In a landmark move to reshape the entertainment landscape in India, Reliance Industries and Walt Disney are merging their media assets in a $8.5 billion deal. The mega merger aims to create the largest entertainment entity in India, a move that could not only change the way Indians consume media but also transform the dynamics of the entertainment and advertising industries in the region. The deal, which combines Disney’s extensive network of TV channels and streaming platforms with Reliance’s significant media holdings, promises a new era of content access and market dominance. The merged entity is set to capture a strong 40% share in the TV market, reach 750 million viewers across 120 channels and become a powerhouse in the advertising sector. But like any major integration, this merger brings with it a mix of opportunities, challenges and concerns. A new entertainment powerhouse The merger brings together two giants: Disney’s Star India, which operates more than 70 TV channels in eight languages, and Reliance’s Viacom18, which runs 38 channels in eight languages. Both companies have impressive streaming platforms – Disney+ Hotstar and JioCinema – and have substantial film production capabilities. By bringing their resources together, they create a media giant that could significantly alter the competitive landscape in India.
This new entity is likely to dominate the Indian market. With access to major sports broadcast rights, including the highly sought-after Indian Premier League (IPL) cricket tournament, the merged company is set to control 75-80% of the Indian sports streaming market. This dominance could extend beyond sports to include a broad spectrum of entertainment content including TV shows, movies and reality TV.
For Indian consumers, this merger could mean a wide selection of content. Imagine accessing a wide variety of shows and films, from international hits like “The Bear” and “Succession” to local favourites and blockbuster reality shows like “Bigg Boss,” all from a single platform. This level of convenience and variety is likely to attract a large number of customers, increasing the appeal of the new entertainment giant.
Economic implications and market dynamics
The economic impact of the merger extends far beyond the immediate realm of entertainment. By creating such a dominant player in the market, the deal could significantly change the dynamics of advertising. With a dominant share on both TV and digital platforms, the new entity is expected to capture a large share of advertising revenues, potentially setting new standards for pricing and market influence.
However, this market dominance also raises concerns about competition. Critics argue that the merger could stifle competition by creating a near-monopoly in the entertainment sector. KK Sharma, former head of the merger control division of the Competition Commission of India (CCI), said such market consolidation could lead to regulatory scrutiny. The CCI has already conditioned its approval on the companies implementing “voluntary amendments” to ensure fair competition, though the specifics of these amendments have not been disclosed.
The potential impact on smaller players in the market is also significant. With the new entity’s vast resources and market reach, smaller competitors may struggle to maintain their market share. Reliance’s strategy of offering services at highly competitive prices, as seen with Jio’s mobile data and JioCinema’s affordable subscription plans, could put additional pressure on these smaller companies.
The challenge of quality and scale
While the merger promises scale, the challenge will be to maintain quality. Since the new entity aims to serve a vast audience, it will be expected to deliver consistently high-quality content. Media and entertainment industry expert Vanita Kohli-Khandekar points out that scale is important, but quality cannot be compromised. “If the streaming market becomes more dependent on views rather than subscriptions, the quality of programming will only be good on one or two apps,” she warns.
The new entity will need to balance the scale of its offerings with the quality of its content. This includes leveraging its extensive library of international and local content, ensuring it can compete effectively with other global players such as Netflix, Amazon Prime Video, and regional competitors.
Impact on the advertising market
The most significant impact of the merger will be on the advertising market. The dominance of the combined entity in both TV and digital platforms puts it in a position to capture a larger share of advertising revenues. This could lead to changes in advertising strategies, pricing models, and market dynamics.