Disney is planning to sell its Indian entity to Reliance for US$10 Billion. One of the biggest sports OTT player getting sold to its rival Jio Cinema. How did we get here & what’s under the deal, we uncover the story👇🏼
Star India officially launched Hotstar on 11 February 2015 after fifteen months of development, coinciding with the 2015 Cricket World Cup & for which Star had acquired the streaming rights (IPL).
By 2019, Hotstar became the #1 OTT player in the country with cricket as it’s core insight and 46 million (4.6 Cr) subscribers. That’s a massive number. For context, Netflix entered India in 2016 and is today at ~8 million subscribers.
Star, and in turn Hotstar, were acquired by The Walt Disney Company in 2019, as part of its acquisition of their US parent company 21st Century Fox. That made Disney+ Hotstar own 116 million paid subscribers globally.
Disney’s global revenue last year was ~₹650,000 Cr and it’s India business made ~₹3200 Cr in the same time frame. That’s <2% of the overall business.
It’s a well-calculated move to sell the India’s operations. It makes little sense to divert resources and focus on India when it can make 10X average revenue per user in the West – period.
Why is Reliance even thinking of buying its rival?
It’s not the distribution. IPL solves most of it. The acquisition solves two key things that Jio cinema lacks today.
First, the supply of content ✨
Sports & serials are two media products that have a high user frequency in India. Sure, Reliance acquired the streaming rights to one of the biggest sporting events in India – the IPL. But it is seasonal and doesn’t have a consistent frequency across the year.
Hundreds of serials, sporting events like Kabadi, Football, and drama categories like Big Boss, Koffee with Karan create the perfect balance for a OTT product that can build daily watch habit.
Second, the world-class infrastructure 🤯
The last IND vs NZ match had 4.3 Cr concurrent live viewers. For context, the Chandrayan 3’s launch had just 0.8 Cr viewers & was already YT’s biggest live stream in the world. Hotstar’s current infra can support 5X of that number. And, we’re still just getting started.
And the market is growing. OTT subscribers are projected to 2X next year. That’s wild numbers. The market ceiling for a cheaper/ad based product is great. With this acquisition, Jio Cinema is buying “speed to scale”.
We all have seen what Reliance did to telecom by changing the rules of the pricing game and expect that to repeat with the OTT game. Pure devil pricing with a clear right to win – unlimited cash at a fingertap.
That’s all for now. The biggest value creation in OTT isn’t content, it’s attention and what we see in China with social commerce will come to OTT eventually. Interesting times and hybrid ad +ecommerce models coming soon.