The recent merger between Reliance Industries Limited (RIL) and Disney in India's media sector is heralding a change in the streaming landscape. As competition becomes intense within the industry, this merger is for combining of resources and strengthening market positions. Take a closer look at the implications of this deal.
Impact of Competition on Streaming Players
Heightened competition in the streaming space has led to squeezed margins for many players. For instance, Disney+ Hotstar witnessed a decline in its paid subscriber base, attributed to Jio Cinemas securing exclusive rights for live sports events like IPL 2023 and FIFA World Cup. With over 40 players vying for market share in India's OTT landscape, the competition has also driven down advertisement rates.
Jio Cinema also recently acquired streaming rights for all shows of HBO Max, which were previously aired by Disney. The combining of platforms will pose a strong challenge to international OTT platforms like Amazon's Prime and Netflix.
Benefits of the Deal
Industry experts anticipate several benefits from the consolidation. Advertising rates could see a significant increase post-merger, with broadcasters gaining higher bargaining power. Moreover, there's potential for rationalization in content costs, leading to improved margins across the industry. Analysts predict a 20-25% climb in advertising rates post-consolidation.
Challenges for Smaller Players
While the merger promises benefits for larger entities, smaller players like Zee and Sony may face heightened challenges. With dominant players commanding a substantial share of viewership and user base, smaller competitors could find it increasingly difficult to compete individually. Deep pockets and a growth mindset further reinforce the advantage of larger entities in the competitive landscape.
Strengths of the Merger
The combined strengths of RIL and Disney are set to extract several strengths, particularly considering RIL's telecommunications business. The merger aims to deliver a compelling digital entertainment experience to audiences in India and globally. With a strong media presence and robust telco infrastructure, the merged entity stands to benefit from revenue and cost synergies.
Market Leadership and Sports Rights
Analysts estimate that the combined entity will enjoy undisputed market leadership in the streaming space, capturing over 85% of the monthly active OTT user base. Additionally, the merger positions the joint venture as a dominant player in sports, holding rights to prestigious cricket properties such as IPL, ICC events, and other sporting leagues like Pro Kabaddi League and English Premier League.
So far, the merger between RIL and Disney marks a milestone in India's streaming industry. With far-reaching benefits for players and consumers alike, the joint venture is poised to redefine the digital entertainment experience of the viewers.
