The consolidation of Disney-Reliance's assets in India will create a media giant far bigger than its rivals, reinforcing billionaire Mukesh Ambani's ambitions in the entertainment sector, with streaming technology capabilities and lucrative cricket rights.。

Media Business Merger

Last Wednesday (Feb. 21), Disney and Reliance set the value of their combined TV and streaming asset business at $8.5 billion, and Ambani's Reliance and its affiliates will own more than 63 percent of the combined company, with Disney holding 37 percent.。The combined group, which has 120 channels and two streaming platforms, will be India's largest TV player, followed by local media company Zee Entertainment, which has 50 stations in India's $2.8 billion growing media and entertainment market.。

Disney's Hotstar is India's largest streaming platform with 38 million paying subscribers.。Netflix (NASDAQ: NFLX) and Amazon (NASDAQ: AMZN) Prime Video did not disclose their number of subscribers in India, but industry analysts speculated they had 20 million and 6.5 million paid subscribers, respectively.。

Reliance's JioCinema is primarily free and doesn't disclose subscriber numbers, though the platform launched a premium-priced service last year.。Before its rivalry with Disney intensified, Reliance heavily promoted JioCinema, whose free live cricket service quickly gained popularity.。However, it has been criticised on social media for frequent technical glitches.。

Shashi Shekhar Vempati, former chief executive of India's state-run broadcaster, said: "Historically, India's media industry has not made significant investments in technological innovation.。Reliance will benefit from Hotstar's streaming and cloud-related technology developments. In many technical aspects, Hotstar outperforms JioCinema. It is better at providing intelligent viewing recommendations based on users' viewing history, and is more capable of making mistakes. Live content to a large audience at the same time。"

According to Disney insiders, the company's streaming service in India has mastered so-called server-side ad insertion technology, which allows them to conduct large-scale advertising and targeting of users during live content streaming.。It also said that Disney has more than 55,000 potential statistical combinations, such as age, geographic location, etc., that can be used for targeted advertising, all of which have been tested in practice (Reliance) can benefit from this.。

The deal between Disney and Reliance comes after years of struggling in India, particularly in its streaming division, which, despite being the largest, has failed to turn a profit.。The transaction is expected to close by the end of this year or early 2025, pending regulatory approval.。

Commercialization of cricket

Disney-Faith will have an edge when it comes to cricket broadcasting, both on TV and digitally。The two companies have spent billions of dollars acquiring broadcast rights to a number of top tournaments, including the world-famous Indian Cricket League and the International Cricket Council's Tournament of India.。

According to media group GroupM, cricket accounted for 85% of India's total sports industry revenue in 2022.。With the merger of Disney and Reliance, Jefferies analysts predict the group will have the "most attractive cricket broadcast rights," accounting for 40% of the advertising market, surpassing rivals Sony (NYSE: SONY) and India's Zee.。

Cricket is a major commercial event in India, with local media reporting that the 10-second ad fee for key cricket matches could reach two..$90,000; by comparison, advertising during Indian football matches costs about $3,000。Lawyers in India, however, have warned that Disney-Shin is a joint force in cricket programming, both digital and television, and could lead to an antitrust investigation.。

Analysts at Ambit Capital in India said the combined business could face losses of $1.2 billion to $1.8 billion over the next few years as the company faces potential losses in a competitive cricket broadcast rights bid, while other companies also have strong positions in the digital advertising space.。

While Disney is a big win for Ambani, he believes the digital advertising prowess of Google (NASDAQ: GOOGL) and Meta will be hard to match.。