Facebook is emphasising how its investment of Rs 43,574 crore in Jio Platforms will help India’s farmers and small businesses. But there are major implications for Indian media too.
To create the giant that is Jio Infocomm, parent Reliance Industries Ltd (RIL) took on a mountain of debt. Facebook’s huge investment, announced today, for a 9.99 per cent stake in Jio Platforms is part of Mukesh Ambani’s stated aim to make RIL debt-free soon.
What exactly is Jio Platforms? And what are the implications of this money infusion for the Indian media business in which Ambani, through RIL and Jio, has become a major player?
Because Ambani has built his presence in media in bits and pieces, the full extent of his holdings are sometimes overlooked.
To recount, RIL has had a 50:50 joint venture with Viacom Media in leading TV network Viacom18. In 2018, RIL upped its stake in the venture and got a clean majority by buying an additional 1 per cent for $20 million.
Earlier, in July 2017, RIL had acquired a 24.9 per cent stake in Ekta Kapoor’s TV and film production company, Balaji Telefilms, for Rs 413 crore. At around the same time, RIL put in $48.75 million to acquire a 5 per cent stake in Eros International.
Late last year, Ambani had initiated the formation of a subsidiary, Jio Platforms, which would house all the initiatives related to the telecom venture. These include Jio TV which streams live television, Jio Cinema which offers movies and episodic series, and Jio Saavn which offers audio streaming, among other things. It also includes distribution networks DEN and Hathway in which the group has a majority stake. It’s a bouquet that Jio offers with wireless broadband, home broadband, Enterprise and SMBs and Narrowband IoT at the core of it.
Both Ambani and Facebook’s founder Mark Zuckerberg underline that this partnership will accelerate India’s "all-round development, fulfilling the needs of Indian people and the economy." The focus they said will be "India’s 60 million micro, small and medium businesses, 120 million farmers, 30 million small merchants and millions of small and medium enterprises in the informal sector.”
However, whenever Ambani has mentioned ‘Jio Digital Life’ in the past, he has referred to an ecosystem comprising network, devices, applications, content – all at a rate every Indian can afford.
Analysts believe that all his investments in the media space have been made with Jio at the heart of it. “While changing the distribution landscape, Reliance has subtly made it a content powerhouse," said a well-known analyst who did not want to be quoted. For example, Eros International and Viacom18 Motion Pictures together own rights to about 45 per cent of the top Bollywood films, he says. Balaji's video-on-demand platform, ALTBalaji which creates a good number of Originals, is integrated into Jio which has 360 million subscribers.
Will this investment impact the media and entertainment landscape? "Yes," says Partho Dasgupta, management consultant and former CEO of BARC India. "Content and pipes is a potent combination," he thinks, adding, "It's about creating value - from content to the pipes till the last mile. Every media major would aspire to be in this situation - but few can afford to be."
On the distribution front, Jio has already rolled out GigaFiber, a high-speed internet service through which one can access live television at a 4K resolution. Back then, former DishTV CEO RC Venkateish was quoted as saying, "Jio Giga Fiber has the capability to upend the entire content distribution system in India. Unlike telecom where there were players like Airtel with strong balance sheets able to withstand the disruption, players in the cable and satellite universe will face an existential challenge with the exception of perhaps a couple of well-run operations."
"As Jio expands into small-town and rural India, it will help Facebook increase its penetration and take on rivals like TikTok."Raman Kalra
Raman Kalra, partner at PwC India, looks at it differently. India is an important market for Facebook and this partnership will allow it to raise both its time- and wallet-share. “One-third of India is yet to access the internet and Jio will get a major part of that subscriber base. Facebook will inevitably become a part of that growth story,” says Kalra.
On the media front, there are many possibilities. For example, Facebook could enter small-town and rural India and ride on user generated content to take on TikTok which is strong there. “More importantly,” says Kalra, “with increased reach, Facebook will have more people engaging with its different offerings, leading to a significant boost in India ad revenues.”
He thinks there may be an impact in sports streaming as well: “By acquiring the rights to La Liga (Spanish Club Football) Facebook has made it clear that it is getting into sports. Once it attains scale, it could change the media and entertainment landscape significantly.”
"Both Jio and Facebook have enormous user bases and how the combined impact of these can be multiplied will depend on how closely the two work together."Jehil Thakkar
What happens now depends on “how closely the two companies work together to bring their various assets to life. If they are able to leverage their installed base together for social media and content, it would create an extremely large distribution platform for both,” points out Jehil Thakkar, Partner (Media and Entertainment), Deloitte India.
He says that since the telecom industry has consolidated, all the companies have fairly large installed bases but “this partnership will spur the next level of investment and market activity as well as introduction of new products. Overall it’s good for the consumers, the market and will lead to a lot of innovation.”