M&A: Reliance May Buy Its Way Into Disney’s World: A Game-Changer in India's Streaming War

In a seismic shift in the Indian entertainment landscape, Disney is preparing to sell its Indian entity to Reliance for a colossal $10 billion. This blockbuster deal is sending shockwaves through the world of streaming, as Reliance's Jio Cinema emerges as the game-changing player, acquiring one of India's most prominent OTT platforms, Disney+ Hotstar. Let's dive into this thrilling narrative and see how we got here.

Hotstar's Meteoric Ascent

The journey began on February 11, 2015, when Star India unveiled its groundbreaking OTT platform, Hotstar, coinciding with the 2015 Cricket World Cup. This strategic move, fueled by Star's acquisition of the IPL streaming rights, allowed Hotstar to make a grand entrance into the hearts of cricket-crazy Indians.

By 2019, Hotstar had become the unrivaled champion of the Indian OTT arena, boasting a staggering 46 million subscribers. To put this in context, Netflix, the global streaming giant, entered the Indian market in 2016 and has since acquired around 8 million subscribers. Hotstar's meteoric rise attracted the attention of The Walt Disney Company, which acquired Star India and, in turn, Hotstar in 2019.

Disney's Global Might and Indian Ventures

With its global revenue soaring to approximately ₹650,000 Crores, Disney was a behemoth of the entertainment world. In the same period, its Indian operations contributed approximately ₹3,200 Crores, representing less than 2% of Disney's massive global business. It was becoming evident that India was not Disney's primary focus.

A Strategic Masterstroke

Disney's decision to divest its Indian operations and pass the baton to Reliance reflects a well-thought-out strategy. It signifies Disney's conscious choice to channel its resources and efforts into regions where the returns are significantly higher. The Western markets, with their substantially greater average revenue per user, have become Disney's new horizon.

Reliance's Vision and Ambition

But what's driving Reliance's eagerness to acquire its rival? It's not just about distribution; the IPL had that covered. The acquisition addresses two critical shortcomings in Jio Cinema's arsenal.

First, it's about securing a vast supply of content. Sports and serials are the two media products with the highest frequency of consumption in India. While Reliance had already secured the streaming rights for the IPL, it is a seasonal event, leaving gaps in year-round engagement. The acquisition of Hotstar equips Jio Cinema with a treasure trove of serials, diverse sporting events, and popular reality shows, ensuring a daily viewing habit.

The second piece of the puzzle is world-class infrastructure. A testament to Hotstar's infrastructure came during the last India vs. New Zealand cricket match, which drew a record-breaking 4.3 Crore concurrent live viewers. Hotstar's infrastructure can comfortably support five times that number. This robust foundation will play a pivotal role as Reliance aims to conquer the rapidly expanding OTT market.

A Booming Market

The Indian OTT market is on the verge of explosive growth, with subscriber numbers projected to double in the coming year. The potential is enormous, especially for ad-supported products, making it a gold mine. With this acquisition, Jio Cinema secures "speed to scale," positioning itself for a dynamic market that awaits disruption.

Reliance's Track Record

Remember how Reliance reshaped the telecom industry with innovative pricing strategies? Expect a similar transformation in the OTT domain. With substantial resources at their disposal, Reliance is set to revolutionize the industry, ushering in disruptive pricing models and charting a course for victory.

The Future of Indian OTT

Intriguingly, the most significant value in the OTT landscape isn't just content; it's the viewer's undivided attention. As we've seen in China with the rise of social commerce, similar trends are anticipated in the Indian OTT sector. The emergence of hybrid ad and e-commerce models promises a new era of entertainment, one that combines content with commerce.

Now, as we come full circle, the news of Mukesh Ambani's Reliance Industries finalizing a multi-billion dollar deal with Walt Disney Co. to acquire its India operations only adds another layer to this captivating narrative. This colossal deal is poised to reshape India's entertainment landscape, solidifying Reliance's position as a major player. With the grand finale of this billion-dollar Bollywood extravaganza awaiting us, we can only look forward to a future where streaming, content, and commerce converge in intriguing ways.

It's showtime, folks!