How RIL May Buy 30% Stake In Tata Play To Compete Against Disney+ and Netflix

If you are an entertainment junkie, you are up for a treat. We’re already spoiled for choice with the innumerable shows on tens of OTT platforms. And you have more coming to you! Plus, if luck favors us, it might just be free. So, enjoy endlessly scrolling through the list of movies because Reliance Industries, India’s largest conglomerate, is reportedly in talks to buy a 30% stake in Tata Play, a subscription-based satellite TV and video streaming service, from Walt Disney. 

The deal, if successful, would mark a strategic move by Reliance to strengthen its presence in India’s television distribution sector and expand the reach of its streaming platform, JioCinema.

The OTT War

Tata Play, owned by Tata Sons and Temasek, is one of the leading players in the direct-to-home (DTH) market, with over 21.43 million subscribers. It also offers an OTT service, Tata Play+, with a library of over 10,000 movies and shows, including Disney+ Hotstar content. 

However, Tata Play faces stiff competition from other streaming platforms, such as Netflix, Amazon Prime, and Zee5, as well as Reliance’s own JioFiber, which provides broadband, TV, and OTT services. The rise of OTT is slowly killing the DTH market. Big players like Tata Play struggle to hold their heads above the water.

Reliance, on the other hand, has been aggressively expanding its digital and media businesses, with acquisitions of Hathway and DEN Networks, two of the largest cable operators in India, as well as investments in Balaji Telefilms, Eros International, and Viacom18. 

Reliance also owns JioCinema, an OTT platform that offers over 1 lakh hours of content, including movies, TV shows, music videos, and original web series.

The Number Game

Acquiring a stake in Tata Play will help Jio Cinema reach closer to the biggest OTT distributors in the world. With this deal, Reliance would gain access to a large and loyal customer base of 21.43 million subscribers that Tata Play has, along with 452 million users that Jio already has. Let’s not forget the diverse and premium content portfolio Tata provides Jio with. 

Reliance might also offer its entire JioCinema content suite to Tata Play customers. This would create a formidable combination of linear TV and OTT offerings, catering to different segments and preferences of the Indian audience. 

Jio users might also benefit from it, as historically, Jio has been providing all content accessible to them to all subscribers of Jio, not just the ones on fiber, but also telecom subscribers. Today, all Jio telecom users can enjoy almost all the OTT Jio has access to for Rs 398. 

This will be a win-win situation for all: the users, Tata, and Jio. While the users get more content at a lower cost, Jio and Tata get access to a larger audience and can compete against Disney+ and Netflix.

Deal Of The Era

The deal would also mark the first collaboration between the Tata Group and the Ambanis, two of India’s most influential business families. The partnership could pave the way for further synergies and cooperation in other sectors, such as telecom, retail, and e-commerce, where both groups have significant interests and ambitions.

Challenges

But just like everything, this boardgame of content has dice with multiple faces, and not all numbers are good:

• Disney, currently holding a 29.8% stake in Tata Play, initially planned to divest its shares during Tata Play’s IPO. Still, the listing was postponed due to regulatory hurdles and market conditions. 
• Disney wants exit options, but the valuation and terms of the deal are yet to be finalized.
• The Competition Commission of India (CCI) has yet to approve this deal.
• Reliance’s market dominance and pricing power in the TV and OTT sectors. This is concerning to the players in the game as they might develop a monopoly in the Indian market, which was seen earlier in the telecom market.

Conclusion

If it materializes, the deal could have far-reaching implications for India’s media and entertainment industry, which is undergoing rapid changes and disruptions due to the rise of digital platforms and changing consumer behavior. Reliance, with its deep pockets and ambitious vision, could emerge as a dominant player in the sector, challenging the existing players and attracting new entrants. 

With its strong brand and loyal customers, Tata Play could benefit from Reliance’s scale and reach and its content and technology capabilities. The deal could also trigger a wave of consolidation and collaboration in the industry as players look to survive and thrive in the competitive and dynamic market.

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