Reliance, Disney eye ad revenue cornered by big tech

New Delhi: The merger of media assets of Reliance Industries and Walt Disney in India is not only aimed at creating a media behemoth with over 120 television channels but also at breaking into the big bucks cornered by big tech firms, opined industry veterans.

The combined entity led by Uday Shankar is expected to pose a tough challenge for tech giants like Google (YouTube) and Meta with its two OTT apps – JioCinema and Hotstar.

Besides, the digital play of the combined entity will also be backed by other digital products under RIL Retained such as BookMyShow, myJio, JioTV, AltBalaji, and ETV Win.

Last week, a detailed 48-page order from the Competition Commission of India (CCI) said that Reliance and Disney voluntarily committed that they "will not bundle together OTT ad slot sales for all three cricketing rights available" with them.

This voluntary submission is nothing but an assurance to advertisers that they will not see exorbitant ad rate hikes for the cricketing rights as a result of the merger, said a media veteran who did not want to be named.

“The combined entity was anyhow cornering all the investment from advertisers on cricket. The attempt is to break into the large share of ad revenues taken away by global tech giants including YouTube,” the media veteran added.

Even as CCI refused to consider YouTube to be a part of the OTT streaming market, Disney and Reliance submitted that the aggregator is a significant competitor with the highest market share in terms of watch time and users. 

“The combined entity is very much working on a strategy to offer advertisers far more lucrative options and deals than YouTube despite the challenges in competing with a UGC platform with no content cost whatsoever,” said an insider without divulging much.

Overview of the Indian OTT market

In their submissions to the competition watchdog, Reliance and Disney said that there is no single commonly accepted metric for assessment of the OTT streaming market, such as GRP for TV channels. 

It was submitted that different business models measure the performance of OTT platforms based on various metrics such as monthly average users (‘MAU’), average weekly watch time (‘AWWT’), revenue from advertisements/subscription/both, etc. 

As of the fiscal year 2023, the combined entity had around 40% share in the OTT market on all the performance indicators.

Viacoml8 Business is present in this market through JioCinema and Star Business through Disney+Hotstar. Additionally, the RIL Retained is also present through BookMyShow, myJio, JioTV, AltBalaji, and ETV Win.

After FY23, JioCinema claimed multi-fold growth in its reach, viewership and ad revenue on the back of two IPL seasons played in 2023 (FY24) and 2024 (FY25).

“According to industry estimates, JioCinema and Hotstar have a combined market share of 50-55% today as compared to 40% in FY23. It is due to increased advertising revenue on the back of offering cricketing tournaments for free to watch. Their overall share of revenue is still a minuscule percentage of the overall digital advertising spends. This is the growth area for Reliance-Disney,” a media agency head told BestMediaInfo.com.

When asked about a realistic view, the media agency head added, “If you command 55% of viewership share across television and digital, any advertiser would not like to miss the opportunity provided by the network. Today, the combined entity will have cricket and other sports, kids content, Marvel and HBO movies, news and the rerun of TV shows. They will use Hotstar for cricket and other upmarket content while JioCinema may continue to cater to the masses.”