Written by Munsif Vengatil and Aditya Kalra
NEW DELHI (Reuters) – Apple Inc’s (NASDAQ:AAPL) partnership with India’s second-biggest telecom company will give the iPhone maker a boost in the content market where it lags far behind the likes of Spotify Inc (NYSE:S) and Amazon.com Inc (AMZN.O). Disney (New York Stock Exchange:).
The US tech giant, which is boosting revenue globally from services including apps, payments and media, is set to offer free music and video streaming to many of Bharti Airtel’s 281 million customers.
The deal is likely to significantly expand the user base of Apple TV+ and Apple Music in a country where Apple has long emphasized the manufacturing side of the business to diversify its supply chain outside of China.
Apple makes a lot of iPhones in India, but its phones account for only 6% of the country’s 690 million smartphones, compared to about 2% in 2019, data from research firm Counterpoint showed.
“This move speaks volumes about Apple’s ambitions in India,” said Nitish Kripalani, former head of Amazon Prime Video in India. “This strategy is a time-tested approach to building presence in markets that the company deems important.”
In the US, Apple has offered Apple Music for free on some Verizon (NYSE:) mobile data plans since 2019, and Apple TV+ will appear in Comcast’s (NASDAQ:) streaming bundle starting in May.
In India, Apple Music will be available to premium users of Airtel’s Wynk music app, which will eventually be shut down.
Airtel’s postpaid contracts allow about seven million subscribers to access the ad-free version of Wink, but only a small percentage use it, said a telecom industry source who declined to be identified because the numbers are confidential.
Apple and Airtel did not respond to requests for comment outside normal business hours.
Music Battlefield
Apple Music is more tailored to the Indian market than Apple TV+, which is mostly in English, with content including Bollywood songs and songs in regional languages, though its library is smaller than Spotify’s, said Neil Shah, co-founder of Counterpoint.
Spotify has about 3 million paid users in India, Ghana has 1.4 million, Wink has 500,000 and Apple Music has 200,000, said a source in the Indian music industry who declined to be identified because he was not authorized to share estimates publicly.
Spotify and Gaana did not respond to requests for comment outside normal business hours.
Overall, only about 7.5 million people paid for audio streaming services in India last year out of about 185 million users of ad-supported and ad-free apps, according to data from industry group FICCI and consulting firm EY.
Airtel will pay Apple a per-user fee that is “significantly” lower than the $1.20 monthly fee charged for both Apple TV+ and Apple Music in India, a telecom industry source said.
In return, the company will save millions of rupees in licensing as it looks to shut down Wynk and use Apple Music to boost revenue and improve customer loyalty, according to a second telecom industry source.
“Airtel has realised that its strength lies in distribution, not content creation,” said the source, who asked not to be identified because he was not authorised to discuss the matter.
Video broadcast
Apple is a small player in the video streaming space in India, with Counterpoint estimating it has less than a million users. Disney+ Hotstar is the market leader with 38 million users, while Netflix (NASDAQ:) is estimated to have around 10 million users.
Indicating the market potential, Netflix has repeatedly said it is targeting 100 million users, without specifying a timeframe.
Apple TV+ is known for its original series like “The Morning Show” and “Slow Horses,” but competitors including Netflix and Disney are offering more Indian content with Bollywood actors and even regional language films.
Disney and Reliance Industries’ Jio Cinema also broadcast cricket – India’s most popular sport – and the two companies are merging their Indian media assets to create the country’s largest entertainment company.
Airtel, which trails only Reliance Jio in terms of telecom subscribers, is planning to offer bundles that offer free access to Apple TV+ for several months, according to the second telecom source.
While this would allow Apple TV+ to enter more homes, growth could be stunted because “its offerings are still largely unoptimized locally,” Counterpoint’s Shah said.