Daybreak - Sony Liv is all set to disrupt OTT power dynamics post Zee merger

Episode Date: May 26, 2023

A year and a half ago, Sony’s India unit—Sony Pictures Networks—announced a merger with rival Zee Entertainment Enterprises Ltd. Ever since, Sony Liv's subscriber base grew from 18 million to over 33 million. With good original stories and unique non-fiction shows, alongside a strong partnerships strategy, Sony has been able to close the gap on market leaders such as Hotstar. Zee meanwhile has a formidable arsenal of regional content.The combined strengths of the two platforms, Sony and Zee, now threaten to change the pecking order of the country's OTT sectorTune in.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Ever since we started daybreak in December, I've been keeping you posted with what is happening in the world of OTT in India. Whether it was how Reliance took away Disney Hot Stars' crown jewel, the IPL streaming rights, or how After that, Reliance decided to make IPL streaming free.

We even discussed how advertisers were feeling about the whole thing and how Disney Hot Star is coping with the loss. So much is happening in the OTT space. So many twists and turns. You could sit with a bucket of popcorn and watch the drama unfold. The level of entertainment is as good as it is on some of their best shows. And now there is something new happening. I mean, we knew this was coming.

when Sony announced a merger with rival Z Entertainment a little more than a year ago. The merger is expected to now be complete by the end of this financial year. And it is going to bring about a major upheaval in the OTT world. While all our eyes have been focused on the bigies, hot star, Amazon, Netflix and Geo,

Sony Live has been quietly at work. It already boasts of an impressive stable of OTT content. Think Rocket Boys, scammer. 1992, the Indian edition of Shock Tank and even Masterchev. Its subscriber base too is steadily rising. Meanwhile, Z5, which is Z's OTT arm, though it does not have that kind of a subscriber base, you can't deny its original content offerings, especially in regional languages. Now, think of what will happen when the two joint forces. The big players are already sitting up and taking notice because the combined entity could very quickly become a formidable rival.

The status quo so far in the OTT space might go through a big shift again. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nickda Sharma, and I Don't Chase the News Cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Today is Friday, the 26th of May. We know how Hot Star has been losing subscribers and important partnerships because it no more has the rights for IPL, which was the money-making machine.

At the same time, the entry of Geo Cinema caused even more upheaval in the OTT sector. But while all of this was going on, a little more than a week ago, Sony released a little truth bomb and it caught the attention of everyone in the OTT space. Sony Live's global subscriber base has almost doubled within a span of a year or so. And guess what? More than three-fourths of these subscriptions are from India alone. Suddenly, OTT executives are waking up to see that Sony Live has become a major player in the sector. And that it has the potential to pose a serious threat to even the leading subscription video on-demand leaders like Amazon Prime and Disney Hodge.

An OTT executive told us that just a year ago, they didn't even feel the need to keep a track on Sony life. It was one of the sidekicks. But how the tables have turned now. Plus, the whole industry in general is shifting focus from making money through subscriptions towards advertising income. Look what Gio did with IPL. It's streaming the whole tournament for free. But still, subscriptions of course play an important part in the game.

So how did Sony Live manage to take it almost double in a little more than a year? Stay tuned to find out. In 2021, which shows like Scam 1992, which was based on the life of Harshad Mehta, the mastermind behind a security scam, Sony Life positioned itself as a serious OTT contender. Also, the devastating second wave of COVID-19 was just about fading away and most people were still confined to their homes. So with the streaming rights for the Tokyo Olympics, everything seemed set for the platform

to cement its place in the OTT industry. But Sony Live was bombarded with complaints about technical snags during the live streaming of the tournament. Despite this though, the platform has come a long way from the summer of 2021. It focused on original content and partnerships. Besides growing its subscriber base, Sony Live also successfully increased the number of monthly active users. And this, by the way, is taken as a good indicator of overall performance in the OTT sector.

A former Z5 executive told us how Sony Live has improved as a product. And even though it still isn't anywhere close to Hot Star or Amazon Prime, it has done really well in terms of working closely with production houses to be. build content, empower writers and directors to tell their original stories. The platform has been able to focus on great writing instead of spending money on big names or depending on huge budgets. Another OTT executive told us that with shows like Scam 1992, Good Luck, Rocket Boys and Maharani, Sony Live has been able to build the perception that it is a great place to tell stories.

Not just that. If you really think about it, some of its top shows actually made difficult subjects more accessible to the audience. Scam1992 was about the stock market. Shark Tank is about the startup ecosystem. Rocket Boyce is literally about rocket science. Clearly, the audience seems to be appreciating this. But even great original content can only take one so far. Sony Live has also been building partnerships to sell subscription bundles,

through telecom providers and internet service providers like Vodafone Idea, Airtel and Geofiber. They also do it through special offers on e-commerce and retail platforms like Flipkart and Chroma. Partnerships account for half or more than half of Sony Live subscriptions. But let us look at the kind of value that a partnership with Z could actually bring about for Sony Live. Sony Live has one of the strongest non-fiction lineups in the ecosystem. Example, the Kapil Sharma Show, Shark Tank, Korn Beninga Kroopati and MasterChev India. Now, we also have to take into account at the same time that executives across the country's most prominent OTT firms are saying that there is a limit to subscriber growth.

Even Hot Star is stepping away from only focusing on premium users. And in this context, industry executives see Sony Life's success with Shocktang India, which is the Indian version of the popular US show where startups pitch their businesses as an important win. But as OTT platforms start checking, spending on shows and stop mindlessly chasing subscribers, Z5's lead is also going to benefit the combined entity. Z is well known for its strength in regional content. The platform has a smaller subscriber,

base compared to Sony Live, but it has a greater success in cultivating an audience. And this is quite clear by its higher monthly active users throughout 2022. The relationships built through Z5's regional TV network have helped it get good content for cheap. Another senior OTT executive told us that for Z5, the target audience is not the bandra boy, but someone who is looking for content across multiple regional languages. This audience may not want to pay for a subscription, but it is a growing and experimental audience. Both Sony Live and Z5 also benefit from their own TV content.

So whatever shape the merge entity takes, the industry executives are already waking up to its potential string. Daybreak is produced from the Newsroom of the Ken, India's first subscriber focus. Focus Business News platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters, subscriber-only apps and podcast extras.

Head to the ken.com and click on the red subscribe button on the top of the website. I am Snigda Sharma, your host, and today's episode was edited by my colleague Rajiv Sien.