Reliance Industries’ much-anticipated joint venture with Walt Disney Co., which combines the businesses of Viacom18 and Star India, could significantly bolster the conglomerate’s video streaming ambitions in the world’s second-largest Internet market.
Once the deal is completed, two of India’s largest streaming platforms - Disney+ Hotstar, which currently leads the country’s subscription-based video streaming market with 38.3 million subscribers, and JioCinema, a prominent player in the ad-supported video streaming market - will have a single owner.
JioCinema had about 237 million monthly active users as of September 30, 2023, of which 33 million are daily active users, according to the service’s website.
Reliance Industries stated on February 28 that it plans to merge the digital streaming and television assets of both companies in India to form a "world-class" leader across entertainment and sports.
The merged entity will have a valuation of Rs 70,352 crore ($8.5 billion) on a post-money basis. Reliance Industries will own a controlling stake in the entity and will invest Rs 11,500 crore ($1.4 billion) for its growth strategy.
Nita Ambani, founder and chairperson of Reliance Foundation, will be the chairwoman of the JV, while Uday Shankar, co-founder of Bodhi Tree Systems and a former Disney India executive, will be the vice-chairperson.
Read: What RIL’s Rs 70K cr JV with Disney entails — 10 points
India’s growing streaming market
The deal, analysts say, is expected to help Reliance gain the upper hand in India’s intensely competitive video streaming market, including domestic and international rivals such as Netflix, Amazon Prime Video, ZEE5, and Sony LIV.
Sony terminated the merger of its India unit with Zee Entertainment in January after deliberations that extended for over two years.
"India is a value-centric market, and consumers like bundling. So, with JioCinema and Disney+Hotstar coming together, they will offer movies, sports, and a global catalogue and start charging for it as a premium plan in a bundled offer. That will give them a large scale because they have got Jio's last mile and their customer base," said Karan Taurani, Senior Vice President at Elara Capital.
"Global streaming services may struggle if JioCinema continues to offer free content. So Netflix and Amazon Prime Video will see a negative impact," he said.
The joint venture also comes at a time when people are increasingly consuming more digital content in the country.
About 707 million Internet users, which is about 86 percent of India’s internet base, consume video and audio streaming services in India, making it the top use case for internet consumption in the country, according to a recent report by the Internet and Mobile Association of India (IAMAI) and Kantar.
This growth has been driven by the rising adoption of smart television sets, those connected to the internet, and streaming sticks such as Google’s Chromecast and Amazon’s Fire TV in the country.
The report stated that more people are accessing video content over internet-only devices than over conventional linear television. About 208 million users are accessing video content over internet-only devices, as compared to 181 million users on linear TV.
On its website, JioCinema states that it has about 125 million monthly active users on connected television devices.
The combination of Viacom18 and Star India will allow the JV to offer local and global entertainment content and sports live-streaming services while providing a convenient entertainment experience at affordable prices, the companies said on February 28 while announcing the merger.
The JV will also be granted exclusive rights to distribute Disney films and productions in India, with a license to more than 30,000 Disney content assets, the statement said.
Utkarsh Sinha, managing director at Bexley Advisors, a boutique investment bank firm, said that the current consolidation in India’s media landscape presents a potent opportunity since the consumer wallet is stretched thin among multiple options.
“A strong, consolidatory wave is coming down the pipeline that should be active for the next 2-3 years…The consolidation would mean that the emergent survivors are able to command a larger individual share of the currently dispersed media and entertainment wallet,” he said.
Read: Star India’s valuation drops from $15 bn in 2018 to $3.2 bn now
Reliance’s content deals
In the past couple of years, Reliance has struck several key content deals to boost JioCinema’s offering besides launching a paid subscription service.
In June 2022, Viacom18 bagged the streaming rights for the IPL tournament for the 2023-2027 period and streamed the entire tournament for free on JioCinema last year.
The move resulted in the service registering a world record for the highest number of concurrent users for a cricket match at the time, drawing in more than 32 million simultaneous viewers during the IPL 2023 final match in May 2023. The record was subsequently broken by Disney+ Hotstar during the ICC World Cup 2023, which clocked 59 million concurrent viewers in November 2023.
Last year, Viacom18 also struck deals with media giants Warner Bros. Discovery and NBC Universal to make JioCinema the exclusive streaming home for their respective content brands, which includes HBO, Warner Bros., Universal Television, Universal Pictures, and Dreamworks Animation.
In a push for kids' entertainment, Reliance also signed a deal with Pokemon Co. to show over 1,000 episodes and about 20 movies of the Japanese anime series Pokemon.
Disney has been mulling options for its India business, which the entertainment giant inherited as part of its $71.3 billion acquisition of 21st Century Fox in 2019, since July last year.
In November, Disney CEO Bob Iger said they would like to "stay in that market but are also looking to see whether we can strengthen our hand and improve the bottom line."
Iger also said that their linear television business was doing quite well in India, but other parts of their business (which likely includes Disney+ Hotstar) have been a challenge.
These comments came as the Disney chief pushed to make the firm's combined streaming businesses profitable by the end of the financial year 2024.
On the television front, the JV will bring together about 120 channels, including entertainment channels such as Colors, Star Plus and Star Gold and sports channels such as Star Sports and Sports18. Reliance said the JV will have over 750 million viewers across India and the Indian diaspora.
Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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