Viacom18-Disney Star Merger: A Chill Wind for Production Costs and OTT Rights Values

Over the past decade, India’s entertainment industry has witnessed a significant transformation due to the evolution of Over-The-Top (OTT) platforms. This shift was driven by the advent of digital technologies that reduced costs in filming, post-production, and exhibition. The real game-changer, however, was the ability to stream movies over the internet, altering consumer behaviours dramatically. This trend was further accelerated during the COVID-19 pandemic when OTT platforms experienced a surge in consumption and subscriptions.

The Rise of OTTs in the Indian Market

The foundation for this shift was laid by network services like Reliance Jio, which sparked the ‘free data revolution’ in India, bringing OTTs into the popular consciousness. The COVID-19 pandemic proved to be a critical moment for OTT platforms. With nationwide lockdowns, closed theatres, and more free time, the Indian population turned to OTT platforms for entertainment. This led to a significant expansion of the OTT marketplace, with big production houses releasing major films directly on these platforms and medium-range films gaining popularity among audiences. However, this boom also led to substantial financial commitments from OTT platforms to production houses, resulting in reported losses due to the high costs of acquiring content.

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Viacom18 and Disney Star Merger

Amidst this landscape, the proposed merger of Mukesh Ambani’s Viacom18 and Walt Disney’s Disney Star has made headlines. This merger is poised to create India’s largest media conglomerate, combining 115 TV channels and streaming platforms, including Disney+ Hotstar and Jio Cinema. The deal, which is in its final stages, suggests a likely ownership split of 51% for Mukesh Ambani and 49% for Walt Disney.

Impact on the Film Industry

This merger could significantly impact pre-release revenues for big movies, especially given the recent history of hyped yet underperforming films affecting OTT earnings. With OTT platforms already correcting their strategies, the establishment of Star-Viacom18 could further alter the financial dynamics of film rights sales to OTT platforms and TV channels. The industry is closely monitoring this development, as it could lead to changes in how films are valued and sold in the burgeoning OTT market in India.

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In light of these significant industry shifts, it’s essential for filmmakers to focus on cost-effective production methods and streamline their budgets to thrive in the evolving OTT-driven market. This approach will be crucial for sustaining success in India’s rapidly changing entertainment landscape.