Decoding the proposed alliance of Sony, RIL’s TV183 min read . Updated: 05 Dec 2019, 06:18 AM IST
Streaming wars will continue and content will get expensive as more people chase the same content
A Bloomberg news report dropped a bombshell last fortnight when it said that two big broadcasting companies, Japanese giant Sony Corp. and Mukesh Ambani-owned Network18 Media and Investments Ltd, are coming together in the Indian market. Later, The Economic Times reported that the two will create a joint venture (JV), in which Sony will have a bigger stake. Till now there has been no official word on the proposed deal from either company.
The entertainment channels of Ambani’s television network are housed under Viacom18 Media Pvt. Ltd, a joint venture between TV18 Broadcast Ltd and Viacom Inc., wherein TV18 has a 51% share.
When it increased its share in the equal JV in 2018, TV18 also extended its brand and content licence arrangement with Viacom for another 10 years. Currently, Viacom18 operates more than 40 channels in seven languages. It also operates a film company, Viacom18 Motion Pictures, video streaming platform Voot, has interests in live events and merchandising, besides a distribution company, IndiaCast Media. Sony Pictures Networks India, on the other hand, a subsidiary of Sony Corp., runs more than 20 channels, including several sports networks.
If indeed the deal fructifies, it could impact the media and entertainment landscape in India in several ways. “It would create a massive powerhouse in broadcasting, a multi-language and multi-genre behemoth," said Jehil Thakkar, partner, Deloitte India.
However, the biggest impact of the deal would probably be on sports broadcasting. In 2017, Star India paid ₹16,347.50 crore to win the telecast rights of Indian Premier League (IPL) for five years beginning 2018, outbidding Sony Pictures Networks India, which had held IPL rights for 10 years.
Reliance Jio Infocomm Ltd, which bid ₹3,075.72 crore for the internet and mobile rights of IPL, also lost to Star. In April 2018, both Sony Pictures Networks and Reliance Jio once again trailed Star in their bid for Board of Control for Cricket in India’s media rights (for all matches played at home), that made the latter a leader in cricket broadcasting.
“With Reliance and Sony’s combined might, the future sports rights will be fiercely contested. The International Cricket Council (ICC) has a clause where you need to have experience in sports broadcasting before you can bid for rights. Through an alliance with Sony, Reliance—which has been keen on sports—resolves that issue," said a TV channel executive, declining to be named.
“Sports is a very powerful genre and, remember, it is cricket that has really made Hotstar what it is today, a market leader among OTT video streaming platforms," said media expert Chintamani Rao. Clearly, this deal will also have a bearing on the OTT space that is teeming with 30 players of varying sizes and scales. Experts are divided on whether the new entity will retain three separate OTT platforms in its portfolio, including SonyLiv, Voot, and Jio, or merge everything under the latter and build it up. Rao believes that Reliance isn’t really interested in the broadcasting business. “For it, the TV play is nothing but a source of content for Jio," he said. “The full impact of the deal will unravel once fibre-to-home takes off and people switch over to OTT streaming. Then this will be huge," said Deloitte’s Thakkar. Although mobiles may still be the biggest platform for streaming, over the next five years, living room devices will also contribute to OTT viewership.
The other major impact will be on content spending. Streaming wars will continue and content will get expensive as more people chase the same content. “Content creators will make hay, while shows and films will up their ante in scale and quality," said Raj Nayak, a media consultant and former CEO of Colors. Sunil Lulla, the former group CEO of ALTBalaji, had earlier said that the “Mahabharat of all content battles will be fought on digital", with the category expected to touch ₹30,000 crore in the next five years. Experts believe Zee Entertainment may get bruised in this battle, considering the group’s founder, Subhash Chandra, has too minor a stake to bet on the big play. Eventually, Zee may be a target for a global media company with its new investors looking for returns. “They are not in it for emotional investment," said Thakkar. Clearly, for now, consolidation is the buzzword in the media and entertainment industry with large broadcasting corporations coming together to take on new tech firms such as Apple, Amazon, and Netflix, which have entered the content space. It remains to be seen whether Viacom will continue to be a part of the proposed Sony-TV18 deal, or prefer to exit the market.
Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.