Reliance-Disney merger to challenge big tech monopoly in digital advertising: Uday Shankar

New Delhi: The merger between Reliance Industries’ Viacom18 and Disney Star India entities will create a media giant worth $8.5 billion. This deal aims to become India’s largest entertainment company, potentially capturing 40% of the TV market and reaching 75 crore viewers across 120 channels. 

Speaking his mind on the merger in a McKinsey interview, media hotshot Uday Shankar, the incoming Vice Chairman of what is set to become India’s largest media and digital entertainment company said, “Most of the digital advertising revenue goes to Google and Meta. So you need to pivot; you need to create a business. We saw an opportunity to leverage our inherent strengths and make that strategic pivot. That’s the primary rationale for the merger.”

Citing another reason for the merger, Shankar said, “The other thing is that, on the streaming side, there’s an opportunity to innovate and disrupt the monetisation models. If you continue to push only SVOD (subscription video on demand) and AVOD (advertising-based video on demand) revenues, you’re limited. 

While there are a lot of people today who are willing to pay for content and who are interesting or important to advertisers, there are also a lot of people who are not relevant for either of these models. You need to create unique or native monetisation models to create value from that base.”

Moving further into the interview, Shankar spoke about reimagining sports coverage in India. Considering the cultural and linguistic diversity of India, Shankar mentioned the need to localise Cricket in India. 

Sharing his thoughts on the need for Cricket to be localised, Shankar said, “Earlier 85% of cricket commentary used to be in English in a country where an estimated 3% of people are comfortable with English. And most of the remaining 15% of the commentary was in Hindi.

The wisdom among all the established sports broadcasters then was that nobody was interested in the commentary; nobody was interested in the content. But that’s like saying that the soundtrack of a movie is irrelevant. So there was an opportunity there.”

Adding more to the bandwagon of thoughts, Shankar said, “I’ve always been a big believer in local languages. Even for the news, I was one of the first people to push for regional-language news channels. Then, in entertainment, Star was very big, but Star was limited to Hindi and a little bit of English. 

When we took over, we went market after market in every major Indian language, and we launched channels there. And today, Star’s leadership is rock-solid because of that. My team worked on it for two years and came up with a plan. Today, less than 10% of sports consumption in India is in English.”

Diving deeper into the conversation, Shankar mentioned his contribution to making Hotstar the most-watched streaming service in India. He highlighted how Hotstar was a solution designed for very low-cost Android phones in a data-challenged environment and the need for content that could be consumed on the small screen with equal excitement.

From the horse’s lips, he said, “One of the things that I realised from my travels around the country and my connectivity to broader India was that many people in this country had completely bypassed the television phase. Many of them were part of a mobile workforce and had come to big cities from small towns or villages. Their living conditions didn’t permit them to own a TV, yet they wanted to consume content.

Platforms like Netflix and Amazon hadn’t yet come to India, and all those solutions were for the big screen. We realised that “big screen” was not the way to go here: we had to solve for the people of the country.”

Over the years, many Western entertainment companies have left India as they failed to understand the Indian consumer. Shankar blamed a lack of local strategy and a lack of consumer research about the Indian user as the reason behind Western companies leaving India.

Providing a perspective on what Western media companies don’t get about India, Shankar said, “They look at India as the headline value of a population of 1.4 billion people. But if you look under the hood, barely 60 million people or so fall into the “affluent” category.

So which India do Western companies want to address? 

They come here for the 1.4 billion people but start designing solutions for 60 million people or less—that’s where the big mismatch is. And this insight becomes clear very quickly. However, they don’t want to change that strategy, for whatever reason—sometimes it’s a conviction about their strategy, sometimes because it causes global dissonance in their business model.”