The numbers are mind-boggling: Their impact very real. In March 2018, Google India posted revenues of Rs 9,337 crore. That makes it the fourth largest media company in India after the Zee Group, Disney and the Times Group. A bulk of Google’s revenues came from search and display advertising. Just over Rs 2,000 crore came from YouTube. That makes YouTube a mid-sized broadcaster or the largest OTT in India.
Google and YouTube are part of the $137 billion Alphabet, the world’s largest media firm. It dominates the digital advertising market not just in the United States but globally as well. After it comes Comcast at $94.5 billion and then Disney at $60 billion in 2018 revenues.
Come back to India. Take a look at a list of the top 15 media and entertainment firms that includes Google India. Two things will hit you.
First, the composition of the top firms is changing into a more even mix of technologies and media types unlike the earlier print or TV heavy lists. After Zee Group, Disney and Times, is DTH-operator Tata-Sky at number five and PVR Cinemas at number 11. The latter to my mind is the most heartening entry — films have long powered almost every other media segment in the country but never hit scale as a business. PVR’s ascension is the surest sign that scale is finally creeping in, at least at the retail end of the business.
Two, and is the main point of this column, the media business in India is poised for some big shifts.
Disney bought out Fox last year. That makes it the owner of Star, one of the largest media firms in India. Zee should be signing a deal offloading 20 percent of its equity to either a strategic or financial investor by the end of July. Many are hoping it might bring in a large global player into the market. And then there is a domestic monster, the Rs 38,838 crore telecom giant Reliance Jio. It doesn’t share numbers or give interviews about its media business. But Jio is constantly acquiring heft on the distribution and content side. In the last year alone, it has bought majority stakes in two cable distribution firms (Den and Hathway) and music streaming app Saavn, among others. Then there is its hold over telecom and the ability to serve cheap data. Unlike other firms, Jio controls all kinds of data pipes (wireless, wireline) and parts of the content that flows on them.
It is certain then that by next year the battle for the Rs 1,67,400 crore Indian media and entertainment market will be fought between four key players — Disney, Jio, Zee and Google.
How do they stack up? All of them have made big investments in digital. Though Google and YouTube are way ahead in revenue and traffic numbers, the others could catch up soon. Disney owns Hotstar, Hulu and will be launching its own Disney+ in November this year. Jio, of course, is a digital native player with a whole suite of apps plus it is a majority shareholder in Viacom18 that offers Voot. Zee5 has shown some good traction on the back of heavy promotion and original programming.
The Indian players come with the ability to have a bigger say on policy than ‘foreign’ ones. But after over 25 years in India, how foreign is Disney’s Star India is a matter of debate. Almost all of them have strong products and market dominance in one segment or another. Star tops in general entertainment and has the second largest OTT (Hotstar) after YouTube. Zee’s hold over audiences, across small and big town India, equals Star’s. It also owns a DTH firm (Dish TV) and a cable one (Siticable) while Star has a 20 percent stake in Tata-Sky.
There will, arguably, be more consolidation. Both Sun and Sony look particularly vulnerable. And without an adequate regulatory framework that deals with market dominance a la the Federal Communications Commission in the US or the UK’s media regulator Ofcom, anybody could make it.―Business Standard