Zee and Sony split up. Now, streaming studios are sulking

Studios making shows for streaming platforms had hoped that the Zee-Sony merger would revive projects that had flagged for a while. However, the acrimonious end to the merger has put paid to their hopes.

While Prime Video works only with select Bollywood names or releases new titles in a staggered manner, Netflix is keen on buying big-budget films. JioCinema has a sports focus, and Disney has slowed ahead of a possible merger with Reliance Industries Ltd. SonyLIV wants to do only mid-scale shows and ZEE5 is targeting cost cuts.

The merger would have provided clarity on the road ahead for the streaming landscape, and its collapse means the studios, which had hoped the combined entity would green-light projects at a faster pace, will have to wait longer.

“It’s a terrible time for content creators,” a top executive at a content studio said. “Not only are talent costs skyrocketing, there are fewer people to sell projects to. We had presumed the merger would enable both companies to green-light more titles, but things have gone back to status quo. Sony remains a large company concerned with P&L (profit and loss) and is even looking at reworking content budgets as Zee continues to limp along,” the executive said on condition of anonymity.

On 22 January, Sony Pictures Entertainment terminated its merger agreement with Zee Entertainment Enterprises, ending India’s largest entertainment deal, after months of fruitless talks to appoint a chief executive officer for the merged entity.

The person cited above said Amazon Prime Video takes long to approve projects, and has cancelled some of the 40 titles it had announced in April 2022. “Disney, too, has been trying to cut losses, and buying and commissioning has been moving at a glacial pace there,” the person added.

A second content studio head agreed while there is more movement on Sony’s side on streaming projects, there is less clarity for producers from ZEE5. “We had made submissions a few months ago that were liked but haven’t been activated since. Overall, activity in the OTT industry is down by half compared to two years ago, and big commissioning decisions (especially for fiction shows) aren’t being taken as much. The AVoD category, too, is exploratory and volume of green-lighting is limited at the moment,” the person added. AVoD stands for advertising video on demand, or the ad-led model.

The big difference is that the Indian OTT industry is now a buyers’ market, Anuj Gandhi, a media analyst and founder of media tech startup Plug and Play Entertainment, said. “The Zee-Sony combination could have made a difference (to content commissioning). But there is a dearth of buyers now and nobody is chasing content at any price asked for,” Gandhi explained.

To be sure, industry experts say it isn’t entirely surprising that after an initial rush of bullish spending when they looked to consolidate their presence in India, video streaming platforms are slowing investments amid muted subscriber additions.

In an interview in December, Saugata Mukherjee, content head of SonyLIV, acknowledged an impending spending correction for most players, although SonyLIV has maintained fiscal prudence, he said. “A lot of people were working on a lot of things, and even the focus on storytelling was getting diluted. But the days of throwing money at shows are over. We don’t want to do too many shows, but the ones we do, we want to do well,” he had emphasized.

In an earnings call this week, Zee chief executive officer (CEO) and managing director (MD) Punit Goenka, too, mentioned the company will be targeting fiscal prudence and, going forward, there will be a sharper emphasis on frugality, with a focus on quality and output. “Across verticals—including technology, content and marketing—we are implementing steps to optimize spends and enhance the return on investments. A sound recalibration of the OTT cost structure will be an integral part of this process,” Goenka said. Live Mint