A combined SonyLiv-ZEE5 OTT video streaming service born out of the proposed merger between Sony Pictures Networks India (SPNI) and Zee Entertainment Enterprises Ltd. (ZEEL) may emerge as the second largest homegrown OTT player in India after Disney+ Hotstar, with the financial and content muscle to take on international giants like Netflix and Amazon Prime Video which have been investing heavily in India. In the first big consolidation in the Indian media landscape, SPNI and ZEEL announced a merger of their businesses on Wednesday. In a press release, the two leading Indian media houses said they would combine both companies' linear networks, digital assets, production operations and program libraries. “The combined company would be a publicly listed company in India and be better positioned to lead the consumer transition from traditional pay TV into the digital future. “As a combined entity, this becomes India’s largest media network with close to 27%-28% market share compared to Star India at 24%,” said Abneesh Roy, executive director, Edelweiss Securities. The combined entity’s digital businesses may emerge as the second largest homegrown OTT video streaming service after Disney+ Hotstar in India, said Karan Taurani, SVP, research analyst, Elara Capital. “This entity will also have much more wherewithal to fight with Netflix in the OTT business because it will have $1.5 billion cash coming into the company through the merger. Also, the risk of selling to a predatory player like Reliance Jio goes away,” said Roy.CONTENT SYNERGY This is only a non-binding term sheet under which the two firms will negotiate the contours of the deal over the next 90 days. But there is plenty of content synergy opportunities that overlap, making them ideal partners to create a platform with a greatly improved content offering, said experts. Sony brings sports to the table, while Zee contributes its regional programming. “Sony is doing well in sports and mainstream general entertainment channels and shows like Scam 1992, whereas Zee has a strong recall in the regional genre, which is less or absent for Sony,” said Taurani. “In the current context, especially for OTT platforms, sports genre is extremely important to get eyeballs. Sony is very strong in reality shows, sports, crime, thrillers and comedy, while Zee is strong in fiction shows. So, this becomes a strong network in terms of programming,” said Roy. ZEE5 India’s chief business officer Manish Kalra recently told Business Today about their plan to increase regional focus with original programming in Punjabi, Tamil, Telugu and Bengali for the OTT platform. “A major part of ZEE5’s strategy is to convey realistic and original tales from the heartland. Almost 50% of our viewership comes from regional language content. Around 30-40% of our content investments will be in the regional space going forward, and we expect this percentage to increase as we further cater to untapped regions,” he had said. Together, the two of them also have a strong movie catalogue which they can use for their TV channels as well as OTT platform, according to the analysts.DISTRIBUTION MIGHT Given the scale and depth of content, the combined entity will have better bargaining power with the distributors such as original equipment manufacturers, telecom companies and other platforms who offer OTT subscriptions to their consumers as part of bundling arrangements, said Taurani. “This is another area of win-win for them rather than having to go to the market separately.”Also read: Zee-Sony merger: Will the companies be able to clear CCI hurdle? Also read: Zee-Sony merger: Why IPL bidding next year will be a fight to the finish