In January 2007, Netflix revolutionized the global media industry with the introduction of its video streaming service. This move showcased Netflix's belief in the power of the internet. Before this breakthrough, Netflix's primary method of operation involved mailing DVDs to subscribers. However, the advent of streaming changed the way people consumed media, providing on-demand viewing and disrupting traditional television and movie industries.
Netflix's pioneering step also paved the way for other major players in the media sector, such as Apple, Alphabet (parent company of Google and YouTube), Facebook, and Amazon. These companies recognized the need to produce their own films, TV shows, and web series in order to reach diverse audiences across different platforms and devices. This fierce competition for dominance in the entertainment economy highlighted the importance of financial power. In line with this, Rupert Murdoch made the decision to sell Twenty First Century Fox's entertainment assets to The Walt Disney Company in 2018, while Zee Entertainment Enterprises faced a debt crisis and opted for a sale.
Currently, rumors suggest that Reliance Industries could potentially acquire Disney Star, which would position it as the second-largest media company in India after Google. Reliance already holds a majority stake in Network18, which owns Viacom18 and JioCinema. Additionally, Punit Goenka, CEO of Zee Entertainment Enterprises, has been allowed to return to the company following a ruling by the Securities Appellate Tribunal. Furthermore, uncertainties persist within Sony regarding the appointment of a new CEO. The merger between Sony and Zee, announced in December 2021, is expected to be finalized this month, creating the fourth-largest media firm in India.
Should both these deals materialize, the Indian media market will be dominated by four major companies: Google, Meta (formerly Facebook), Reliance, and Sony-Zee. This consolidation will not only significantly impact the industry but also affect all its stakeholders, ranging from news to entertainment and sports. Shrikant Shenoy, associate VP of media buying agency Lodestar UM, describes these developments as unprecedented in scale. By combining the broadcast, digital, and studio assets of Disney with Network18's channels, digital properties, and film studio, a media conglomerate would be created, controlling 32% of all TV viewership in India. The enormous size and influence of such a company will undoubtedly call for careful scrutiny, especially considering the legal and regulatory obstacles faced during the Zee-Sony merger. Daoud Jackson, a senior analyst at London-based Omdia, emphasizes the need for thorough examination of the impact such a monumental deal would have.The Competition Commission of India is expected to address the concerns surrounding a potential merger between Voot, JioCinema, and Disney+ Hotstar. Regulatory worries have been raised by analysts based in Asia, who believe that the consolidation of these entertainment applications could have far-reaching implications. With a vast viewership of 892 million individuals, television is far from being obsolete in India.
According to data from Comscore for June 2023, the merged streaming service would amass over 233 million unique visitors, almost half the reach of India's biggest streaming app, YouTube. This level of consolidation is unprecedented in the United States, as noted by the Asian analyst. Speculation about this merger is causing concern among advertisers who contributed to the Rs 2.1 trillion generated by the Indian media and entertainment industry in 2022. The potential impact of this consolidation is being compared to the emergence of another Google, with hopes for synergistic benefits.
The broadcasting rights to the Indian Premier League currently reside with Disney, while JioCinema holds the digital rights. Analysts, led by Shenoy, believe that the consolidation will allow for enhanced leveraging in cricket, which could be highly advantageous. The entry of major media-tech firms has already led to a substantial increase of 40 to 60 percent in production costs for films, shows, and series. However, the financial strain caused by the pandemic further added to these costs.
In response to the challenging circumstances, PVR and Inox, two of India's largest theater chains, decided to merge. This move was driven by the desire to capitalize on the synergistic advantages and offset the 90 percent decline in their top line revenue during the 2020-2021 period. As the battle for dominance in the media and entertainment industry intensifies, key players such as Disney-Star, Sony-Zee, Jio, Bharti Airtel, Google, Netflix, and Amazon Prime Video are vying for the top position. The potential exit of Disney—the likelihood of which remains uncertain—could prompt Sun TV and Times Group, among others, to explore their options. This scenario could ultimately lead to further consolidation within the industry.