Amazon Prime Video-MX Player deal likely threat for JioCinema, YouTube?

New Delhi: The news of Amazon acquiring MX Player first surfaced in March 2023, but the deal was called off in July. The acquisition talks resurfaced again in February this year. Finally, after a prolonged wait of over a year, Amazon made it clear that it would not be acquiring MX Player but agreed to buy some of its assets, including its content library, to strengthen its presence in India.

This move will help Amazon Prime Video compete with JioCinema and YouTube, further penetrate Tier 2 and Tier 3 cities as well as rural areas, and create new avenues for advertising revenue, especially with regard to its Mini TV service.

Ashish Bhasin, Founder of The Bhasin Consulting Group, remarked, “This move by Amazon will give them further access to tier two, tier three towns, and rural India. The potential for growth in these areas is tremendous, particularly now that we are seeing the green shoots of rural revival. If the monsoons go well, we will see it happening sooner.”

“This aligns perfectly with the expected surge of 150 to 200 million new internet users in these regions over the next three years,” added Bhasin, citing PwC.

Bhasin also asserted that instead of acquiring the entirety of MX Player, a partial asset buyout would definitely accelerate Amazon’s agenda of garnering market share in the video streaming space. 

"Amazon will utilise the content and reach of MX Player to strengthen its MiniTV AVOD service and extend its reach to provide better competition to YouTube and Jio Cinema," said Uday Sodhi, Senior Partner and Co-Founder at Kurate Digital Consulting and former head of digital business at Sony Pictures Networks India. 

According to research reports, the over-the-top (OTT) market is expected to reach Rs 12,000 crore in 2024 and Rs 30,000 crore by 2030. 

JioCinema made a significant impact on the OTT market by streaming the IPL for free, prompting Disney Hotstar to release the World Cup from behind its paywall and stream it for free. 

Even in the SVOD model, JioCinema introduced plans as low as Rs 29 per month. With Viacom18 acquiring the Disney Star India business, it will create a media behemoth, even in the OTT space, because JioCinema+Hotstar will capture about 85% of India’s video-streaming audience, as per analysts at brokerage firm Bernstein. 

India has the largest YouTube audience by far, with approximately 567 million monthly active users engaging with the popular social video platform.

Amazon operates both the paid subscription-based OTT service Prime Video and the free video-on-demand service miniTV in India. 

Amazon launched miniTV in May 2021 and followed up with the release of a standalone Android app for miniTV in July 2023. 

According to EY-FICCI Frames’ latest report on the M&E industry, Amazon miniTV witnessed a fourfold year-on-year growth in overall watch time in 2023. 

Earlier, miniTV said it aims to add over 900 hours of exclusive content across genres in 2024. 

Prime Video has the highest percentage of Prime members who watch Prime Video each month across all locales, reaching 99% of pin codes in India. 

As per various reports, Prime Video subscribers in India range between 20 and 30 million.

During his visit to India in March, Mike Hopkins, head of Prime Video and Amazon MGM Studios, stated, “As we look at the next 250 million subscribers that we're going to acquire, they are definitely going to come from outside of the United States.”

Acquiring the assets of MX Player aligns with Amazon’s plan to reach a 250 million subscriber base. 

At its peak, MX Player had amassed over 350 million users, although this number has declined significantly over time. 

“Even if it would have fallen to half of it, imagine! Amazon miniTV will be able to immediately pocket over 120 million users,” a media veteran told BestMediaInfo.com.

The deal indicates that while Amazon plans to leverage MX Player’s content library, it will not be acquiring its technology, as Amazon has its own robust tech setup, nor will it assume responsibility for MX Player’s liabilities. 

Notably, in May, the Delhi High Court directed MX Media to allocate Rs 31.25 crore from its asset sale towards the amount owed to Sony for unpaid dues from the 2021 agreement. This agreement, which ran for two terms until March 2023, granted MX Player access to certain Sony content and functionalities. However, MX Player terminated the agreement in March 2022, leaving behind unpaid dues.

“When Sony learned about the deal, it quickly approached the court to claim its share from the MX Player asset sale for the pending dues,” said a person familiar with the matter.

The Amazon-MX Player deal highlights the growing trend of consolidation in India's fiercely competitive video streaming market.

The Amazon-MX Player deal is “indicative of a larger trend of consolidation in the Indian OTT market," as agreed upon by both Bhasin and Sodhi. 

Bhasin suggested that “this consolidation will lead to optimised content delivery," therefore eliminating wastage in a crowded OTT landscape. 

“Consolidation can also lead to the development of more effective advertising solutions,"  according to Sodhi, “creating a win-win situation for both OTT platforms and brands.”