In December 2021, when Punit Goenka announced the final outlines of Zee Entertainment’s merger deal with Sony Pictures, he killed two birds with one stone. On the one hand, the merger allayed the immediate concerns raised by the mutinous shareholders of Zee, and on the other hand, the deal paved the way for the emergence of a new leader in the Indian broadcasting market.
Once the merger is complete, the Zee-Sony duo will have a combined market share of 28%, overtaking Walt Disney-owned Star India, which has a 24% market share. Experts suggest the domestic broadcast space is ripe for a three-way battle between Zee-Sony, Disney-Star and Mukesh Ambani’s Reliance Industries-backed Network18-Eenadu-GroupJio trio. At stake is a $23.7 billion market, which is expected to grow to $30.6 billion by 2023.
The upcoming Indian Premier League (IPL) broadcast rights auction will perhaps offer a first glimpse of the intense rivalry between the three players. Star and merged entity ZeeSony will be neck and neck in the battle for market supremacy, while buzz is that behemoth Reliance will be putting a lot of money on the line. While Sony has a sports portfolio it ironically had acquired from Zee in 2016, experts say its mix of sports programming doesn’t compare to Star.
Cricket is the main driver of sports programming in India, and currently Star holds the main rights to broadcast all matches – IPL, BCCI (Board of Control for Cricket in India) and ICC (International Cricket Council ). Karan Taurani of Elara Capital said, “Sports is a winner-takes-all market, either you’re there or you’re not. Cricket has the lion’s share among sports and within cricket, Indian cricket is where there will be the most interest; and within Indian cricket, IPL will get the most attention. Therefore, it is important that broadcasters get the right mix of programming if you want to bet big on sports. “You can’t be a small player like Sony betting on non-cricket sports like Kabaddi, Olympics, etc., and expect to compete,” Taurani adds.
The prevailing philosophy in media and entertainment is that the supremacy of sports can have far-reaching consequences, as is indeed the case with Hotstar, which has a 41% market share, according to some market reports. subscription video on demand with streaming rights to IPL, BCCI and ICC events featuring India. However, given that broadcast rights for all three are up for renewal by 2023, Disney Star’s supremacy in the digital platform space is uncertain. Ajimon Francis, managing director of Brand Finance India, told BusinessLine, “It won’t just be ZeeSony challenging Star. You have to watch out for the Reliance Jio juggernaut. This year it’s going to be a party for the central IPL pool as Facebook (Meta), YouTube, Jio, Star, Zee-Sony will fight tooth and nail for the media/streaming rights.
According to industry watchers, bidders will be ready with a bid purse of ₹40,000 crore and Star’s winning bid of ₹16,347 crore will be easily doubled. Digital platforms will not only invite competition from the best broadcasters. According to Jehil Thakkar, Partner at Deloitte, “It’s not just about streaming app players, it’s a much broader landscape; you also have foreign players (like Amazon Prime). Given that we are still fragmented in the streaming space, we will see some consolidation in the medium to long term. The fight is for sports content and the fight is also for digital supremacy. Abneesh Roy, Executive Vice President of Edelweiss Financial Services, said, “On the OTT front (on the top), Zee and Sony are individually weak, but a combined digital platform of the two will be second only to Hotstar.” A potential ZeeSony digital platform in a market dominated by Hotstar, Amazon and Netflix is likely to become a major disruptor as it will have it all.
“After the merger, their library of digital content will be unparalleled, as they will offer sports through Sony and content in all genres and languages. Since they are likely to enter the market with affordable prices for the general public, a Zee-Sony OTT app will become a must-have for consumers,” Roy said. On the traditional linear television side, the New Tariff Order 2.0, which was introduced by TRAI last year, with much opposition from broadcasters. According to the order, tariffs for individual TV channels were capped at ₹12 from the existing ₹19. This obliges the chains to sell packages, marketing and advertising outside; and content becomes paramount. Therefore, the bigger you are, the more likely you are to succeed. “Although investments will certainly go to the digital side, linear television broadcasting is the main source of income for broadcasters. Therefore, you will also see investments in better programming and better distribution overall, in order to attract audiences. The marketing of these channels by broadcasters is going to become more important,” Thakkar said. Access to premium sports content will also be necessary to stand out in the linear market. For consumers, the battle between Zee-Sony, Disney-Star and Reliance could mean better programming and better investment in interesting, niche content as gamers battle for eyeballs.
January 16, 2022