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Reliance wants to put on a show

Reliance wants to put on a show

can shelling out big bucks help the conglomerate add a media piece to its jigsaw puzzle?
finance
January 29, 2022
5 min read
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Reliance wants to put on a show

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towards the end of 2021, perhaps in cliche Indian soap opera fashion, a high stakes dramatic battle was fought out in the Indian media and entertainment space. troubled Zee entertainment held off a hostile takeover bid from the Invesco group (allegedly a proxy for Reliance) to merge instead with Sony’s India division, forming India’s second-largest media network by revenue. that seems to only have stoked Reliance’s fire for the sector as it is making waves with its latest moves.

with digital entertainment consumption meanwhile on the rise, which direction will this sector take?

flexing its muscles

Reliance has onboarded bigwigs such as Uday Shankar, former Star & Disney India chairman, and James Murdoch as strategic partners in its 51:49 media joint-venture with ViacomCBS, Viacom18. industry insiders also believe it may be lining up a fund raise of more than Rs 12,000 crore for Viacom18. comparing that number to Zee’s present ~Rs 30,000 crore post-merger market cap adds some context to the size of the potential raise. they, along with the Star network, constitute a three-horse race for domination in the sector.

at present, Viacom18 has 53 entertainment channels and has a viewership of about 600 million Indians a month. It boasts a particularly strong sports portfolio that it is further strengthening by bagging the media rights of properties such as the National Basketball Association (NBA), FIFA World Cup 2022, Italy’s Serie A, Spanish La Liga, French Ligue 1, ATP Masters and Abu Dhabi T10 in recent times.

Jio shows the way

while there are several other players in the market, only Sun network is of a size even comparable to the aforementioned three. this signals we might be in for a period of consolidation where the big fish gobble up smaller ones in the pond. however, that may not even be necessary as the entire landscape shifts towards the digital streaming segment. this is something that Reliance somewhat sparked in the nation with its generous data plans through its Jio unit, sending consumption through the roof and changing consumer behaviour for good.

therefore it may place great emphasis on Voot, its digital entertainment offering, which has managed to achieve over 1 million paid subscribers since the premium offering went live in March 2021. however, with competitors such as Disney+ Hotstar, Amazon Prime Video and Netflix having 46 million, 22 million and 5.5 million paid users, Reliance faces tough competition. however, with digital being the fastest-growing segment in the media sector, expanding at 22-23% per annum, there is certainly scope for it to capitalise.

in the bigger picture, growth in media consumption, which saw a boom due to pandemic-enforced conditions, might slow down. this was seen with Netflix’s latest quarterly results, where it was seen especially struggling in India. but at the same time, media penetration in India is relatively low in comparison to global averages, offering opportunity for growth. perhaps it’s just a question of creating an Indian Game of Thrones or Squid Game.