Reliance Jio’s growth to become one of India’s largest telecom operator in a span of just two years came mainly due to its free model. At the launch of its services in 2016, Reliance Jio offered free data and voice calls to its subscribers for first free months and later extended the free service for another three months. Alongside this free data and voice calls, Jio also offered free access to a bunch of apps called Jio Apps.
While the Mukesh Ambani-led company has offered Jio Apps for free to its subscribers, the company might soon switch to a freemium model. In its ‘Reliance Jio Targets Digital Content Leadership’ report, Strategy Analytics claims that the company is looking to move from its free model to a freemium model. A freemium model is one where customers will enjoy basic features or certain content on the platform for free while some other content, also branded as premium content, will be kept behind a paywall. In order to access these content, Reliance Jio will ask its customers to pay for them.
Reliance Jio’s business model has been built around the concept of offering free services at a nominal subscription plan that works for at least three months. It has been offering its mobile tariff plan at such steep price that rivals Airtel and Vodafone have been forced to lower their prices and consolidate in the industry with mergers. However, Reliance Jio does not really command a loyalty where its customers will be willing to pay for a content that they have been accessing for free all along.
“Identifying content that users are willing to pay for combined with business models and a user experience that resonates with target customer segments will be critical for successful monetization,” Strategy Analyst said in its report.
With abundance of data at their disposal, Indian smartphone users have been consuming more content than ever before. OTT platforms like Netflix and Hotstar have seen tremendous jump in their viewership while rival telecom operators like Bharti Airtel and Vodafone have also beefed up their content platforms to challenge Reliance Jio.
It is not immediately clear what Reliance Jio plans to offer for free and what content will be turned into paid content. While it successfully managed to convince its customers that subscription to Jio apps as additional benefit, it will be difficult for the company to get them to pay for those content. “Jio’s competitors Bharti Airtel and Vodafone are being forced to react by beefing up their own content strategies,” Brice Longnos, analyst at Strategy Analytics Wireless Media Strategies, said.
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Reliance Jio recently merged its music service JioMusic with Saavn to create a new streaming music entity. While both the platforms operate independently, they are likely to be merged at some point. The company has also announced several other partnership to beef up its content ecosystem. It needs to be seen how Reliance Jio differentiates its free data from paid content.