Niche OTT platforms eye M&As to avoid getting crushed by RIL-Disney

The coming together of Walt Disney and Reliance Industries is set to drive consolidation in India’s streaming landscape as smaller, regional-language platforms explore merger and acquisition opportunities (M&A) to avoid getting crushed by a much larger entity that will potentially dominate the OTT ecosystem, experts said.

The big challenge for M&As at the moment, however, remains arriving at a price point that parties can agree upon, given that even smaller players have hit a ceiling with paid subscriptions, but believe they have a valuable offering because of their targeted approach, a claim that may not always work for bigger entities that are themselves looking to expand their reach.

“The Disney-Reliance merger has definitely sparked some concerns. The prospect of a massive entity like this potentially monopolizing the market raises questions about our ability to compete for viewership, especially among regional audiences. Additionally, navigat

ing the challenges of escalating content costs, securing distribution partnerships, and negotiating competitive advertising rates become increasingly daunting in the shadow of such a formidable partnership,” said Rajat Agrawal, director and content syndication head, Ultra Media & Entertainment Group that owns Marathi OTT platform Ultra Jhakaas. The company is constantly exploring strategies to fortify its position in the industry and is actively seek out collaborations that align with the goal of delivering value to customers, Agrawal said, declining to disclose specific plans.

In late February, Reliance Industries Ltd and Disney India merged their streaming and TV assets in an $8.5-billion deal to create an entertainment powerhouse.

To be sure, streaming industry experts point out the real challenge arises from the fact that no OTT player is currently profitable for a larger entity to invest. “It will take an even larger investment from the bigger player to retain the existing subscribers of the regional platform, which may have anyway hit a ceiling on paid members. A lot of the smaller players are also happy simply sustaining their own niche,” said a media analyst declining to be named.

The immediate concern for all competing players is on the AVoD (advertising video-on-demand) front given the monopoly that the merged Disney-Reliance entity will have on the advertising ecosystem, said Girish Dwibhashyam, vice-president, strategy and business head at DocuBay, a documentary-streaming platform. “Consolidation is on everyone’s mind because it’s anyway unusual to have over 40 players in one market. But niche players are not profitable, at the same time, nobody wants to exit without a significant valuation,” Dwibhashyam added.

That said, several smaller players continue to see hope for their model. Sandeep Bansal, managing director, Chaupal OTT, a platform specializing in Punjabi, Haryanvi and Bhojpuri content, said the (Disney-Reliance) merger will have an impact on the larger OTT-consuming audiences of India that watch Hindi and south Indian content, but the dent should be relatively smaller for platforms that cater to niche or underserved viewers. While strengthening its hold with original content and a strong distribution network, Bansal said the company values collaborations with individuals and corporations that share its vision.

“If regional or other OTT players have a compelling consumer proposition, there would not be any headroom constraint in India. Content costs are currently inflated and are poised to be corrected this year to be viable. Consolidation may positively impact both content cost rationalization and the advertising rates,” said Saurabh Srivastava, chief operating officer, digital business, Shemaroo Entertainment Ltd. LiveMint