A game-changer in India’s OTT landscape

Viacom18’s purchase of Hotstar promises a powerful OTT platform with extensive content, reshaping India’s media industry.

On Monday, January 22, Sony backed out from a mammoth merger deal with Zee Entertainment, a deal that was valued at a whopping Rs 83,000 crore (USD 10 billion). Even as the contours of this breakup lead to murky legal tussles that can swing either way (as we saw with Elon Musk and Twitter’s tug of war), the unlikely collateral that emerged from this is an impact on the valuation of Disney’s India business. Fast forward to February 1, and media reported that Reliance Industries’ entertainment arm, Viacom18, had swooped in to acquire a majority stake in Disney India.

As things stand right now, Viacom18, along with media entrepreneur James Murdoch’s Bodhi Tree Systems, is acquiring 60% of Disney’s India assets, including its traditional television broadcast channels and over-the-top (OTT) digital streaming platforms. Viacom18 valued Disney India at USD 3.9 billion, substantially lower than the USD 10 billion that Disney was seeking. In the newly formed consortium, Viacom18 will own 51% of Disney India, while Disney itself will retain 40% of its stake in the new company. Murdoch’s Bodhi Tree will hold 9% of the company, making it one of the biggest OTT groups in the country.

A red-hot OTT battle

The reason why this tussle started with a footnote of the Zee-Sony ordeal is because of the valuation that Viacom18 is seemingly picking up Disney’s India assets. The heart of Disney’s India appeal lies with its streaming platform, Hotstar. At the end of September 2022, Hotstar was the biggest streaming platform in India with over 60 million paid subscribers—way ahead of Amazon’s Prime Video and Netflix, its nearest competitors.

Since then, Hotstar has lost two of its biggest deals that used to draw subscribers to it: digital broadcasting rights for the Indian Premier League (IPL) cricket tournament, and US media giant HBO’s streaming rights in India. Both these services were picked up and moved on to Viacom18-owned streaming platform, JioCinema, which has since catapulted on to becoming one of the biggest names in the Indian digital broadcasting space.

At the same time as when Hotstar lost its landmark deals, Zee was also slated to offer Disney’s broadcasting division streaming rights it had for matches of the International Cricket Council (ICC). Now, Zee has disputed its obligation to follow through with this deal, since its merger with Sony is now off the chart. This, in turn, has further contributed to the ongoing downfall of Disney’s India assets valuation, making this a murky multi-way pickle to plough through.

What does this mean for the industry?

All of this adds up to a big fight in the video streaming industry. At the end of 2022, Disney+ Hotstar was at the top of the chart, in terms of subscriber market share, with 46 million active subscribers at the end of the year. Prime Video, with 40.8 million subscribers, ranked second, ahead of Netflix at third with 30.7 million subscribers. Since then, the advent of JioCinema has had a massive impact on these rankings.

By the first quarter of 2023, JioCinema had added over 10 million subscribers in anticipation of the IPL cricket tournament, while Hotstar lost over 8 million subscribers. Beyond this, JioCinema has continued to grow its subscriber base due to its content deals with HBO and NBC, as well as its broadcasting of homegrown reality TV show, Bigg Boss.

Competitors like Airtel and Vodafone-Idea may need to invest to secure premium streaming content, further boosting Viacom18 and Reliance’s advantage.

With the new deal, Hotstar and JioCinema are slated to come under a unified parent firm; although it is not clear yet if the two platforms will be merged into one by Viacom18. The precedent for this already lies in the streaming platform Voot being merged into JioCinema. Experts, however, say that Hotstar still has a considerable brand appeal among Viacom18’s subscriber target groups, a factor that could help keep it alive as an individual brand. Disney, with a 40% share of the company, could also play a role in it.

The crux of this move, though, could well lie in JioCinema and Hotstar forming an umbrella that would have a sizeable market share. While formal numbers are scarce, a combined OTT market share of over a quarter of the industry is likely to be under Reliance’s overall ownership. This, in the long run, could give Viacom18 a billion-dollar streaming group—as per market researcher Statista, the OTT market is tipped to be valued at USD 5.6 billion by 2028.

How will this impact the duo?

The merger of JioCinema and Hotstar into a single OTT platform, combined with Viacom18’s production expertise, will significantly enhance the group’s original localised content offerings. This move aligns with the strategies of global giants like Amazon Prime Video and Netflix. Leveraging Viacom18’s extensive partnerships and content library, the conglomerate will boast one of the largest repositories to attract users and subscribers.

Some of the content that may become available with JioCinema and Hotstar together include broadcasting deals for live telecasts such as the English Premier League and IPL, as well as landmark content such as HBO, Marvel, Pixar, DC, and Star Wars—all consolidated. This consolidation may lead to bundled subscription prices, making it one of the most appealing offers for Indian consumers. This could also create a lucrative bundled content platform for telecom operators, particularly benefiting Reliance’s Jio Infocomm with increased revenue from bundled tariff plans. Competitors like Airtel and Vodafone-Idea may need to invest to secure premium streaming content, further boosting Viacom18 and Reliance’s advantage.

If the deal proceeds, it could be the start of the creation of one of Asia’s, and perhaps even the world’s largest OTT services platforms under a single media and entertainment umbrella.

 feedbackvnd@cybermedia.co.in