’s impact on the over-the-top ecosystem.

Another analyst added that while the OTT ecosystem will definitely improve, the question is about how Jio wants to bundle the offering, which mainly depends on the pricing.

Punmiya said, “There is a kind of "OTT War" which is in place for some time now and wherein every platform is engaged in creating unique and engaging content. While, OTT is "Content at Convenience" multiplexes offers a great viewership experience. Even if small and big screen are competing they will continue to thrive Indian markets for long given every platform have their ardent followers.”

Balaji Telefilms’ management is also upbeat about the changes that Jio will bring. “We are looking upon this as a very positive development, it will help consumers access internet at a very high speed. We have seen previously when Jio was launched that Reliance has revolutionised this market and made internet accessible to the masses of India that fits very well with our strategy. Our content has been historically mass content, so all steps and measures taken to spread internet out at high speed like Jio Fiber will do is a positive move and a very positive development for us,” said Balaji Telefilms management in its earnings call.

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